Pre Midterm Exam Answers

3/8/23, 4:47 PM Pre-Midterm Exam: Group 4 AC 1203 - COST ACCOUNTING AND CONTROL
Pre-Midterm Exam
Due Mar 8 at 6pm Points 100 Questions 60
Available Mar 8 at 4:30pm - Mar 8 at 6pm 1 hour and 30 minutes Time Limit None
Instructions
This exam covers Chapter 1, 2, 3 and 7. Budget your time properly as you answer the 60 numbered
items.
Attempt History
Attempt Time Score
LATEST Attempt 1 85 minutes 51 out of 100
Score for this quiz: 51 out of 100

Submitted Mar 6 at 5:59pm
This attempt took 85 minutes.
Question 1 0 / 1 pts
An objection to the use of a factory overhead rate based on direct labor

cost is that:
these items are difficult to measure.
costs of applying this method are excessive.
ou Answered overhead is allocated in relation to units produced by workers.
orrect Answer
a job is charged with more overhead when a highly paid operator works on
the job than when a low-paid operator performs the work.
https://usc.instructure.com/courses/26582/quizzes/174918 1/46
Expense A is a fixed cost; expense B is a variable cost. During the current

year the activity level has increased, but is still within the relevant range.
In terms of cost per unit of activity, we would expect that:
expense B has decreased.
Correct!
expense A has decreased.
expense A has remained unchanged.
expense B has increased.
In a job order costing system,
an average cost per unit within a job cannot be computed.
costs are accumulated by departments and averaged among all jobs.
Correct! overhead is typically assigned to jobs on the basis of cost driver.
standards cannot be used.
Which of the following valuation methods are acceptable in a job order

costing system?
Actual Material Standard Material Actual Labor

Predetermined Overhead
Cost Cost Cost

Cost
a. Yes Yes No
Yes
b. Yes No Yes
No
c. No Yes Yes
Yes
d. Yes Yes Yes

Yes
Correct! D
Shipping expense is P9,000 for 8,000 pounds shipped and P11,250 for
11,000 pounds shipped. Assuming that this activity is within the relevant
range, if the company ships 9,000 pounds, its expected shipping expense
is closest to:
Correct!
P9,750
P9,972
P8,583
P10,125
Moderna Corp. is to submit a bid on the production of 5,500 vases. It is

estimated that the
cost of materials will be P8,500 and the cost of direct labor will be
P12,000. Factory
overhead is applied at 50% of direct labor cost in the Molding Department

and at P7.50
per direct labor hour in the Finishing Department. Of the above direct
labor, it is estimated
that 500 direct labor hours at a cost of P4,000 will be required in

Finishing. Moderna wishes
a markup of 100% of its total production cost. How much is the bid price?
P60,500
orrect Answer P56,500
P28,250
ou Answered
P30,250
Sinovac Corp. has provided the following production and average cost
data for two levels of monthly
production volume. The company produces a single product.
Production Volume 4,000 units 5,000 units
Direct Materials P45.50 per unit P45.50 per

unit
Direct Labor P44.90 per unit P44.90 per

unit
Manufacturing Overhead P131.50 per unit P108.50 per

unit
The best estimate of the total monthly fixed manufacturing cost is:
Correct!
P106.90
P45.50
P16.50
P90.40
Given the cost formula Total Cost = Fixed Cost P17,500 + P4 (activity
level), at what level of activity
will total cost be P42,500?
5,250 units
10,625 units
4,375 units
Correct!
6,250 units
Sling Corp. produces and sells a single product. Data concerning that
product appear below:
Selling price per unit ......................................... P 130
Variable Cost per unit ...................................... P 58.50
Total Fixed Costs ........................................ P195,195
The break-even point is closest to:
1,502
orrect Answer 2,730
ou Answered 3,337
2,523
A credit balance in the Manufacturing Overhead account at the end of the

