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Handout No. 2202 B Cost Accounting and Control

The document provides accounting data for Karsten Corporation including sales, inventory amounts, expenses and other financial details. It includes multiple sets of financial data and questions related to calculating costs, income and other accounting figures based on the provided data.
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0% found this document useful (0 votes)
355 views

Handout No. 2202 B Cost Accounting and Control

The document provides accounting data for Karsten Corporation including sales, inventory amounts, expenses and other financial details. It includes multiple sets of financial data and questions related to calculating costs, income and other accounting figures based on the provided data.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Additional Data:

Sales revenue ............................................. P102,000 Use the following to answer questions 79-82:
Direct labor costs ....................................... P10,000
Manufacturing overhead costs .................. P12,000 The following data (in thousands of pesos) have been taken from the accounting records of Karsten
Selling expenses ........................................ P14,000 Corporation for the just completed year.
Administrative expenses ........................... P16,000
Sales ...................................................................... P990
Cost of goods manufactured ...................... P40,000
Raw materials inventory, beginning ..................... P70
Raw materials purchases ........................... P10,000
Raw materials inventory, ending ........................... P30
73. The ending raw materials inventory was: Purchases of raw materials .................................... P100
a. P11,000 b. P23,000 c. P10,000 d. P12,000 Direct labor ............................................................ P200
74. If the net operating income was P40,000, then the beginning finished goods inventory was: Manufacturing overhead ....................................... P160
a. P22,000 b. P9,000 c. P42,000 d. P1,000 Administrative expenses ....................................... P180
Selling expenses .................................................... P150
Use the following to answer questions 74-75: Work in process inventory, beginning .................. P40
Work in process inventory, ending ....................... P70
The following data (in thousands of pesos) have been taken from the accounting records of Karsen Corporation
for the just completed year. Finished goods inventory, beginning .................... P150
Finished goods inventory, ending ......................... P130
Sales ...................................................................... P930
Raw materials inventory, beginning ..................... P70 Use these data to answer the following series of questions.
Raw materials inventory, ending ........................... P40
79. The cost of the raw materials used in production during the year (in thousands of pesos) was:
Purchases of raw materials .................................... P190
a. P130 b. P170 c. P140 d. P60
Direct labor ............................................................ P150 80. The cost of goods manufactured (finished) for the year (in thousands of pesos) was:
Manufacturing overhead ....................................... P210 a. P530 b. P540 c. P470 d. P570
Administrative expenses ....................................... P90 81. The cost of goods sold for the year (in thousands of pesos) was:
Selling expenses .................................................... P120 a. P490 b. P450 c. P620 d. P600
Work in process inventory, beginning .................. P80 82. The net operating income for the year (in thousands of pesos) was:
Work in process inventory, ending ....................... P70 a. P170 b. P140 c. P500 d. P200
Finished goods inventory, beginning .................... P90
Finished goods inventory, ending ......................... P140 Use the following to answer questions 83-86:

Use these data to answer the following series of questions. The following data (in thousands of pesos) have been taken from the accounting records of Karstone
Corporation for the just completed year.
75. The cost of the raw materials used in production during the year (in thousands of pesos) was:
a. P230 b. P220 c. P160 d. P260 Sales ......................................................................... P880
76. The cost of goods manufactured (finished) for the year (in thousands of pesos) was: Raw materials inventory, beginning ........................ P20
a. P590 b. P650 c. P660 d. P570 Raw materials inventory, ending .............................. P30
77. The cost of goods sold for the year (in thousands of pesos) was: Purchases of raw materials ....................................... P150
a. P680 b. P540 c. P640 d. P730 Direct labor ............................................................... P180
78. The net operating income for the year (in thousands of pesos) was: Manufacturing overhead .......................................... P230
a. P180 b. P170 c. P390 d. P190 Administrative expenses .......................................... P100
Selling expenses ....................................................... P130
Work in process inventory, beginning ..................... P80 Use the following to answer questions 91-92:
Work in process inventory, ending .......................... P30
Finished goods inventory, beginning ....................... P120 The manufacturing operations of Jones Company had the following inventory balances for the month of March:
Finished goods inventory, ending ............................ P100
Inventories March 1 March 31
Use these data to answer the following series of questions. Raw materials .................... P12,000 P14,000
Work in process ................. P8,000 P9,000
83. The cost of the raw materials used in production during the year (in thousands of pesos) was: Finished goods .................. P32,000 P25,000
a. P180 b. P140 c. P160 d. P170
84. The cost of goods manufactured (finished) for the year (in thousands of pesos) was: 91. If the company purchased P20,000 of raw materials during March, what was the cost of raw materials
a. P580 b. P600 c. P500 d. P630 used in production?
