1. Geraldine Aluminum processes a single type of steel. For a.

P135,000
the current period the following information is given: b. P240,000
c. P180,000
d. P195,000

6. Which of the following will increase the cost of goods sold

during the year?
  a. Decrease in purchases of direct materials during the year
All materials are added at the beginning of the production b. Increase in work in process inventory during the year
process. The beginning inventory was 30% complete as to c. Increase in the salaries of inventory accountant during the
conversion, while the ending inventory was 40% completed year
for conversion purposes. Geraldine uses the first-in, first-out d. Decrease in finished goods inventory during the year
costing method. What were the costs assigned to the units 7.
transferred out this period (round equivalent unit cost to the
nearest penny)?
a. P113,160
b. P122,300
c. P113,236
d. P113,980

2. Product X is sold for P32 a unit and Product Y is sold for a. P651,056
P48 a unit. Each product can also be sold at the split-off point. b. P671,150
Product X can be sold for P10 and Product Y for P8. Joint
costs for the two products totaled P2,000 for January for 300 c. P629,900
units of X and 250 units of Y. What are the respective joint d. P692,306
costs assigned to each unit of products X and Y if the sales
value at split-off method is used? 8. Statement No. 1: Joint costs are incurred beyond the split-
a. P4.55 and P4.55 off point and are assignable to individual products. Statement
b. P4.00 and P4.55 No. 2: Separable costs are incurred beyond the split-off point
c. P4.00 and P3.20 that are assignable to each of the specific products identified at
d. P2.96 and P4.44 the split-off point.
a. TRUE, TRUE
3. Statement 1: A financial benefit of a just-in-time system is b. FALSE, FALSE
that inventory carrying costs are reduced. Statement 2: In a c. TRUE, FALSE
just-in-time system, suppliers are selected primarily on the d. FALSE, TRUE
basis of their ability to provide materials and products at the
lowest possible price. 9. Gamma Company has sales of P120,000, a contribution
a. True, True margin of P48,000, and a net operating income of P12,000.
b. False, False The company's degree of operating leverage is:
c. True, False a. 4.8
d. False, True b. 10
c. 2.5
4. Conversion costs: d. 4
a. include all the factors of production
b. include direct labor and overhead 10. Which of the following journal entries would be used to
c. in process costing are usually considered to be added evenly record the application of manufacturing overhead to work in
throughout the production process process in a process costing system with two processing
d. Both B and C are correct. departments, department A and department B?
a. Work in Process–Department A        XXX
5. Joy Co. uses a predetermined overhead rate based on direct Work in Process–Department B                   XXX
labor cost to apply manufacturing overhead to jobs. The                Manufacturing Overhead                            XXX
predetermined overhead rates for the year are 200% for b. Manufacturing Overhead                                 XXX
Department A and 50% for Department B. Job 123, started                Work in Process–Department A                  XXX
and completed during the year, was charged with the                Work in Process–Department B                  XXX
following costs: c. Work in Process–Department B        XXX
                                                    Dept. A        Dept. B                Work in Process–Department A                  XXX
Direct materials .....................   P25,000            P5,000                Manufacturing Overhead                            XXX
Direct labor ..............................        ?         P30,000 d. Work in Process–Department A                       XXX
Manufacturing overhead ........    P40,000         ?                Work in Process–Department B                  XXX
The total manufacturing costs associated with Job 123 should                 Manufacturing Overhead                           XXX
be:
 16. Celso Company would like to estimate the variable and
fixed components of its maintenance costs and has compiled
11. All of the following are potential financial benefits of just- the following data for the last five months of operations.
in-time EXCEPT:   Labor Hours Maintenance Cost
a. reducing the risk of obsolescence January 160 P617
b. lower investments in inventories February 130 P553
c. reducing manufacturing lead time
March 180 P596
d. lower investments in plant space for inventories
April 190 P623
12. The Denise Chair Company manufactures a standard May 110 P532
recliner. In February, the firm's Assembly Department started Using the least-squares regression method, the estimated total
the production of 150,000 chairs. During the month, the firm fixed cost per month for maintenance is closest to:
completed 170,000 chairs and transferred them to the a. P400
Finishing Department. The firm ended the month with 20,000 b. P416
chairs in ending inventory. All direct materials costs are added c. P470
at the beginning of the production cycle. Weighted-average d. P378
costing is used by Denise. What were the equivalent units for
materials for February? 17. The Nori Company manufactures several different
a. 150,000 chairs products. Unit costs associated with Product ORD203 are as
b. 160,000 chairs follows:
c. 170,000 chairs Direct materials                                        P50
d. 190,000 chairs Direct manufacturing labor                         8
Variable manufacturing overhead            10
13. An understanding of the underlying behavior of costs Fixed manufacturing overhead                 23
helps in all of the following EXCEPT Sales commissions (2% of sales)                  5
a. costs can be better estimated as volume expands and Administrative salaries                                9
contracts. Total                                                        P105
b. true costs can be better evaluated. What are the inventoriable costs per unit associated with
c. process inefficiencies can be better identified and as a result Product ORD203?