year means that overhead was underapplied.
True
Correct!
False
In service businesses using job order costing, the hourly rate used to
charge costs to a
job usually includes:
overhead cost only
Correct!
both labor and overhead cost
labor cost only
labor, overhead, and miscellaneous costs
Which of the following documents is used to specify the type and quantity
of materials drawn from the
storeroom, and identifies the job to which the costs of the materials are to
be charged?
Purchase Order
Bill of Materials
ou Answered Job Order Cost Sheet
orrect Answer Material Requisition Slip
Choice of allocation base should be made based on:
the base's activity.
the base's relation to direct labor.
the relative size of the base.
Correct! whether the base actually drives the cost being allocated.
The expense that theoretically is not a correct part of inventory cost is:
Correct! freight-out
inspection costs
accounting costs for materials received
freight-in
When closing overapplied manufacturing overhead to cost of goods sold,

which of the following would
be true?
Net income will decrease.
Work in process will decrease.
Cost of goods sold will increase.
Correct!
Gross margin will increase.
The Work in Process inventory account of a manufacturing company

shows a balance of
P2,400 at the end of an accounting period. The job cost sheets of the two
uncompleted
jobs show charges of P400 and P200 for direct materials, and charges of
P300 and P500
for direct labor. From this information, it appears that the company is
using a predetermined
overhead rate, as a percentage of direct labor costs, of:
240%
80%
Correct!
125%
300%
On December 1, LV Corp. had P21,000 of raw materials on hand. During

the month, the
company purchased an additional P61,000 of raw materials. During

December, P70,000
of raw materials were requisitioned from the storeroom for use in

production. The debits
to the Materials account for the month of December totalled:
P21,000
ou Answered
P82,000
P70,000
Aldo Corp. had P35,000 of raw materials on hand on August 1. During the
month, the
company purchased an additional P66,000 of raw materials. During

August, P81,000 of
materials were requisitioned from the storeroom for use in production.

These materials
included both direct and indirect materials. The indirect materials totaled
P7,000. The
debits to the Work in Process account as a consequence of the

materials transactions in
August totalled:
P-0-
P66,000
ou Answered P81,000
During October, Kramer Inc. transferred P73,000 from Work in Process to

Finished Goods and recorded a
Cost of Goods Sold of P76,000. The journal entries to record these

transactions would include a:
debit to Finished Goods of P76,000.
Correct! credit to Work in Process of P73,000.
credit to Finished Goods of P73,000
credit to Cost of Goods Sold of P76,000
The bill of materials:
informs the purchasing agent of the quantity and kind of materials needed.
Correct!
is the list of material requirements for each step in the production
sequence.
certifies quantities received and reports results of inspection and testing.
contracts for quantities to be delivered.
Jade Inc., a manufacturing company, has provided the following data for
the month of
September. The balance in the Work in Process inventory account was

P21,000 at the
beginning of the month and P24,000 at the end of the month. During the
month, the
company incurred direct materials cost of P69,000 and direct labor cost of
P31,000.
The actual manufacturing overhead cost incurred was P54,000. The

manufacturing
overhead cost applied to Work in Process was P58,000. The cost of

goods manufactured
for September was:
ou Answered P154,000
P158,000
P151,000
Elmera Inc. has provided the following data for the month of March. The
balance in the Finished Goods
inventory account at the beginning of the month was P43,000 and at the
end of the month was P42,000.
The cost of goods manufactured for the month was P221,000. The actual
manufacturing overhead cost
incurred was P45,000 and the manufacturing overhead cost applied to

Work in Process was P49,000. The
adjusted cost of goods sold that would appear on the income statement
for March is:
P222,000
P221,000
Wandrie Inc. has provided the following data for the month of October.
There were no
beginning inventories; consequently, the direct materials, direct labor, and

manufacturing
overhead applied listed below are all for the current month.
Work in Process Finished Goods Inventory Cost of

Goods Sold
Direct Materials P 6,320 P 15,860
P80,080
Direct Labor 5,450 15,250

77,000
Factory Overhead Applied 5,840 10,950

56,210
Manufacturing overhead for the month was overapplied by P3,000. The

company allocates
any underapplied or overapplied overhead among work in process,

finished goods, and cost
of goods sold at the end of the month on the basis of the overhead
applied during the
month in those accounts. The cost of goods sold for October after
allocation of any
underapplied or overapplied overhead for the month is closest to:
P215,600
P216,290
Chaffey Inc. has provided the following data for the month of January.
There were no beginning inventories; consequently, the direct materials,
direct labor, and manufacturing overhead applied listed below are all
for the current month.
Work in Process Finished Goods Inventory