85. The cost of goods sold for the year (in thousands of pesos) was: a. P24,000 b. P22,000 c. P32,000 d. P18,000
a. P620 b. P580 c. P720 d. P700 92. If the company transferred P40,000 of completed goods from work in process to finished goods during
86. The net operating income for the year (in thousands of pesos) was: March, what was the amount of the cost of goods sold?
a. P260 b. P30 c. P90 d. (P30) a. P47,000 b. P40,000 c. P33,000 d. P44,000

Use the following to answer questions 87-88: Use the following to answer questions 93-94:

The manufacturing operations of QC Company had the following inventory balances for the month of March: At a sales volume of 30,000 units, Carne Company's total fixed costs are P30,000 and total variable costs are
P45,000. The relevant range is 20,000 to 40,000 units.
Inventories March 1 March 31
Raw materials .................... P10,000 P12,000 93. If Carne Company were to sell 32,000 units, the total expected cost would be:
Work in process ................. P6,000 P7,000 a. P75,000 b. P78,000 c. P80,000 d. P77,000
Finished goods .................. P30,000 P22,000 94. If Carne Company were to sell 40,000 units, the total expected cost per unit would be:
a. P2.50 b. P2.25 c. P2.13 d. P1.88
87. If the company purchased P18,000 of raw materials during March, what was the cost of raw materials
used in production? Use the following to answer questions 95-98:
a. P16,000 b. P20,000 c. P41,000 d. P19,000
88. If the company transferred P38,000 of completed goods from work in process to finished goods during Marrell is employed on the assembly line of a manufacturing company where she assembles a component part
March, what was the amount of the cost of goods sold? for one of the company's products. She is paid P16 per hour for regular time and time and a half for all work in
a. P38,000 b. P43,000 c. P30,000 d. P46,000 excess of 40 hours per week.

Use the following to answer questions 89-90: 95. Marrell works 45 hours during a week in which there was no idle time. The allocation of Marrell's wages
for the week as between direct labor cost and manufacturing overhead cost would be:
Servix, Inc., produces water pumps. Each water pump contains a small valve that costs P5. During May, 600
valves were drawn from the supply room and installed in water pumps in the production process. Eighty Manufacturing
percent of these units were completed and transferred into finished goods warehouses. Of the units completed, Direct Labor Overhead
thirty percent were still unsold at the end of the month. There were no beginning inventories. a. P760 P0
b. P720 P40
89. The cost of valves in work in process at the end of May would be:
c. P640 P80
a. P2,400 b. P3,000 c. P600 d. P720
90. The cost of valves in cost of goods sold for May would be: d. P610 P40
a. P1,680 b. P2,100 c. P900 d. P720
96. Marrell works 50 hours in a given week but is idle for 4 hours during the week due to equipment Warranty repairs and replacements ................................ P12,000
breakdowns. The allocation of Marrell's wages for the week as between direct labor cost and Net cost of scrap ............................................................. P53,000
manufacturing overhead cost would be: Test and inspection of incoming materials ..................... P23,000
Technical support provided to suppliers ........................ P71,000
Manufacturing
Overhead Disposal of defective products ....................................... P94,000
Direct Labor
Quality data gathering, analysis, and reporting .............. P47,000
a. P816 P64
Liability arising from defective products ....................... P75,000
b. P800 P80
Depreciation of test equipment ...................................... P22,000
c. P736 P144
99. What would be the total prevention cost appearing on the quality cost report?
d. P640 P160 a. P118,000 b. P93,000 c. P76,000 d. P59,000
100. What would be the total appraisal cost appearing on the quality cost report?
97. Marrell's employer offers fringe benefits that cost the company P4 for each hour of employee time a. P45,000 b. P52,000 c. P74,000 d. P76,000
(either regular or overtime). During a given week, Marrell works 48 hours but is idle for 3 hours due to 101. What would be the total internal failure cost appearing on the quality cost report?
material shortages. The company treats all fringe benefits as part of manufacturing overhead. The a. P106,000 b. P147,000 c. P75,000 d. P128,000
allocation of Marrell's wages for the week between the direct labor cost and manufacturing overhead 102. What would be the total external failure cost appearing on the quality cost report?
