Prelims

ACT 102
I. Determine whether the ff. items are controllable or non-controllable

and direct or indirect cost of a particular department.
1. Depreciation of fixed assets being used in the department.

2. Commission of salesmen set by higher management at 5% of sales.
3. Cost of supplies used by the department.
4. Share in expenses of the administrative departments such as the legal and
the personnel departments.
5. Repairs and maintenance of assets being used by the departments subject
to the approval of higher management.
6. Cost of annual vacation leaves as required by law.
7. Traveling expenses of supervisors in the department.
8. Cost of light and power, there is only one meter in the entire compound.
9. Cost of water used. Every department is provided with its own water
meter.
10.Salaries of the manager of the department.
II. Determine whether the ff. statements refer to job order costing or to
process costing.
1. Cost computation is at regular intervals usually on a monthly basis.

2. Products are distinguishable from one another.
3. Costing method used when there is mass production through continuous
standardized processes.
4. Production is undertaken more for stocks than based on special orders.
5. Cost accumulation is by departments.
6. Cost accumulation is by products or specified in production orders.
7. Cost computation is upon completion of the manufacturing processes.
8. Cost accumulation is using the cost of production report.
9. Production cost are accumulated in a job order cost sheet.
10.Each job is considered an accounting unit.
III. ESSAY
1. Various parties interested in the affairs of business firms want to get

some information when they read the firm’s financial statements. What
are some of these information?
2. Cite some differences between management accounting (MA) and
Financial Accounting (FA) in terms of the following:
a. Users of reports c. use of projected data
b. Accounting principles d. source of data
3. Responsibility accounting is individual oriented. Explain.
IV. Identification
1. Production volume in terms of finished units.

2. A report where cost accumulation is done under process costing.
3. Where production cost per job are accumulated.
4. The main internal uses of financial statements.
5. The establishment of an individual accountability based on his scope of
authority.
6. An organizational unit with a head responsible for its operations.
7. It is partly fixed and variable.
8. It benefits future periods and is therefore considered an asset.
9. The difference between actual and budgeted results.
10.An accounting system in which operations of the business are broken into
cost, profit or investment centers.
V. True or False.
1. In performing the planning function, the manager see to it that operations

are carried out in the best possible way.
2. Planning and controlling have one thing in common – they both involve
decision-making.
3. Only quantitative information is needed by management to carry out its
decision-making function.
4. Management accounting covers a much broader scope for it goes beyond
the boundaries of traditional accounting.
5. The planning and controlling functions of management are interrelated
for planning is undertaken to effect control and control can be more
effected if there is planning.
6. From the point of view of a department head, his own salary is non-
controllable.
7. Contribution to absorption is non-controllable costs and to profit is equal
to revenue realized minus controllable costs.
8. Controllable costs are those over which the head of a responsibility center
exercise significant influence.
9. Financial statement have their limitations and of these is that not all
relevant data, about a company can be discerned therefrom.
10.Industry standards tend to place the performance of a company in a more
meaningful perspective.
VI. Indicate the type of product costing used in the following products.
(Job order or Process)
1. Chemicals 6. tables
2. TV 7. textiles
3. Salt & Sugar 8. flour
4. Minola oil 9. cement
5. Canned goods 10. Beauty products
Problems
1. Salam Corp. uses process costing for its sole product. From the following
data, compute the equivalent units of production assuming FIFO and
average costing.
In process, Jan.1 - 2 000 units, ¼ done

Placed in process - 15 000 units
In process, Jan.31 - 1 000 units, 2/3 done
2. Given the following production costs, compute the cost per unit in each
department and cost per completed unit. (Use the equivalent units in
problem 1 – FIFO and average).
Department 1 Department 2
Materials P 100 000 P 60 000

Labor 40 000 20 000
Factory overhead
(based on direct labor cost) 40% 25%
3. Assume the following cost data for Problem 1 (FIFO and average)
Cost of in process Jan.1 -P 3 400
Factory costs for January:

Materials - 35 000
Labor - 23 000
Factory overhead - 15 000
Determine the following:
a. Total cost to be accounted for
b. Schedule of costs of goods manufactured
c. Unit cost for January
4. Daniel owns two business. The following data are given:
Drug Store Department Store
Net sales P 105 000 P 67 000

Cost of sales 100 000 60
000
Operating expenses 39 500 36 500
Which business earns more income?

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ACT 102

I. Determine whether the ff. items are controllable or non-controllable

1. Depreciation of fixed assets being used in the department.

1. Cost computation is at regular intervals usually on a monthly basis.

1. Various parties interested in the affairs of business firms want to get

1. Production volume in terms of finished units.

1. In performing the planning function, the manager see to it that operations

In process, Jan.1 - 2 000 units, ¼ done

Materials P 100 000 P 60 000

Factory costs for January:

4. Daniel owns two business. The following data are given:

Drug Store Department Store

Net sales P 105 000 P 67 000

Which business earns more income?

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