Cost of Goods Sold
Direct Materials P 3,140 P 18,000

P100,080
Direct Labor 1,310 15,000

83,400
Factory Overhead Applied 1,680 8,400

45,920
Manufacturing overhead for the month was underapplied by P7,000. The

company
allocates any underapplied or overapplied overhead among work in

process, finished goods,
and cost of goods sold at the end of the month on the basis of the
overhead applied during
the month in those accounts. The work in process inventory at the end of
January after
allocation of any underapplied or overapplied overhead for the month is

closest to:
P5,920
P5,975
Correct!
P6,340
P6,285
Nola Co. applies manufacturing overhead to jobs using a predetermined

overhead rate of
70% of direct labor cost. Any underapplied or overapplied overhead cost

is closed to Cost
of Goods Sold at the end of the month. During August, the following
transactions were
recorded by the company:
Materials (all direct materials):
Purchased during the month .....................................................

P 30,000
Used in production
................................................................. 31,000
Labor:
Direct labor hours worked during the month ........................

3,000
Direct labor cost incurred

......................................................... P 27,000
Indirect labor cost incurred

........................................................ P 6,000
Manufacturing overhead costs incurred

.............................................. P19,000
Inventories:
Materials (all direct) August 31

................................................. P 8,000
Work in process, August 1

................................................. P 7,600
Work in process, August 31*

................................................. P 15,000
* contains P6,000 of direct labor cost
The amount of direct materials cost in the August 31 Work in Process

inventory account was:
Correct! P4,800
P4,200
P10,200
P9,000
Nola Co. applies manufacturing overhead to jobs using a predetermined

overhead rate of
70% of direct labor cost. Any underapplied or overapplied overhead cost

is closed to Cost
of Goods Sold at the end of the month. During August, the following
transactions were
recorded by the company:
Materials (all direct materials):
Purchased during the month .....................................................

P 30,000
Used in production
................................................................ 31,000
Labor:
Direct labor hours worked during the month ........................

3,000
Direct labor cost incurred

......................................................... P 27,000
Indirect labor cost incurred

........................................................ P 6,000
Manufacturing overhead costs incurred

.............................................. P19,000
Inventories:
Materials (all direct) August 31

................................................. P 8,000
Work in process, August 1

................................................. P 7,600
Work in process, August 31*

................................................. P 15,000
* contains P6,000 of direct labor cost
The entry to dispose of the underapplied or overapplied overhead cost for

the month
would include:
orrect Answer a credit of P100 to the Factory Overhead Control account.
ou Answered a debit of P6,000 to Cost of Goods Sold.
a debit of P6,000 to Factory Overhead Control.
a credit of P100 to Cost of Goods Sold account.
Enzo Co. uses a job-order costing system. The following data were
recorded for June:
WIP, June 1 Costs
Added in June
Job Order # Balance Direct

Materials Direct Labor
235 P 2,500 P 600

P 400
236 1,500 800

1,000
237 1,000 1,200

1,750
238 800 1,500

2,250
Overhead is charged to production at 80% of direct materials cost. Jobs

235, 237, and 238
were completed during June and transferred to finished goods. Jobs 235
and 238 have been
delivered to customers. Cost of Goods Sold for June was:
P10,170
Correct! P9,730
P15,520
P14,640
Enzo Co. uses a job-order costing system. The following data were
recorded for June:
WIP, June 1 Costs
Added in June
Job Order # Balance Direct

Materials Direct Labor
235 P 2,500 P 600

P 400
236 1,500 800

1,000
237 1,000 1,200

1,750
238 800 1,500

2,250
Overhead is charged to production at 80% of direct materials cost. Jobs

235, 237, and
238 were completed during June and transferred to finished goods. Jobs
235 and 238 have
been delivered to customers. Work in Process inventory on June 30

was:
Correct! P3,940
P4,100
P3,300
P9,450
In a job order costing system, the net cost of normal spoilage is equal to:
ou Answered the cost of spoiled work minus estimated spoilage cost.
estimated disposal value plus the cost of spoiled work.
orrect Answer the cost of spoiled work minus the estimated disposal value.
the units of spoiled work times the predetermined overhead rate.
Fulton Co.’s Job 501 for the manufacture of 2,200 units was completed in
August at the unit
cost presented below.
Final inspection of Job 501 disclosed that 200 units were spoiled and
were sold for P 6,000.
Direct materials
………………………………………......................................P 20
Direct labor
……………………………………….........................................… 18
Factory overhead (includes an allowance of P 1 for spoiled