would be: a. P426,000 b. P234,000 c. P106,000 d. P87,000
Manufacturing Use the following to answer questions 103-106:
Direct Labor Overhead
a. P960 P64 Ealsy Company's quality cost report is to be based on the following data:
b. P768 P256
c. P720 P304 Maintenance of test equipment ...................................... P95,000
d. P640 P320 Cost of field servicing and handling complaints ............ P17,000
Statistical process control activities ............................... P77,000
98. Marrell's employer offers fringe benefits that cost the company P4 for each hour of employee time Net cost of scrap ............................................................. P62,000
(either regular or overtime). During a given week, Marrell works 48 hours but is idle for 3 hours due to Downtime caused by quality problems .......................... P23,000
material shortages. The company treats all fringe benefits relating to direct labor as added direct labor Technical support provided to suppliers ........................ P93,000
cost. The allocation of Marrell's wages for the week between direct labor cost and manufacturing Depreciation of test equipment ...................................... P81,000
overhead would be:
Supplies used in testing and inspection .......................... P33,000
Manufacturing Warranty repairs and replacements ................................ P24,000
Direct Labor Overhead
103. What would be the total prevention cost appearing on the quality cost report?
a. P832 P128
a. P172,000 b. P170,000 c. P174,000 d. P94,000
b. P900 P124 104. What would be the total appraisal cost appearing on the quality cost report?
c. P912 P112 a. P114,000 b. P95,000 c. P128,000 d. P209,000
d. P960 P64 105. What would be the total internal failure cost appearing on the quality cost report?
a. P85,000 b. P143,000 c. P40,000 d. P86,000
Use the following to answer questions 99-102: 106. What would be the total external failure cost appearing on the quality cost report?
a. P41,000 b. P505,000 c. P126,000 d. P40,000
Eakle Company's quality cost report is to be based on the following data: Use the following to answer questions 107-110
Eames Company's quality cost report is to be based on the following data:
Supervision of testing and inspection activities ............. P29,000
Technical support provided to suppliers ......................... P20,000 Use the following to answer questions 115-118:
Test and inspection of in-process goods ......................... P67,000
Depreciation of test equipment ....................................... P68,000 Fadden Company's quality cost report is to be based on the following data:
Quality data gathering, analysis, and reporting ............... P46,000
Statistical process control activities ................................ P97,000
Warranty repairs and replacements ................................. P97,000
Depreciation of test equipment ....................................... P87,000
Debugging software errors .............................................. P22,000
Supplies used in testing and inspection ........................... P48,000
Downtime caused by quality problems ........................... P95,000
Re-entering data because of keying errors ...................... P12,000
Returns arising from quality problems ............................ P12,000
Debugging software errors .............................................. P73,000
Supervision of testing and inspection activities. ............. P24,000
Quality circles ................................................................. P84,000
107. What would be the total prevention cost appearing on the quality cost report? Net cost of spoilage ......................................................... P85,000
a. P44,000 b. P66,000 c. P32,000 d. P113,000 Returns arising from quality problems ............................ P28,000
108. What would be the total appraisal cost appearing on the quality cost report? Cost of field servicing and handling complaints ............. P65,000
a. P163,000 b. P135,000 c. P159,000 d. P92,000
109. What would be the total internal failure cost appearing on the quality cost report? 115. What would be the total prevention cost appearing on the quality cost report?
a. P162,000 b. P34,000 c. P117,000 d. P192,000 a. P184,000 b. P125,000 c. P132,000 d. P181,000
110. What would be the total external failure cost appearing on the quality cost report? 116. What would be the total appraisal cost appearing on the quality cost report?
a. P226,000 b. P451,000 c. P109,000 d. P34,000 a. P133,000 b. P135,000 c.. P99,000 d. P316,000
117. What would be the total internal failure cost appearing on the quality cost report?
Use the following to answer questions 111-114: a. P150,000 b. P170,000 c. P101,000 d. P133,000