improved. a. P60
d. sales volume can be better estimated. b. P48
c. P66
14. Michael Corporation uses direct labor-hours in its d. P91
predetermined overhead rate. At the beginning of the year, the
estimated direct labor-hours were 17,900 hours and the total 18. Statement 1: The equivalent units in beginning work in
estimated manufacturing overhead was P341,890. At the end process inventory plus the equivalent units for the work done
of the year, actual direct labor-hours for the year were 16,700 during the period equals the units transferred out plus the
hours and the actual manufacturing overhead for the year was equivalent units in ending work in process inventory.
P336,890. Overhead at the end of the year was: Statement 2: There is no difference in the unit costs computed
a. P17,920 overapplied under the weighted-average and FIFO methods of process
b. P17,920 underapplied costing if there is no beginning work in process Inventories
c. P22,920 overapplied a. False, False
d. P22,920 underapplied b. False, True
c. True, True
15. A company that makes organic fertilizer has supplied the d. True False
following data:
Bags produced and sold .................................   240,000 19. Cost behavior refers to
Sales revenue............................................    P1,896,000 a. whether a particular expense has been ethically incurred.
Variable manufacturing expense...................   P804,000 b. classifying costs as either inventoriable or period costs.
Fixed manufacturing expense .......................   P520,000 c. whether a cost is incurred in manufacturing, merchandising,
Variable selling and administrative expense...  P180,000 or service company.
Fixed selling and administrative expense ......  P270,000 d. how costs react to a change in the level of activity.
Net operating income ....................................   P122,000
 The company's margin of safety in units is closest to: 20. The basic source document for direct manufacturing labor
a. P125,714 is the:
b. P32,105 a. labor-time record
c. P140,000 b. All of these answers are correct.
d. P202,238 c. job-cost record
d. materials-requisition record
21. The FIFO method provides a major advantage over the unit selling prices at split-off are P30, P20, and P10. Joint
weighted-average method in that: costs up to the split-off point are P75,000. If joint costs are
a. the weighted-average method ignores units in the beginning allocated based upon the sales value at split-off, what amount
and ending work in process inventories. of joint costs will be allocated to the widgets?
b. the FIFO method treats units in the beginning inventory as a. P28,125
if they were started and completed during the current period. b. P17,647
c. the calculation of equivalent units is less complex under the c. P30,882
FIFO method. d. P26,471
d. the FIFO method provides measurements of work done
during the current period. 27. It is concerned with providing financial information to
persons within the organization to enable them to make
22. In joint costing: informed judgments and effective decisions which further the
a. Both B and C are correct. organization's goals.
b. costs are assigned to individual products as assembly of the a. Cost accounting
product occurs b. Tax accounting
c. a single production process yields two or more products c. Management accounting
d. costs are assigned to individual products as disassembly of d. Financial accounting
the product occurs
28. If the work in process inventory has increased during the
23. Jofel Corporation uses direct labor-hours in its period :
predetermined overhead rate. At the beginning of the year, the a. manufacturing costs incurred for the period will be greater
total estimated manufacturing overhead was P423,870. At the than cost of goods manufactured
end of the year, actual direct labor-hours for the year were b. manufacturing costs for the period will be less than the cost
19,400 hours, manufacturing overhead for the year was of goods manufactured
underapplied by P5,650, and the actual manufacturing c. cost of goods sold will be greater than cost of goods
overhead was P418,870. The predetermined overhead rate for manufactured
the year must have been closest to: d. cost of goods manufactured will be greater than cost of
a. P20.76 goods sold
b. P21.30
c. P21.59 29. Thea Manufacturing Company manufactures products X,
d. P21.85 Y, and Z from a joint process. Additional information are as
follows in deciding when to sell the joint products:
24. The Denise Chair Company manufactures a standard
recliner. In February, the firm's Assembly Department started
the production of 150,000 chairs. During the month, the firm
completed 170,000 chairs and transferred them to the
Finishing Department. The firm ended the month with 20,000
chairs in ending inventory. All direct materials costs are added
at the beginning of the production cycle. Weighted-average
costing is used by Denise. How many chairs were in inventory
at the beginning of the month? Conversion costs are incurred
uniformly over the production cycle. Joint costs were allocated using the relative sales value at
a. 10,000 chairs split-off approach.  Compute the amount of joint cost allocated
b. 40,000 chairs to Product Y and Z.
c. 30,000 chairs a. P80,000 and P70,000
d. 20,000 chairs b. P30,000 and P42,000
c. P42,000 and P30,000
d. P5,500 and P5,600
25. The journal entry to record applying overhead during the
production process is:
30. Princess Manufacturing Company uses a job-order costing
a. Manufacturing Overhead ...........................XXX
system and started the month of October with a zero balance
               Finished Goods .......................................XXX
in its work in process and finished goods inventory accounts.
b. Work In Process ........................................ XXX
During October, Princess worked on three jobs and incurred
               Manufacturing Overhead ........................XXX
the following direct costs on those jobs:
c. Finished Goods ........................................ XXX
               Manufacturing Overhead ........................XXX
d. Manufacturing Overhead ........................ XXX
               Work In Process ......................................XXX
Princess applies manufacturing overhead at a rate of 150% of
26. The Beth Corporation manufactures widgets, gizmos, and direct labor cost. During October, Princess completed Jobs
turnbols from a joint process. May production is 2,000 B18 and B19 and sold Job B19.
widgets; 3,500 gizmos; and 4,000 turnbols. Respective per
What is Princess' work in process inventory balance at the end
of October?
a. P43,000
b. P23,000
c. P32,000
d. P30,500  
All materials are added at the beginning of the production
31. Contribution margin is: process. The beginning inventory was 40% complete as to
a. the excess of sales revenue over variable cost conversion, while the ending inventory was 30% completed
b. the same as sales revenue for conversion purposes. Phoebe uses the weighted-average
c. profit costing method. What is the total cost assigned to the units
d. another term for volume in the "cost-volume-profit" completed and transferred this period?
analysis a. P109,440
b. P113,160
32. Which of the following statements is true? c. P120,100
I.                 Overhead application may be made slowly as a d. P107,010
job is worked on.
II.               Overhead application may be made in a single 37. Under a job-order costing system, the dollar amount
application at the time of completion of the job. transferred from Work in Process to Finished Goods is the
III.              Overhead application should be made to any job sum of the costs charged to all jobs:
not completed at year-end in order to properly value the work- a. completed during the period.
in-process inventory. b. completed and sold during the period.
a. Both statements I and II are true. c. started in process during the period.
b. Only statement I is true. d. in process during the period.
c. Statements I, II, and III are all true.
d. Only statement II is true. 38. The operations of Felix Company resulted in overapplied
overhead for the month just completed. Which of the
33. Earnings of factory assembly-line during idle time should following journal entries can be correct if Felix allocates
usually be considered part of: under-or overapplied overhead among accounts?
a. factory overhead costs a. Cost of Goods Sold ................................. XXX
b. direct labor cost               Manufacturing Overhead ........................ XXX
c. prime costs b. Work in Process ...................................... XXX
d. non-manufacturing costs                         Finished Goods ............................... XXX
                        Cost of Goods Sold ......................... XXX
34. Which of the following transactions will result to increase                         Manufacturing Overhead ................ XXX
in cost of goods manufactured for the period ended? c.
a. Increase in the labor cost of inventory accountant for the Manufacturing Overhead ........................ XXX
period ended               Cost of Goods Sold ................................. XXX
b. Decrease in finished goods inventory for the period ended d.
c. Increase in raw materials inventory for the period ended Manufacturing Overhead ........................ XXX
d. Decrease in work in process inventory for the period ended                 Work in Process ................................... XXX
                Finished Goods ..................................... XXX
                Cost of Goods Sold ............................... XXX
35. After careful planning, Makayla Manufacturing
Corporation has decided to switch to a just-in-time inventory
39. The Denise Chair Company manufactures a standard
system. At the beginning of this switch, Makayla has 30 units
recliner. In February, the firm's Assembly Department started
of product in inventory. Makayla has 2,000 labor hours
the production of 150,000 chairs. During the month, the firm
available in the first month of this switch. These hours could
completed 170,000 chairs and transferred them to the
produce 500 units of product. Customer demand for this first
Finishing Department. The firm ended the month with 20,000
month is 400 units. If just-in-time principles are correctly
chairs in ending inventory. All direct materials costs are added
followed, how many units should Makayla plan to produce in
at the beginning of the production cycle. Weighted-average
the first month of the switch?
costing is used by Denise. 23. Of the 150,000 units Denise
a. 400
started during February, how many were finished during the
b. 430
month?
c. 370
a. 130,000
d. 470
b. 150,000
c. 170,000
36. Phoebe Steel processes a single type of steel. For the d. 190,000
current period the following information is given:
40. Colin Souvenir Factory manufactured a variety of party
souvenirs. The owner had recently decided to implement a JIT
Costing System. Transactions during February were as c. P25.00 per hour; P20.00 per hour
follows: d. P45.00 per hour; P45.00 per hour
a.     Raw materials totaling P450,000 were purchased and
requisitioned for production. 46. If a company applies overhead to production on the basis
b.     Direct labor costs of P500,000 were incurred. of a predetermined rate, a debit balance in the Manufacturing
c.      Indirect labor costs amounted to P640,000. Overhead account at the end of the period means that:
d.      Utilities costs totaled P210,000. a. actual overhead cost was greater than the amount charged to
e.     Other actual factory overhead costs amounted to production.
P270,000. b. more overhead cost has been charged to production than has
f.       Applied conversion costs totaled P1,500,000. been charged to finished goods during the period.
g.      All units were completed and picked-up by the customer. c. actual overhead cost was less than the amount of direct
Compute the amount of over-applied and under-applied labor cost.
conversion cost for the month d. actual overhead cost was less than the amount charged to
a. P120,000 under-applied production.
b. P120,000 over-applied
c. P50,000 over-applied 47. Mark Jayson Company uses a predetermined overhead rate
d. P50,000 under-applied based on direct labor cost to apply manufacturing overhead to
jobs. The following information about Mark Jayson
41. The systematic examination of the relationships among Company's Work in Process inventory account has been
selling prices, volume of sales and production, costs, and provided for the month of May:
profits is termed: May 1 balance ...........................................         P26,000
a. gross profit analysis Debits during May:
b. cost-volume-profit analysis Direct Materials ...................................... P40,000
c. contribution margin analysis Direct Labor ........................................... P50,000
d. budgetary analysis Manufacturing Overhead ........................ P37,500
During the month, Mark Jayson Company's Work in Process
42. At the beginning of the year, manufacturing overhead for inventory account was credited for P120,500, which
the year was estimated to be P477,590. At the end of the year, represented the Cost of Goods Manufactured for the month.
actual direct labor-hours for the year were 29,000 hours, the Only one job remained in process on May 31; this job had
actual manufacturing overhead for the year was P472,590, and been charged with P9,600 of applied overhead cost. The
manufacturing overhead for the year was overapplied by P110. amount of direct materials cost in the unfinished job would be:
If the predetermined overhead rate is based on direct labor- a. P12,800
hours, then the estimated direct labor-hours at the beginning of b. P16,700
the year used in the predetermined overhead rate must have c. P10,600
been: d. P23,400
a. 29,000 direct labor-hours
b. 28,987 direct labor-hours
48. Ideally, how many units should be produced in a just-in-
c. 28,993 direct labor-hours
time manufacturing system?
d. 29,300 direct labor-hours
a. budgeted customer demand for the following week.
b. actual customer demand for the current week.
43. All costs incurred beyond the splitoff point that are c. budgeted customer demand for the current week.
assignable to one or more individual products are called: d. maximum production capacity for the current week.
a. byproduct costs
b. separable costs 49. Just-in-time purchasing requires:
c. joint costs a. larger and less frequent purchase orders
d. main costs b. smaller and more frequent purchase orders
c. smaller and less frequent purchase orders
44. Cost of goods sold is equal to cost of goods manufactured: d. larger and more frequent purchase orders
a. minus the increase in finished goods inventory
b. plus the increase in work in process inventory 50. The following information pertains to the Ana
c. plus the decrease in work in process inventory Corporation:
d. minus the decrease in finished goods inventory

45. Fixed costs remain constant at P400,000 per month.

During high-output months variable costs are P320,000, and
during low-output months variable costs are P80,000. What
are the respective high and low indirect-cost rates if budgeted
professional labor-hours are 16,000 for high-output months
and 4,000 for low-output months? What is cost of goods sold?
a. P56.20 per hour; P120.00 per hour a. P243,000
b. P45.00 per hour; P120.00 per hour
b. P244,000
c. P249,000
d. P248,000