work) 18
P 56
Assume that spoilage loss is charged to all production during August (due
to internal failure).
What would be the unit cost of the good units produced on Job 501?
ou Answered P57.50
orrect Answer P56
P55
P58.60
Fulton Co.’s Job 501 for the manufacture of 2,200 units was completed in
August at the unit cost presented below.
Final inspection of Job 501 disclosed that 200 units were spoiled and
were sold for P 6,000.
Direct materials
………………………………………......................................P 20
Direct labor
……………………………………….........................................… 18
Factory overhead (includes an allowance of P 1 for spoiled

work) 18
P 56
====
Assume that the spoilage loss is attributable to the exacting specifications

of Job 501 and is charged to this
specific job. What would be the unit cost of the good units produced on
Job 501?
P55
P58.60
ou Answered P61.60
orrect Answer P57.50
During May, Monte Co. incurred the following costs on Job 108 for the
manufacture of 200 units:
Original cost accumulation:
Direct Materials …………………………………… P 660
Direct Labor ……………………………………….. 800
Factory Overhead (150% of direct labor) ……… 1,200
P2,660
=====
Direct costs of reworking 10 units:
Direct materials ……………………………………P 100
Direct labor ………………………………………… 160
P 260
======
The rework costs were attributable to the exacting specifications of Job

108, and the full
rework costs were charged to this specific job. What is the cost per
finished unit of
Job 108?
ou Answered P14.60
P13.30
orrect Answer P15.80
P14.00
During May, Monte Co. incurred the following costs on Job 108 for the
manufacture of 200 units:
Original cost accumulation:
Direct Materials …………………………………… P 660
Direct Labor ……………………………………….. 800
Factory Overhead (150% of direct labor) ……… 1,200
P2,660
=====
Direct costs of reworking 10 units:
Direct materials ……………………………………P 100
Direct labor ………………………………………… 160
P 260
======
Assuming that the rework cost were attributable to internal failure or

charged to factory overhead, what is the cost per finished unit of Job 108?
P14.00
P14.60
Correct! P13.30
P15.80
If the year’s overhead costs incurred are P 29,000 and P 25,000 have
been applied to the
jobs, what would be the appropriate entry to close these accounts

(assuming no proration)?
DR. Cost of Goods Sold P 29,000 CR. Applied Factory Overhead P 29,000
DR. Work in process P 29,000 CR. Factory Overhead Control P 29,000
ou Answered
DR. Factory Overhead Control P 25,000 DR. Cost of Goods Sold 4,000
CR. Applied Factory Overhead ……… P 29,000
orrect Answer
DR. Cost of Goods Sold P 4,000 DR. Applied Factory Overhead 25,000
CR. Factory Overhead Control P 29,000
Scrap includes all of the following except:
Correct! partially or fully completed units that are in some way defective
the trimmings remaining after processing materials
defective materials that cannot be used or returned to the vendor
broken parts resulting from employee or machine failures
When spoilage occurs because of some action taken by the customer, the
unrecoverable cost
of the spoilage should be charged to:
Spoiled Goods Inventory
Factory Overhead Control
Applied Factory Overhead
Correct! Work in Process
In highly automated manufacturing firm where direct labor is small relative

to other
production costs and not easily traceable to specific jobs, direct labor
costs may be
charged directly to:
Income Summary
Correct! Factory Overhead Control
Work in Process
Cost of Goods Sold
The purchasing department performs all of the following functions except:
ou Answered
keeps informed concerning sources of supply, prices, and delivery
schedules
prepares and places purchase orders
receives purchase requisitions for materials, supplies, and equipment
orrect Answer compares quantities received with the suppliers' packing list
An example of a nonvolume-related overhead base would be:
machine hours
direct materials cost
direct labor cost
Correct! number of setups
Which of the following statements about job order cost sheets is true?
a. All job order cost sheets serve as the general ledger control account
for Work in process inventory.
b. Job order cost sheets can serve as subsidiary ledger information for
both Work in process
inventory and Finished goods inventory.
c. If material requisition forms are used, job order cost sheets do not
need to be maintained.
d. Job order cost sheets show costs for direct material and direct labor,
but not for factory overhead
since it is an applied amount.
Correct!
b
In a normal cost system, a debit to Work in Process Inventory would not

be made for:
actual direct material
orrect Answer actual overhead.
actual direct labor
ou Answered applied overhead.
Badian Inc. of Cebu Ltd. has decided to institute a pilot ABC project in its
5-person Purchasing
Department. Annual departmental costs are P 473,500. Because finding

the best supplier takes
the majority of effort in the department, most of the costs are allocated to
this area.
ACTIVITY ALLOCATION MEASURE # OF PEOPLE

TOTAL COST
Find best suppliers # of telephone calls 3

P 300,000
Issue purchase orders # of purchase orders

1 100,000
Review receiving reports # of receiving reports

1 73,500
During the year, the purchasing department made 150,000 telephone

calls, issued 10,000
purchase orders, and reviewed 7,000 receiving reports. Many purchase

orders are received in a
single shipment. One product manufactured by Cebu Ltd. required the

following purchasing
department activities: 125 telephone calls, 60 purchase orders and 15

receipts. What amount of
purchasing department cost should be assigned to the product?
P4,500
ou Answered P921.48
P327.55
orrect Answer P1,007.50
Compared to an ABC system, a traditional costing system reports:
either higher or lower unit cost for high-volume products than an ABC
system depending upon the level of fixed costs.
ou Answered
a lower unit cost for high-volume products and a higher unit cost for low-
volume products
orrect Answer
a higher unit cost for high-volume products and a lower unit cost for low-
volume products.
the same unit costs for high- and low-volume products as does an ABC
system.
Q Company uses a normal cost system. The following information is from

its financial records for
the year:
Total manufacturing costs, P2,500,000
Cost of goods manufactured, P2,425,000
Applied overhead, 30% of total manufacturing

costs
Predetermined OH rate, 80% of direct labor cost
Assuming the company’s work in process inventory at January 1 was

75 percent of its
December 31 work in process inventory, what is the carrying value of the

company’s work in
process inventory at December 31?
P100,000
P75,000
Toma Nuptial Bakery makes very elaborate wedding cakes to order. The
company has an activity-
based costing system with three activity cost pools. The activity rate for
the Size-Related activity
cost pool is P1.14 per guest. (The greater the number of guests, the
larger the cake.) The activity
rate for the Complexity-Related cost pool is P31.86 per tier. (Cakes with
more tiers are more
complex.) Finally, the activity rate for the Order-Related activity cost pool
is P59.66 per order.
(Each wedding involves one order for a cake.) The activity rates include
the costs of raw ingredients
such as flour, sugar, eggs, and shortening. The activity rates do not
include the costs of purchased
decorations such as miniature statues and wedding bells, which are

accounted for separately.
Data concerning two recent orders appear below:
Zedian Wedding
Towry Wedding
Number of reception guests 55

172
Number of tiers on the cake 2
3
Cost of purchased decorations for cake P18.55

P27.26
Assuming that the company charges P458.08 for the Towry wedding
cake, what would be the
overall margin on this order?

orrect Answer
P79.50
ou Answered P139.16
P378.58
P106.76
Supplies needed for use in the factory are issued on the. basis of:
orrect Answer material requisition slip
time tickets
ou Answered
job order cost sheet
factory overhead analysis sheets
Which of the following statements concerning job order cost sheet is

incorrect?
ou Answered
The amount of overhead on a job order cost sheet is the applied factory
overhead rather than the actual factory overhead.
orrect Answer It would reveal the selling costs associated with a particular job.
The total costs recorded on a job order cost sheet should also be reflected
in the Work in process account in the general ledger.
It would show the direct materials used on that specific job.
Toma Nuptial Bakery makes very elaborate wedding cakes to order. The
company has an activity-
based costing system with three activity cost pools. The activity rate for
the Size-Related activity
cost pool is P1.14 per guest. (The greater the number of guests, the
larger the cake.) The activity
rate for the Complexity-Related cost pool is P31.86 per tier. (Cakes with
more tiers are more
complex.) Finally, the activity rate for the Order-Related activity cost pool
is P59.66 per order.
(Each wedding involves one order for a cake.) The activity rates include
the costs of raw ingredients
such as flour, sugar, eggs, and shortening. The activity rates do not
include the costs of purchased
decorations such as miniature statues and wedding bells, which are

accounted for separately.
Data concerning two recent orders appear below:
Zedian Wedding
Towry Wedding
Number of reception guests 55