118. What would be the total external failure cost appearing on the quality cost report?
Factoria Company's quality cost report is to be based on the following data: a. P138,000 b. P93,000 c. P263,000 d. P579,000

Disposal of defective products ........................................ P41,000 Use the following to answer questions 1190122:
Statistical process control activities ................................ P29,000
Test and inspection of in-process goods ......................... P65,000 Fado Company's quality cost report is to be based on the following data:
Net cost of spoilage ......................................................... P23,000
Net cost of scrap ............................................................. P18,000
Test and inspection of incoming materials ...................... P22,000
Quality circles ................................................................ P84,000
Warranty repairs and replacements ................................. P14,000
Depreciation of test equipment ...................................... P32,000
Downtime caused by quality problems ........................... P56,000
Returns arising from quality problems ........................... P59,000
Quality training ............................................................... P42,000
Systems development ..................................................... P45,000
Product recalls ................................................................. P32,000
Supplies used in testing and inspection .......................... P68,000
111. What would be the total prevention cost appearing on the quality cost report? Product recalls ................................................................ P34,000
a. P71,000 b. P51,000 c. P107,000 d. P43,000 Disposal of defective products ....................................... P62,000
112. What would be the total appraisal cost appearing on the quality cost report? Debugging software errors ............................................. P56,000
a. P63,000 b. P87,000 c. P88,000 d. P158,000
113. What would be the total internal failure cost appearing on the quality cost report? 119. What would be the total prevention cost appearing on the quality cost report?
a. P120,000 b. P88,000 c. P70,000 d. P55,000 a. P129,000 b. P116,000 c. P143,000 d. P113,000
114. What would be the total external failure cost appearing on the quality cost report? 120. What would be the total appraisal cost appearing on the quality cost report?
a. P88,000 b. P166,000 c. P324,000 d. P46,000 a. P100,000 b. P124,000 c. P229,000 d. P50,000
121. What would be the total internal failure cost appearing on the quality cost report? Finished Goods .............................. XXX
a. P121,000 b. P90,000 c. P124,000 d. P136,000 Cost of Goods Sold ........................ XXX
122. What would be the total external failure cost appearing on the quality cost report? 128. Which of the following entries would record correctly the monthly salaries earned by the top management
a. P458,000 b. P96,000 c. P93,000 d. P229,000 of a manufacturing company?
123. Which of the following industries would be most likely to use a process costing system?
a. Ship builder b. Movie studio c. Oil refinery d. Hospital a. Manufacturing Overhead ........................... XXX
124. A process cost system is employed in those situations where: Salaries and Wages Payable ............. XXX
a. many different products, jobs, or batches of production are being produced each period. b. Salaries Expense ........................................ XXX
b. where manufacturing involves a single, homogeneous product that flows evenly through the Salaries and Wages Payable ............. XXX
production process on a continuous basis. c. Work in Process ......................................... XXX
c. a service is performed such as in a law firm or an accounting firm. Salaries and Wages Payable ............. XXX
d. full or absorption cost approach is not employed. d. Salaries and Wages Payable ....................... XXX
125. Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In Salaries Expense ............................... XXX
computing the predetermined overhead rate for last year, the company misclassified a portion of direct 129. The journal entry to record applying overhead during the production process is:
labor cost as indirect labor. The effect of this misclassification will be to:
a. understate the predetermined overhead rate. a. Manufacturing Overhead .................................... XXX
b. overstate the predetermined overhead rate. Work In Process ......................................... XXX
c. have no effect on the predetermined overhead rate. b. Finished Goods ................................................... XXX
d. cannot be determined from the information given. Manufacturing Overhead ........................... XXX
126. Which of the following entries would record correctly the application of overhead cost? c. Manufacturing Overhead .................................... XXX
A) Work in Process .................................. XXX Finished Goods .......................................... XXX
Accounts Payable ...................... XXX d. Work In Process .................................................. XXX
B) Manufacturing Overhead .................... XXX Manufacturing Overhead ........................... XXX
Accounts Payable ...................... XXX 130. When manufacturing overhead is applied to production, it is added to:
C) Manufacturing Overhead .................... XXX a. the Cost of Goods Sold account. b. the Raw Materials account.
Work in Process ......................... XXX b. the Work in Process account. d. the Finished Goods inventory account.
131. Which of the following statements is true?
D) Work in Process .................................. XXX
I. Overhead application may be made slowly as a job is worked on.
Manufacturing Overhead ........... XXX
II. Overhead application may be made in a single application at the time of completion of the job.
127. The operations of Kalispell Company resulted in overapplied overhead for the month just completed.
III. Overhead application should be made to any job not completed at year-end in order to properly
Which of the following journal entries can be correct if Kalispell allocates under- or overapplied overhead
value the work in process inventory.
among accounts?
a. Only statement I is true. b. Only statement II is true.
c. Both statements I and II are true. d. Statements I, II, and III are all true.
