The balance of this account includes all manufacturing Only Statement 1 is false.

costs incurred to date for goods in various stages of

production but not yet completed. Both statements are false.

Finished Goods Inventory Only Statement 1 is true.

Work in process Inventory Question 5

Statement 1 A cost object can be any of the following: a
Raw Materials Inventory unit of product, a customer order, a project or a division
of the company. T
Cost of Goods Sold Statement 2 Fixed costs become relevant if they change
based on a decision being taken. T
Question 2
Statement 1 A fixed cost increases on a per‑unit basis Only Statement 1 is true.
as production increases. F
Statement 2 In deciding whether to buy a new machine Both statements are false.
or not, the cost of the old machine is considered an
irrelevant cost. T Both statements are true.

Both statements are false. Only Statement 2 is true.

Only Statement 1 is true. Question 6

Statement 1 An example of a cost that is irrelevant to a
Both statements are true. future decision is an opportunity cost. F

Only Statement 2 is true. Statement 2 Raw materials for one company are often
the finished product of another company. T
Question 3
Statement 1 The term "relevant range" as used in cost Both statements are false.
accounting means the range over which cost relationship
are valid. T Both statements are true.
Statement 2 Within the relevant range a change in
activity results in a change in variable cost per unit and Only Statement 1 is true
total fixed costs. F
Only Statement 1 is false.
Both statements are false.
Question 7
Only Statement 2 is true. Statement 1 Health and accident insurance is a semi-
variable cost. T
Both statements are true.
Statement 2 Salaries paid to department heads,
Only Statement 1 is true. inspectors, material handlers and factory maintenance
personnel are considered as indirect labor cost. T
Question 4
Statement 1 A factory overhead cost can either be a Both statements are true.
fixed cost or a variable cost. T
Statement 2 The balance of the Materials account Only Statement 2 is true.
represents the cost of all materials purchased and on
hand to be used in the manufacturing process including Both statements are false.
raw materials, pre-fabricated parts and other factory and
supplies. T Only Statement 1 is true.

Both statements are true. Question 8

Statement 1 Wages of stockroom clerk is an indirect Statement 1 The element of manufacturing cost that
labor cost. T supports time tickets is labor. T
Statement 2 Salary of the factory manager is not Statement 2 The purpose of a time ticket is to record the
considered an indirect labor cost. F hours worked or the time spent by an employee on each
job which will be paid in the next payday. T
Only Statement 2 is true.
Only Statement 2 is true.
Only Statement 1 is true.
Only Statement 1 is true.
Both statements are true.
Both statements are false.
Both statements are false.
Both statements are true.
Question 9
Statement 1 Costs of idle time due to assembly line Question 13
breakdown is considered an indirect labor cost. T Work in Process is debited and Materials is credited for
Statement 2 Expenses that require a series of payments indirect materials requisitioned to production.
over a long period of time such as long-term debt and True
lease rentals are frequently known as committed fixed
expenses. T False

Only Statement 1 is true. Question 14

Job costing is commonly used to estimate costs in
Only Statement 2 is true. beverage production.

Both statements are true. True

Both statements are false. False

Question 10 Question 15
Statement 1 Supplies needed for use in the factory are Direct costs are traced in the same way for actual
issued on the basis of job cost sheets. F costing and normal costing.
Statement 2 Expenses that are fixed at management's Group of answer choices
discretion at a certain level for the period are referred to
as committed fixed costs. F True

Only Statement 1 is true. False

Both statements are true. Question 16

The overhead accounts are closed or become zero at
Both statements are false. the end of each year.