172
Number of tiers on the cake 2
3
Cost of purchased decorations for cake P18.55

P27.26
Assuming that all of the costs listed above are avoidable costs in the
event that an order is turned down, what amount would the company have
to charge for the Zedian wedding cake to just break even?
P247.60
P59.66
Correct!
P204.63
P18.55
Which of the following statements concerning job order costing is

incorrect?
Traditionally, direct labor has been a very popular overhead application

base.
In a service business, indirect costs of providing a service are treated as

overhead and applied in a manner similar to that for factory overhead.
Job order costing is appropriate to both manufacturing and service

businesses.
Correct!
Cost drivers are those items which cause actual overhead to exceed
applied overhead.
With the job order cost system, a credit balance in the Factory Overhead
Control account at the end of an
accounting period would indicate:
Correct!
the presence of overapplied overhead.
that an error in the job order costing system has occurred.
the presence of underapplied overhead.
that the company lost money during the period.
A company has identified the following overhead costs and cost drivers for
the coming year:
OVERHEAD COST DRIVER BUDGETED COST

BUDGETED ACTIVITY LEVEL
Machine setup # of setups P

20,000 200
Inspection # of inspections
P130,000 6,500
Material handling # of material moves P

80,000 8,000
Engineering Engineering hours P 50,000

1,000
Total …………… …………………………….. P280,000
=======
The following information was collected on 3 jobs that were completed

during the year:
Job 101 Job

102 Job 103
Direct materials ………………………… P 5,000 P

12,000 P 8,000
Direct labor ……………………………... P 2,000 P

2,000 P 4,000
Units completed ………………………… 100

50 200
Number of setups ………………………. 1

2 4
Number of inspections …………………. 20

10 30
Number of material moves ……………… 30

10 50
Engineering hours ………………………. 10

50 10
Budgeted direct labor cost was P 100,000 and budgeted direct material
cost was P 280,000.
If the company uses ABC, how much overhead cost should be assigned
to Job 101?
P5,000
ou Answered P5,600
P2,000
the coming year:


20,000 200
P130,000 6,500

80,000 8,000

1,000
Total …………… …………………………….. P280,000
=======

during the year:
Job 101 Job

102 Job 103

12,000 P 8,000
Direct labor ……………………………... P 2,000 P

2,000 P 4,000

50 200

2 4

10 30

10 50

50 10
cost was P 280,000.
If the company uses ABC, compute the cost of each unit of Job
102.
orrect Answer
P340
P440
ou Answered P392
P520
the coming year:


20,000 200
P130,000 6,500

80,000 8,000

1,000
Total …………… …………………………….. P280,000
=======

during the year:
Job 101 Job

102 Job 103

12,000 P 8,000
Direct labor ……………………………... P 2,000 P

2,000 P 4,000

50 200

2 4

10 30

10 50

50 10
cost was P 280,000.
The company prices its products at 140% of cost. If the company uses
ABC, the price of each
unit of Job 103 would be:
P116
ou Answered P140
P100
orrect Answer P98
Uniformly assigning the costs of resources to cost objects when those

resources are actually
used in a non-uniform way is called:
department costing
undercosting
overcosting
Correct!
peanut-butter costing
Grover Co. is a job-order costing firm that uses ABC to apply overhead to
jobs. Grover identified
3 overhead activities and related drivers. Budgeted information for the

year is as follows:
Activity Cost Driver Amount

of Driver
Engineering Designs P120,000 Engineering hours

3,000
Purchasing 80,000 Number of parts

10,000
Other overhead 250,000 Direct labor hours

40,000
Grover worked on four jobs in July. Data are as follows:
Job #60 Job #61 Job #62

Job #63
Balance, 7/1 P32,450 P40,770 P29,090

-
Direct Materials P26,000 P37,900 P25,350

P11,000
Direct labor P40,000 P38,500 P43,000

P20,900
Engineering hours 20 10 15
100
Number of parts 150 180 200

500
Direct labor hours 2,500 2,400 2,600

1,200
By July 31, Jobs 60 & 62 were completed and sold. The remaining jobs
were in process. The
balance in Work in Process Inventory on July 31 is:
P231,965
P47,400
Product cost cross-subsidization means that:
a. when one product is overcosted, it results in more than one other

product being overcosted.
b. when a company undercosts more than one of its products, it will

overcost more than one of
its other products.
c. when a company undercosts one of its products, it will overcost at least

one of its other products.
d. when one product is overcosted, it results in all other products being

overcosted.
Correct! c
ABC system differs from traditional costing system in the treatment of:
a. direct labor costs
b. direct material costs
c. prime costs
d. indirect costs
Correct!
d
Extracts from cost information of Herbal Corp.:
Simple L3
Complex
Pack
1.7 Pack Total
Setup cost allocated using direct labor hours P19,250

P5,750 P25,000
Setup cost allocated using setup-hours P13,400

P11,600 P25,000
Assuming that setup-hours is considered a more effective cost driver for

allocating setup costs
than direct labor hours. Which of the following statements is true of

Herbal's setup costs under
traditional costing?
a. L3 pack is undercosted by P5,850.
b. 1.7 pack is undercosted by P5,750.
c. L3 pack is overcosted by P5,850.
d. L7 pack is overcosted by P5,850.
Correct!
c
The fundamental cost objects of ABC are:
ou Answered cost drivers
services
orrect Answer activities
products
Which of the following characteristics would be an indicator that a

company would benefit from
switching to ABC?
a. Only one homogeneous product is produced on a continuous basis.
b. The existing cost system is reliable and predictable.
c. Overhead costs are high and increasing with no apparent reason.
d. The costs of implementing ABC outweigh the benefits.
Correct! c
Quiz Score: 51 out of 100

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3/8/23, 4:47 PM Pre-Midterm Exam: Group 4 AC 1203 - COST ACCOUNTING AND CONTROL

Score for this quiz: 51 out of 100

An objection to the use of a factory overhead rate based on direct labor

these items are difficult to measure.

costs of applying this method are excessive.

ou Answered overhead is allocated in relation to units produced by workers.

Expense A is a fixed cost; expense B is a variable cost. During the current

expense B has decreased.

expense A has remained unchanged.

expense B has increased.

In a job order costing system,

an average cost per unit within a job cannot be computed.

costs are accumulated by departments and averaged among all jobs.

Correct! overhead is typically assigned to jobs on the basis of cost driver.

standards cannot be used.

Which of the following valuation methods are acceptable in a job order

Actual Material Standard Material Actual Labor

Cost Cost Cost

d. Yes Yes Yes

Moderna Corp. is to submit a bid on the production of 5,500 vases. It is

overhead is applied at 50% of direct labor cost in the Molding Department

that 500 direct labor hours at a cost of P4,000 will be required in

orrect Answer P56,500

production volume. The company produces a single product.

Production Volume 4,000 units 5,000 units

Direct Materials P45.50 per unit P45.50 per

Direct Labor P44.90 per unit P44.90 per

Manufacturing Overhead P131.50 per unit P108.50 per

will total cost be P42,500?

Variable Cost per unit ...................................... P 58.50

Total Fixed Costs ........................................ P195,195

The break-even point is closest to:

orrect Answer 2,730

A credit balance in the Manufacturing Overhead account at the end of the

job usually includes:

overhead cost only

labor cost only

labor, overhead, and miscellaneous costs

ou Answered Job Order Cost Sheet

orrect Answer Material Requisition Slip

Choice of allocation base should be made based on:

the base's activity.

the base's relation to direct labor.

the relative size of the base.

accounting costs for materials received

When closing overapplied manufacturing overhead to cost of goods sold,

Net income will decrease.

Work in process will decrease.

Cost of goods sold will increase.

The Work in Process inventory account of a manufacturing company

overhead rate, as a percentage of direct labor costs, of:

On December 1, LV Corp. had P21,000 of raw materials on hand. During

company purchased an additional P61,000 of raw materials. During

of raw materials were requisitioned from the storeroom for use in

to the Materials account for the month of December totalled:

orrect Answer P61,000

company purchased an additional P66,000 of raw materials. During

materials were requisitioned from the storeroom for use in production.

debits to the Work in Process account as a consequence of the

orrect Answer P74,000