A) Cost of Goods Sold ................................. XXX
132. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents:
Manufacturing Overhead ............... XXX a. the amount of cost charged to Work in Process during the period.
B) Manufacturing Overhead ........................ XXX b. the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period.
Cost of Goods Sold ........................ XXX c. the amount of cost placed into production during the period.
C) Work in Process ...................................... XXX d. the amount of cost of goods completed during the current year whether they were started before
Finished Goods ....................................... XXX or during the current year.
Cost of Goods Sold ........................ XXX 132. Under a job-order costing system, the peso amount transferred from Work in Process to Finished Goods is
the sum of the costs charged to all jobs:
Manufacturing Overhead ............... XXX
a. started in process during the period. b. in process during the period.
D) Manufacturing Overhead ........................ XXX c. completed and sold during the period. d. completed during the period.
Work in Process ............................. XXX
133. If a company applies overhead to production on the basis of a predetermined rate, a debit balance in the
Manufacturing Overhead account at the end of the period means that: The total manufacturing costs associated with Job 123 should be:
a. actual overhead cost was greater than the amount charged to production. a. P135,000
b. actual overhead cost was less than the amount of direct labor cost. b. P180,000
c. more overhead cost has been charged to production than has been charged to finished goods c. P195,000
during the period. d. P240,000
d. actual overhead cost was less than the amount charged to production. 139. Fisher Company uses a predetermined overhead rate based on direct labor cost to apply manufacturing
134. Overapplied overhead means that: overhead to jobs. The following information about Fisher Company's Work in Process inventory account
a. the applied overhead cost was less than the actual overhead cost. has been provided for the month of May:
b. the applied overhead cost was greater than the actual overhead cost.
c. the estimated overhead cost was less than the actual overhead cost. May 1 balance ........................................... P26,000
d. the estimated overhead cost was less than the applied overhead cost. Debits during May:
135. A job order cost system uses a predetermined overhead rate based on estimated activity and estimated Direct Materials ...................................... P40,000
manufacturing overhead cost. At the end of the year, underapplied overhead might be explained by Direct Labor ........................................... P50,000
which of the following situations? Manufacturing Overhead ........................ P37,500
During the month, Fisher Company's Work in Process inventory account was credited for P120,500,
Actual activity Actual manufacturing overhead costs which represented the Cost of Goods Manufactured for the month. Only one job remained in process
A) Greater than estimated Greater than estimated on May 31; this job had been charged with P9,600 of applied overhead cost. The amount of direct
B) Greater than estimated Less than estimated materials cost in the unfinished job would be:
C) Less than estimated Greater than estimated a. P10,600 b. P16,700 c. P12,800 d. P23,400
D) Less than estimated Less than estimated 140. At the beginning of the year, manufacturing overhead for the year was estimated to be P477,590. At the
end of the year, actual direct labor-hours for the year were 29,000 hours, the actual manufacturing
overhead for the year was P472,590, and manufacturing overhead for the year was overapplied by
136. Departmental overhead rates are generally preferred to plant-wide overhead rates when:
P110. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-
a. the activities of the various departments in the plant are not homogeneous.
hours at the beginning of the year used in the predetermined overhead rate must have been:
b. the activities of the various departments in the plant are homogeneous.
a. 29,300 direct labor-hours c. 28,987 direct labor-hours
c. most of the overhead costs are fixed.
b. 28,993 direct labor-hours d. 29,000 direct labor-hours
d. all departments in the plant are heavily automated.
141. At the beginning of the year, manufacturing overhead for the year was estimated to be P670,700. At the
137. The Work in Process inventory account of a manufacturing company shows a balance of P18,000 at the
end of the year, actual direct labor-hours for the year were 36,200 hours, the actual manufacturing
end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of P6,000
overhead for the year was P665,700, and manufacturing overhead for the year was overapplied by
and P3,000 for materials, and charges of P4,000 and P2,000 for direct labor. From this information, it
P22,100. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct
appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs,
labor-hours at the beginning of the year used in the predetermined overhead rate must have been:
of:
a. 35,037 direct labor-hours
a. 50%
b. 35,300 direct labor-hours
b. 200%
c. 36,200 direct labor-hours
c. 300%
d. 33,874 direct labor-hours
d. 20%
142. At the beginning of the year, manufacturing overhead for the year was estimated to be P670,530. At the
138. Blackwood Co. uses a predetermined overhead rate based on direct labor cost to apply manufacturing
end of the year, actual direct labor-hours for the year were 29,400 hours, the actual manufacturing
overhead to jobs. The predetermined overhead rates for the year are 200% for Department A and 50% for
overhead for the year was P665,530, and manufacturing overhead for the year was underapplied by
Department B. Job 123, started and completed during the year, was charged with the following costs:
P27,550. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct
labor-hours at the beginning of the year used in the predetermined overhead rate must have been:
Dept. A Dept. B
a. 30,900 direct labor-hours
Direct materials ............................. P25,000 P5,000
b. 29,400 direct labor-hours
Direct labor .................................... ? P30,000
c. 30,670 direct labor-hours
Manufacturing overhead ................ P40,000 ?
d. 31,939 direct labor-hours 148. Crick Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year,
143. Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the the estimated direct labor-hours were 14,400 hours and the total estimated manufacturing overhead was
year, the estimated direct labor-hours were 17,500 hours. At the end of the year, actual direct labor- P355,680. At the end of the year, actual direct labor-hours for the year were 15,200 hours and the actual
hours for the year were 16,000 hours, the actual manufacturing overhead for the year was P233,000, manufacturing overhead for the year was P350,680. Overhead at the end of the year was:
and manufacturing overhead for the year was underapplied by P15,400. The estimated manufacturing a. P24,760 underapplied
overhead at the beginning of the year used in the predetermined overhead rate must have been: b. P24,760 overapplied
a. P249,375 c. P19,760 underapplied
b. P217,600 d. P19,760 overapplied
c. P228,000 149. Dagger Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the
d. P238,000 year, the total estimated manufacturing overhead was P423,870. At the end of the year, actual direct
144. Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the labor-hours for the year were 19,400 hours, manufacturing overhead for the year was underapplied by
year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct labor-hours P5,650, and the actual manufacturing overhead was P418,870. The predetermined overhead rate for the
for the year were 9,700 hours, the actual manufacturing overhead for the year was P143,350, and year must have been closest to:
manufacturing overhead for the year was underapplied by P18,220. The estimated manufacturing a. P21.59 b. P20.76 c. P21.30 d. P21.85
overhead at the beginning of the year used in the predetermined overhead rate must have been: 150. Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year,
a. P164,023 the total estimated manufacturing overhead was P364,140. At the end of the year, actual direct labor-
b. P125,130 hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by P8,060,
c. P148,350 and the actual manufacturing overhead was P359,140. The predetermined overhead rate for the year must
d. P138,350 have been closest to:
145. Braaten Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the a. P15.43 b. P15.30 c. P15.17 d. P14.96
year, the estimated direct labor-hours were 14,100 hours. At the end of the year, actual direct labor-hours
for the year were 13,500 hours, the actual manufacturing overhead for the year was P291,100, and 151. Dafoe Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the
manufacturing overhead for the year was underapplied by P7,600. The estimated manufacturing overhead year, the total estimated manufacturing overhead was P221,100. At the end of the year, actual direct
at the beginning of the year used in the predetermined overhead rate must have been: labor-hours for the year were 14,400 hours, manufacturing overhead for the year was overapplied by
a. P286,100 P21,500, and the actual manufacturing overhead was P216,100. The predetermined overhead rate for
b. P296,100 the year must have been closest to:
c. P298,816 a. P15.01 b. P17.73 c. P15.35 d. P16.50
d. P283,500 152. Juanita Corporation uses a job-order cost system and applies overhead on the basis of direct labor cost.
146. Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, At the end of October, Juanita had one job still in process. The job cost sheet for this job contained the
the estimated direct labor-hours were 17,900 hours and the total estimated manufacturing overhead was following information:
P341,890. At the end of the year, actual direct labor-hours for the year were 16,700 hours and the actual
manufacturing overhead for the year was P336,890. Overhead at the end of the year was: Direct materials ........................................... P480
a. P22,920 underapplied Direct labor .................................................. P150
b. P17,920 overapplied Manufacturing overhead applied ................. P600
c. P17,920 underapplied
d. P22,920 overapplied An additional P100 of labor was needed in November to complete this job. For this job, how much
147. Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, should Juanita have transferred to finished goods inventory in November when it was completed?
the estimated direct labor-hours were 21,800 hours and the total estimated manufacturing overhead was a. P1,330 b. P500 c. P1,230 d. P1,730
P497,040. At the end of the year, actual direct labor-hours for the year were 21,500 hours and the actual 153. Wall Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing
manufacturing overhead for the year was P492,040. Overhead at the end of the year was: overhead to jobs. The company's estimated costs for the next year are:
a. P6,840 overapplied Direct materials ..................................................... P3,000
b. P6,840 underapplied Direct labor ............................................................ P20,000
c. P1,840 underapplied Depreciation on factory equipment ....................... P6,000
d. P1,840 overapplied Rent on factory ...................................................... P12,000
Sales salaries .......................................................... P29,000 Actual manufacturing overhead cost incurred ................. P38,000
Factory utilities ...................................................... P15,000 Actual direct labor hours worked .................................... 18,500
Indirect labor ......................................................... P6,000 The under- or overapplied overhead for the year was:
a. P1,000 underapplied
It is estimated that 10,000 direct labor hours will be worked during the year. The predetermined b. P1,000 overapplied
overhead rate will be: c. P3,000 underapplied
a. P3.90 b. P5.90 c. P6.80 d. P9.10 d. P3,000 overapplied
154. The following information relates to Spock Manufacturing Company: 158. Sargent Company applies overhead cost to jobs on the basis of 80 percent of direct labor cost. If Job 210
shows P10,000 of manufacturing overhead cost applied, how much was the direct labor cost on the job?
Total estimated manufacturing overhead at beginning of year .. P620,000 a. P12,500 b. P11,000 c. P8,000 d. P10,000
Total manufacturing overhead applied to production during 159. In the Vasquez Company, any over- or underapplied overhead is closed out to Cost of Goods Sold. Last
the year .................................................................................... P625,000 year, the company incurred P27,000 in actual manufacturing overhead cost, and applied P29,000 of
Total manufacturing overhead incurred during the year ............ P618,000 overhead cost to jobs. The beginning and ending balances of Finished Goods were equal, and the
Company's Cost of Goods Manufactured for the year totaled P71,000. Given this information, Cost of
The company closes out the balance in the Manufacturing Overhead to Cost of Goods Sold at the Goods Sold, after adjustment for any over- or underapplied overhead, for the year must have been:
end of the year. In the journal entry to close out the balance, the company would: a. P98,000 b. P73,000 c. P71,000 d. P69,000
a. debit cost of goods sold for P2,000 160. In reviewing the accounting records at year-end, Garff Company's accountant has determined that the
b. credit cost of goods sold for P2,000 following items and amounts were debited to the Manufacturing Overhead account during the year:
c. credit cost of goods sold for P7,000
d. debit cost of goods sold for P7,000 Factory supervisor’s salary ............................................. P8,000
155. Rio Manufacturing Company uses a job order cost system. At the beginning of February, Rio only had one Sales commissions .......................................................... P7,000
job in process, Job #594. The direct costs assigned to this job at that time were P800 of materials and Vacation pay for the materials storeroom clerk ............. P2,000
P650 of labor. Job #594 was finished during February incurring additional direct costs of P120 for Including the items listed above, the debits to the Manufacturing Overhead account totaled P245,000 for the
materials and P370 for labor. Job #595 was started and finished during February. The direct costs year. Credits to the account totaled P240,000 for the year. Based on this information, if all entries had been
assigned to this job were P310 for materials and P190 for labor. Job #596 was started during February but made correctly during the year the Manufacturing Overhead account would have been:
was not finished by the end of the month. The direct costs assigned to this job were P740 for materials and a. overapplied by P4,000
P300 for labor. Rio applies manufacturing overhead to its products at a rate of 200% of direct labor cost. b. overapplied by P12,000
What is Rio's cost of goods manufactured for February? c. underapplied by P5,000
a. P2,440 b. P3,750 c. P4,860 d. P6,500 d. overapplied by P2,000
156. Serenje Manufacturing Company produces nameplates and uses a job-order cost system. The following 161. Compute the October cost of direct materials used if raw material purchases for the month were P30,000
amounts relate to nameplate production for the month of June: and the inventories were as follows:

Work in process inventory, June 1 ...................................................... P620 Beginning Ending


Cost of materials directly assigned to production during June ........... P1,800 Direct materials ............................. P7,000 P4,000
Cost of labor directly assigned to production during June .................. P1,200 Work in Process ............................. P6,000 P7,500
