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GRADE

HIGHER EDUCATION
DEPARTMENT
Accountancy Programs

1st Semester, A.Y. 2018-2019

QUIZ 03
AC1631-A – Cost Accounting and Cost Management
Mr. John D. Vargas, CPA, MBA
DATE: October 6, 2018
ANSWER
SHEET

Student Name: Section: Raw Score:

Over 50
TEST 1: Theories TEST 2: Problem Solving
(20 points, 1 point each) (30 points, 2 points each)

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Higher Education Department

Accountancy Programs
st
1 Semester, A.Y. 2018-2019

QUIZ 02
AC1631-A – Cost Accounting and Cost Management
Mr. John D. Vargas, CPA, MBA

QUESTIONNAIR
E

Test 1: THEORIES

1. The time period between placing an order its receipt in stock is known
as a. Overtime
b. Carrying time
c. Lead time
d. Date time
2. An increase in inventory holding costs
will a. Decrease the EOQ
b. Increase the EOQ
c. Have no effect on the EOQ
d. Decrease the number of orders issued per year
3. Two companies report the same cost of goods available for sale, but each employs a different inventory
costing method. If the price of goods has increased during the period, then the entity using
a. FIFO will have the highest ending
inventory b. FIFO will have the highest cost of
sales
c. LIFO will have the highest ending inventory
d. LIFO will have the lowest cost of sales
4. The additional units that are held in inventory to reduce the stockouts are known
as a. Buffer stock
b. Average inventory
c. Order point
d. EOQ
5. It is an authorization signed by the purchasing agent to a vendor (supplier) to supply goods at the agreed
price, specification, terms and conditions of the product and at a specified time and place of delivery
a. Purchase order
b. Material requisition form
c. Bill of materials
d. Receiving report
6. The objective of EOQ is?
a. To minimize total ordering cost and maximize total carrying costs
b. To minimize total carrying cost and maximize total ordering costs
c. To minimize total ordering costs and total carrying costs
d. To order sufficient units to economically meet the next period’s demand.
7. The following are advantages of time-based wage plan except:
a. Simple and economical to use
b. Provides additional incentive for workers to achieve production efficiency because that are paid based
on the time spent in the factory
c. Gives a sense of security to workers because they will know that are paid based on the time spent in
the factory
d. It controls material wastages as the job is not done in a hurry
8. If the overtime premium is caused by a regular order which cannot be completed in the regular working
hours, it is debited to:
a. Work in Process Inventory
b. Factory Overhead Control
c. Finished Goods Inventory
d. Expenses
9. A payroll costs that are paid to workers who are directly engaged in the conversion process of raw materials to
finished goods
a. Indirect labor
b. Direct labor
c. Administrative salary
d. Sales Salary
10. This department is responsible for the planning, recruitment, and firing of the labor
force a. Payroll department
b. Cost Accounting department
c. Time Keeping department
d. Personnel department
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11. This department is responsible for the preparation of the plan for each job and process, maintaining efficient
working condition, conducting time and motion study, merit rating
a. Production department
b. Cost Accounting department
c. Payroll department
d. Engineering department
12. It is a wage plan calculated by multiplying the number of units produced by a specified rate per
unit a. Time based wage plan
b. Modified based wage plan
c. Piece based wage plan
d. None of the choices
13. The appropriate method for the disposition of over or under applied factory overhead
is a. To cost of goods sold only
b. To finished goods only
c. To allocate to cost of goods sold, finished goods and work in
process d. Depends on the materiality of the amount
14. Which of the following statement/s is/are false?
a. If actual overhead exceeds applied overhead, factory overhead is said to be overapplied.
b. If actual overhead exceeds applied overhead, factory overhead is said to be
underapplied.
c. If overapplied factory overhead is immaterial, the account is closed by a credit to Factory Overhead.
d. If overapplied factory overhead is material, the account is closed by a credit to Factory Overhead.
15. Which of the following statement/s is/are false?
a. In an actual cost system, actual production overhead costs are accumulated in an Overhead Control
account and assigned to Work in Process at the end of the period.
b. In a normal cost system, actual production overhead costs are accumulated in an Overhead Control
account and assigned to Work in Process at the end of the period.
c. It is not necessary to prepare the Cost of Goods Manufactured statement prior to preparing the Cost of
Goods Sold statement.
d. Variable cost per unit remains constant within the relevant range.
16. A service allocation method that considers all interrelationships of the departments?
a. Step
b. Reciprocal
c. Indirect
d. Direct
17. It is a system that accumulates factory overhead costs based on predetermined overhead
rate a. Historical costing
b. Actual costing
c. Job order costing
d. Normal costing
18. Which of the following statement/s is/are false?
a. When manufacturing overhead is charged to a job, the work in process account is debited.
b. When manufacturing overhead is charged to a job, the manufacturing overhead account is
debited. c. When manufacturing overhead is charged to a job, the work in process account is
credited.
d. When manufacturing overhead is charged to a job, the manufacturing overhead account is credited.
19. A debit balance in the factory overhead account
is a. Over applied variance
b. Under applied variance
c. Volume variance
d. Spending variance
20. Both actual and normal costing
a. Require predetermined overhead rate
b. Are likely to result in over or under applied factory overhead
c. Include material, labor and factory overhead in product cost
d. All of the above
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TEST 2: PROBLEMS

Problem 1:

Hume Corporation has the following data for the current year:

Direct Labor $220,000

Direct Material 137,800
Actual Overhead 320,000
Applied Overhead 395,000
Raw Material 51,394
Work in Process 101,926
Finished Goods 111,192
Cost of Goods Sold 250,182

(1) Is it over or underapplied?

(2) What is the amount of under- or overapplied overhead?
(3-6) Prepare Journal Entries if over/under applied is material.

Problem 2:

GTA Corp pays has the following data for the fourth week of August:
Employee Hourly Hours Worked
Name Rate Sun Mon Tues Wed Thu Fri Sat Total

Brian 900 6 8 8 8 8 8 8 54
Chris 950 0 8 7 10 9 7 8 49
Regie 750 1 8 9 8 10 9 8 53
Tom 900 5 8 10 8 8 9 8 56
Jack 1000 9 8 8 6 7 10 8 56

The rate for hours in excess of 40 is one and a half times the regular rate. The rate for hours worked on Sunday is
twice the regular rate.

(7-11) Compute the gross earnings of each employee

Problem 3:

Mitzi operates its factory 300 days per year. Its annual used of material is 300,000 gallons. It carries a 2,500 gallon
safety stock of material and its lead time is 3 business days.

(12) What is the order point?

The EOQ for Material is 7,500 gallons, and the carrying cost per gallon per year is

P.25 (13) What is the total annual carrying cost?

Problem 4:

Isay’s order quantity for tocino is 5,000 kilos. Isay maintains a safety stock at 500 kilos and its order point is 1,500
kilos.

(14) What is the lead time, assuming daily usage is 50 kilos?

(15) What would be the total annual carrying costs, assuming the carrying cost per unit is P0.80?

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