AEC 203- COST ACCOUNTING AND CONTROL

Worksheet 1.1

NAME:____________________________ PROGRAM/YEAR & SECTION: ___________

SCHEDULE: _______________________ DATE: ______________________________

A. Instruction/s:
From the given choices, write the letter of the correct answer on the left side
of every number.

Answer
__d.___1. A decision –making concept, described as the contribution margin income that is foregone by
not using a limited source for its best alternative use is called
a. Marginal cost c. potential cost
b. Incremental cost d. opportunity cost
__d.___2. Which one of the following costs is not likely to contain a variable cost component?
a. Labor c. depreciation
b. Overhead d. selling expense
__c.___3. The term that refers to cost incurred in the past that are not relevant to a future decision.
a. Full absorption cost c. sunk cost
b. Under-allocated indirect cost d. marginal cost
__d.___4. The salaries that you could be earning by working rather than attending college is an example
of
a. Outlay costs c. sunk costs
b. Misplaced costs d. opportunity costs
__c.___5. Costs that vary in direct proportion with the volume of production.
a. Fixed costs c. variable costs
b. Mixed costs d. controllable costs
__c.___6. The term relevant cost applies to all the following decisions situations except the
a. Acceptance of a special order c. determination of product price
b. Replacement of equipment d. addition or deletion of a product line
__d.___7. Management accountants are concerned with incremental unit costs. These costs are similar
to the following, except
a. The economic marginal cost c. the cost to produce an additional unit
b. The variable cost d. the manufacturing unit cost
__d.___8. Sunk costs
a. Are substitute for opportunity costs
b. Are relevant to long-term decisions but not to short-term decisions
c. Are relevant to decision making
d. In themselves are not relevant to decision making
__c.___ 9. The cost proposed annually for the plant service for the grounds at corporate headquarters
a. Prime cost c. relevant cost
b. Discretionary costs d. differential cost
__c.___10. The cost of goods sold is a component of the income statement of a merchandising
establishment, this refers to the purchases adjusted for changes in inventory. In manufacturing
company, what replaced purchases to arrive at cost of goods sold.
a. Finished goods c. work in process inventory
b. Fixed manufacturing overhead d. cost of goods manufactured
 A. Instruction/s:
1. Classify the following cost as to direct materials, direct labor, factory overhead
or other cost.
2. On the space provided, write DM for direct materials, DL for direct labor, FOH for
factory overhead and OC for other cost.

__________________________________________________________________________________
Answer

___DM___ 1. paper in books

___FOH___ 2. salaries of factory workers
___DM___ 3. wood in furniture
___DM___ 4. plastic in a water tank,
___DM___ 5. and leather in shoes
___FOH___ 6. rent of factory space
___FOH___ 7. Depreciation of factory machineries
___OC___ 8. Advertising cost
___OC___ 9. Maintenance and repair of office equipment

___OC___ 10. Insurance of office vehicles

1
 A. Instruction/s
: From the data provided in the problem, compute for the following:
1. Manufacturing overhead
2. Prime cost
3. Conversion cost
4. Total manufacturing cost

ABC Company has disclosed the following cost information for the year 2019:
Direct materials P 346,000
Direct labor 723,000
Factory utilities 609,000
Factory rent 326,000
Depreciation of factory equipment 50,000
Depreciation of office equipment 25,000
Advertising expenses 15,000
Salary of office janitor 5,000

Answer

1. Manufacturing overhead (or factory overhead)

Manufacturing overhead = Factory utilities + Factory rent + Depreciation of factory

equipment
Manufacturing overhead = P609,000 + P326,000 + P50,000
Manufacturing overhead = P985,000.00

2. Prime cost

Prime cost = Direct materials + Direct labor

Prime cost = P346,000 + P723,000
Prime cost = P1,069,000.00

3. Conversion cost

Conversion cost = Direct labor + Factory overhead

Conversion cost = P723,000 + P985,000
Conversion cost = P1,708,000.00

4. Total manufacturing cost

Total manufacturing cost = Direct materials + Direct labor + Factory overhead

Total manufacturing cost = P346,000 + P723,000 + P985,000
Total manufacturing cost = P2,054,000.00