Cost of nameplates completed during June ......................................... P4,300 Finished goods ............................... P10,000 P12,000
Serenje applies overhead at a predetermined overhead rate of 60% of direct material cost. At the end of June,
only one job was in Work in Process inventory. This job had been charged with P150 of direct material cost. The cost of direct materials used would be:
What is the direct labor cost assigned to this job? a. P31,500 b. P29,500 c. P27,000 d. P33,000
a. P100 b. P160 c. P225 d. P530 162. Hardin Company's manufacturing overhead account showed a P20,000 underapplied overhead balance
157. Dukes Company used a predetermined overhead rate this year of P2 per direct labor hour, based on an on December 31. Other data as of December 31 appear below:
estimate of 20,000 direct labor hours to be worked during the year. Actual costs and activity during the
year were: Cost of Goods Sold.................................................................... P800,000
Overhead applied during the year included in Cost of Goods
Sold ........................................................................................ P200,000 166. The cost of goods manufactured for the year was:
Overhead applied during the year in the ending balances of: a. P190,000 b. P162,000 c. P168,000 d. P135,000
Work in Process inventory ..................................................... P80,000
Use the following to answer the next four (4) questions:
Finished Goods inventory ...................................................... P120,000
At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead would be
P70,000 and the activity level would be 10,000 machine-hours. The level of activity at capacity is 14,000
If the company allocates the underapplied overhead among Cost of Goods Sold and the appropriate
machine-hours. The actual manufacturing overhead for the year was P63,300 and the actual level of activity
inventory accounts based on the amount of overhead applied during the year in the accounts, Cost of
was 10,100 machine-hours.
Goods Sold after allocation will be:
a. P790,000 b. P820,000 c. P810,000 d. P780,000
167. If the company bases its predetermined overhead rate on estimated machine-hours, then its
predetermined overhead rate would have been:
Use the following to answer the next four (4) questions:
a. P6.27 b. P7.00 c. P5.00 d. P6.33
168. If the company bases its predetermined overhead rate on estimated machine-hours, then its overhead for
The accounting records of Omar Company contained the following information for last year:
the year would have been:
a. P12,800 overapplied
Beginning Ending
b. P12,800 underapplied
Direct materials inventory ......................... P9,000 P7,000
c. P7,400 overapplied
Work in process inventory ........................ P17,000 P31,000 d. P7,400 underapplied
Finished goods inventory .......................... P10,000 P15,000 169. If the company bases its predetermined overhead rate on machine-hours at capacity, then its
predetermined overhead rate would have been:
Manufacturing costs incurred a. P6.33 b. P6.27 c. P5.00 d. P7.00
Direct materials used ................................. P72,000 170. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of
Overhead applied ...................................... P24,000 unused capacity reported on the income statement would have been:
a. P700 b. P7,400 c. P6,700 d. P12,800
Direct labor cost (10,000 hours) ................ P80,000
Depreciation .............................................. P10,000 Use the following to answer the next three (3) questions:
Rent ........................................................... P12,000 Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the
Taxes ......................................................... P8,000 following data for its most recent year of operations.
Cost of goods sold ..................................... P157,000*
* Estimated manufacturing overhead ....................... P139,080
Selling and administrative costs incurred Estimated machine-hours ...................................... 3,800
Advertising ................................................ P35,000 Actual manufacturing overhead ............................ P137,000
Rent ........................................................... P20,000 Actual machine-hours ........................................... 3,780
Clerical ...................................................... P25,000
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for
*Does not include over- or underapplied overhead. the purpose of computing the company's predetermined overhead rate for the year.

163. The amount of direct material purchased during the year was: 171. The predetermined overhead rate is closest to:
a. P66,000 b. P70,000 c. P65,000 d. P74,000 a. P36.60 b. P36.41 c. P36.42 d. P36.05
164. The total costs added to Work in Process during the year were: 172. The applied manufacturing overhead for the year is closest to:
a. P206,000 b. P162,000 c. P176,000 d. P182,000 a. P136,269 b. P138,348 c. P136,987 d. P137,630
165. If Omar Company applies overhead to jobs on the basis of direct labor hours and Job 3 took 120 hours, 173. The overhead for the year was:
how much overhead should be applied to that job? a. P732 underapplied b. P1,348 underapplied
a. P960 b. P360 c. P528 d. P288 c. P732 overapplied d. P1,348 overapplied

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