Only Statement 2 is true. True

Question 11 False
Overapplied factory overhead would result if factory
overhead costs incurred were greater than Question 17
costs charged to production. In job order costing, when materials are returned to the
storekeeper that were previously issued to the factory for
True cleaning supplies, the journal entry should be made to:

False DR. Materials: CR. Work in Process Inventory

Question 12 DR. Factory Overhead Control: CR. Materials

 A company allocates its variable factory overhead based
DR. Work in Process Inventory: CR. Materials. on direct labor hours. During the past

DR. Materials: CR. Factory Overhead Control three months, the actual direct labor hours and the total
factory overhead allocated were as follows:
Question 18
When a manufacturing company has a highly automated October
plant producing many different products, probably the November December
most appropriate basis of applying factory overhead
costs to Work in Process is: Direct labor hours............... 2,500
3,000 5,000
units processed
Total factory overhead allocated............. P80,000
machine hours P75,000 P100,000

direct labor cost Based on this information, the estimated variable cost
per direct labor hour was:
direct labor hours
P8.00
Question 19
Under a job order cost system, the peso amount of the
entry to transfer the inventory from Finished Goods to
Cost of Goods Sold is the sum of the costs charged to all
jobs:

sold during the period

in process during the period Question 22

Howell Corp. has a job order cost system. The following
started in process during the period debits (credits) appeared in Work in

completed during the period Process for the month of July:

Question 20 July 1,
Zirel Company had the following account balances and balance..............................................................................
results from operations for the month of July: .............................................. P 12,000

direct materials consumed, P10,400; direct labor, July 31, direct

P8,000; factory overhead, P8,800; July 1, work in materials............................................................................
process inventory, P2,400; July 31, work in process .............................. 40,000
inventory, P1,800; finished goods inventory, July 1,
P1,200; finished goods inventory, July 31, P1,000. The July 31, direct
cost of jobs completed only in July was: labor..................................................................................
................................ 30,000
P26,600
July 31, factory
P27,800 overhead...........................................................................
............................. 27,000
P27,200
July 31, to finished
P28,000 goods................................................................................
........................ (100,000)
Question 21
Howell applies overhead to production at a (P2,250) overapplied
predetermined rate of 90% of direct labor cost.
Question 24
Job 1040, the only job still in process at the end of July, Applied Factory Overhead is debited and Factory
has been charged with factory overhead Overhead Control is credited to:

of P2,250. What was the amount of direct materials close the estimated overhead account to actual
charged to Job 1040? overhead.

record the actual factory overhead for the period.

charge estimated overhead to all jobs worked on during

the period.

record overapplied overhead for the period.

Question 25
Finished Goods is debited and Cost of Goods Sold is
credited for:

return of goods by the customer.

transfer of completed goods to the customer.

sale of a customer order.

return of materials to the supplier.

Question 26
Winkel Woodcrafters produces special-order wood
P4,250
products. The company uses job order costing for
Question 23
pricing and cost accumulation purposes. The following
Wailhi Co. estimated Department A's overhead at
costs were incurred on two recent jobs:
P255,000 for the period based on an estimated volume
of 100,000 direct labor hours. At the end of the period,
Cost Item Job Order #20
the factory overhead control account for Department A
Job Order #30
had a balance of P265,500; actual direct labor hours
were 105,000.
Direct materials:
What was the over- or under-applied overhead for the
period?
Issued.................................................. P6,500
P8,000

Returned.............................................. 500
0

Indirect materials used............................. 500

400

Direct labor............................................... P9,000

P15,000

Direct labor rate....................................... P9 per hour

P10 per hour
 The amount to be billed for Job Order #30 is:
Overhead application rate........................ P10 per direct
labor hour P15 per direct labor hour

The company adds 50% markup on cost in determining

the amount to be charged for each job.

Which of the following statements is true?

The overhead applied to Job #30 is less than that of Job

#20.

The markup based on cost for Job #30 is higher than

that of Job #20.

The total production costs of Job#30 is less than the

total production costs of Job #20.

The direct labor hours used by Job #20 is greater than

the direct labor hours used by Job #30.

Question 27
Winkel Woodcrafters produces special-order wood
products. The company uses job order costing

for pricing and cost accumulation purposes. The

following costs were incurred on two recent jobs:

Cost Item Job Order #20

Job Order #30

Direct materials:
P68,250
Issued.................................................. P6,500 Question 28
P8,000 The logical explanation for an entry that includes a debit
to Factory Overhead Control and a credit to Prepaid
Returned.............................................. 500 Insurance is that
0
insurance was paid on production equipment.
Indirect materials used............................. 500
400 the insurance company sent the company a refund of its
policy premium.
Direct labor............................................... P9,000
P15,000 overhead for insurance was applied to production.

Direct labor rate....................................... P9 per hour insurance for production equipment expired.
P10 per hour
Question 29
Overhead application rate........................ P10 per direct M Corp. manufactures a product and uses a job-order-
labor hour P15 per direct labor hour cost system. During May, the following

The company adds 50% markup on cost in determining costs were incurred in completing Job M1: direct
the amount to be charged for each job. materials, P13,700; direct labor, P4,800;
administrative, P1,400; and selling, P5,600.
an information databank
Overhead was applied at the rate of P25 per machine
hour, and Job M1 required 800 machine source documents

hours. If Job M1 resulted in 7,000 units, the cost of time survey

goods sold per unit would be:
computer programs

Question 33
Which of the following statements about normal costing
is TRUE?

Direct costs are traced using a budgeted rate, and

indirect costs are allocated using an actual rate

Direct costs are traced using an actual rate, and

indirect costs are allocated using a budgeted rate.

Direct costs and indirect costs are traced using budgeted

rates.

Direct costs and indirect costs are traced using an actual

rate.

Question: 34
Job-cost records of LV Company contained the following
data:
Total Cost
Date Date Date
of Job
P5.50
Job No. Started Finished Sold
at June 30
Question 30
220 May 18 June 12 June 20
A job order cost accumulation system is most suitable
P6,000
where:
221 May 20 June 19 June 21
homogeneous products are produced.
P4,000
222 June 7 July 5 July 12
continuous processing is performed.
P7,000
223 June 10 June 28 July 1
mass production techniques are used.
P6,500
224 June 19 July 16 July 25
customized products are produced.
P8,000
The Work in Process Inventory at June 30 is:
Question 31
The process of charging factory overhead to Work in
Process on the basis of a predetermined application rate
multiplied by actual input is known as:

P15,00
normal costing
Question 35
Job-cost records of LV Company contained the following
Question 32
data:
Managers and accountants collect most of the cost
information that goes into their systems through:
 Direct material P5,000
Total Cost
Date Date Date Direct labor (100 hours @ $7.25) P725
of Job
Job No. Started Finished Sold Machine hours incurred 40
at June 30
220 May 18 June 12 June 20 Predetermined overhead rate per machine hour P26
P6,000
221 May 20 June 19 June 21 At the end of March, what total cost appears on the job
P4,000 order cost sheet for Job #656?
222 June 7 July 5 July 12
P7,000
223 June 10 June 28 July 1
P6,500
224 June 19 July 16 July 25
P8,000
Finished Goods Inventory @ June 30 is:

P6,500

Question 36
Job-cost records of LV Company contained the following
data:
Total Cost
Date Date Date
P6,765
of Job
Job No. Started Finished Sold
Question 38
at June 30
220 May 18 June 12 June 20
P6,000
221 May 20 June 19 June 21
P4,000
222 June 7 July 5 July 12
P7,000
223 June 10 June 28 July 1
P6,500
224 June 19 July 16 July 25
P8,000
Cost of Goods Sold for June is:

P10,000

Question 37
Larena Corp. manufactures products on a job-order
basis. The job cost sheet for Job #656 shows the
following for March:
 Overapplied overhead P 6,000

Cost of Goods Sold P980,000

Work in Process Inventory P 38,000

Finished Goods Inventory P 82,000

If the most common treatment of assigning overapplied

overhead were used, the final balance in Cost of Goods
Sold is:

P974,000

P3,203 Question 41
Work in process inventory on December 31 of the
Question 39 current year is P44,000. Work in process inventory
Overhead is applied to jobs at the rate of 40% of direct increased by 60% during the year. Cost of goods
labor cost. Direct material of P1,250 and direct labor of manufactured amounted to P275,000.
P1,400 was expended on Job #145 during June. On What are the total manufacturing costs incurred in the
May 31, the balance of Job #145 was P2,800. The current year?
balance on June 30 is:

P6,010

Question 40
At the end of the last fiscal year, Manico Co. had the
following account balances: P291,500
Question 42 The manager is preparing a flexible budget for next year
In a decision analysis situation, which of the following and requires a breakdown of the cost of steam used in
costs is not likely to contain a variable cost component? its factory into the fixed and variable elements. The
following data on the cost of steam used and direct labor
overhead hours worked are available for the last 6 months of this
year:
labor
Month Cost of Steam
selling Direct Labor Hours

depreciation July P15,850

3,000
Question 43
Opportunity costs are: August 13,400
2,050
partly fixed costs and partly variable costs.
September 16,370
costs irrevocably incurred by past actions. 2,900

not recorded in the accounting records as they are October 19,800

not incurred but is implied. 3,650

the difference between actual and standard costs. November 17,600

2,670
Question 44
In analyzing whether to build another regional service December 18,500
office, the salary of the CEO at the corporate 2,650
headquarters is:
Total P101,520
irrelevant since another imputed costs for the same will 16,920
be considered.
Assuming the manager uses the high-low method of
irrelevant because it is a future cost that will not differ analysis. The estimated variable cost of steam per
between the alternatives under consideration. direct labor hour is:

relevant because this will probably change if the

regional service office is built.

relevant because salaries are always relevant.

Question 45
When all manufacturing costs used in production are
attached to the products, whether direct or indirect,
variable or fixed, this is called:

job order costing

absorption costing

process costing
P4.00
variable costing Question 47
The following information for Downy Inc. are provided for
Question 46 2022:
 Dept. 1 40,000
Beginning 26,000 58,000
Ending
Dept. 2 3,000
Finished Goods ………….. P 750,000 P 5,000 14,000
550,000
Dept. 3 -0-
Work in process………….. 1,100,000 -0- -0–
875,000
Direct labor hours:
For the year 2022, the cost of goods manufactured and
gross profit were P 10,000,000 and P1,500,000, Dept. 1 500
respectively. Sales for the year was: 400 300

Dept. 2 200
250 350

Dept. 3 1,500
1,800 2,500

Machine hours:

Dept. 1 -0-
P11,700,000 -0- -0–

Question 48 Dept. 2 1,200

A manufacturer employs a job order costing system. All 1,500 2,700
jobs ordinarily pass through all three
Dept. 3 150
production departments, and Job 101 and Job 102 were 300 200
completed during the current month.
The cost of the completed Job 101 is:

Production Dept. Direct Labor Rate

Manufacturing Overhead Application Rates

Dept. 1 P 12.00
150% of direct material cost

Dept. 2 18.00 P
8.00 per machine hour

Dept. 3 15.00
200% of direct labor cost

Job 101
Job 102 Job 103

Beginning work in process P 25,500

P 32,400 P -0–

Direct Material:
 P25.75

Question 50
Lexy Co. uses job order costing and it has 3 jobs in
process: Job #6, Job #7 and Job #8. The following
information is available from its records:
Raw materials used P120,000; direct labor per hour is
P8.50 and predetermined overhead rate is 120% based
on direct labor cost. Direct material was requisitioned as
follows for each job respectively: 30% for Job #6; 25%
for Job #7; 25% for Job #8; the balance for indirect
material requisition. Direct labor hours per job are 2,500
for Job #6; 3,100 for Job #7 and 4,200 for Job #8.
Indirect labor is P33,000. Other actual overhead costs
totaled P36,000. How much is the prime cost for Job
#6?

P215,200
Question 49
Total Units of Product Average Fixed Cost Average
Variable Cost Average Total Cost

6 P 15.00
P 25.00 P 40.00

7 12.86
24.00 36.86

8 11.25
23.50 34.75
P57,250
9 10.00
23.75 33.75

The marginal cost of producing the ninth unit is: