COSTCO1 Quiz 2 PDF

QUIZ 2 COSTCO1 – Cost Accounting and Control Part 1 November 26, 2024 Name: _____________________________________________ Score: ___________________ Prof: Mr. John Miller E. Gubot...

QUIZ 2 COSTCO1 – Cost Accounting and Control Part 1 November 26, 2024 Name: _____________________________________________ Score: ___________________ Prof: Mr. John Miller E. Gubot Course/Yr./Section: _________ Instructions: 1. Follow specific instructions for each part of the exam. On a separate sheet of paper, shade the letter of your answer. 2. Use permanent ink only when encircling the letter of your final answer. 3. Avoid erasures, it will invalidate your answer. 4. Strictly no cheating and no use of any gadget. Violating this rule will automatically give you a zero point. PART I – TRUE OR FALSE: Shade A if the statement is true, and Shade B if the statement is false. 1. A variable cost is a cost that remains constant in total throughout wide ranges of activity. 2. If the activity level increases, then one would expect the variable cost per unit to increase as well. 3. Fixed costs expressed on a per unit basis vary inversely with changes in activity. 4. Labor fringe benefits may be charged to direct labor or manufacturing overhead while overtime premiums paid usually are considered a part of manufacturing overhead. 5. The cost of idle time should be charged as direct labor of the job that is in process when the breakdown occurs. 6. Internal failure costs result from identification of defects during the appraisal process. Such costs may include scrap, rejected products, rework, and downtime. 7. In ideal circumstances, each payroll check is delivered personally to the employee who signs a receipt for it. 8. The amount of income taxes withheld from employee gross pay is an expense to the employer. 9. Remuneration for manual labor, both skilled and unskilled, is commonly referred to as salaries. 10.An entry is made debiting Accrued Payroll and crediting Cash when payroll checks drawn against a payroll checking account are issued. 11.To better provide for a good division of labor, one individual should be in charge of time-keeping and payroll record keeping and distribution functions. 12.To avoid congestion at the time clock, it is desirable that one employee punch in or out for several other employees. 13.Service departments are sometimes called indeterminate cost centers, while production departments would be the final cost centers. 14.One of the purposes of service department cost allocation is to value inventory for external financial reporting. 15.Under the step-method of cost allocation, the final amount of pesos allocated to any production department is influenced by the order in which allocation is made from the service departments. 16.When a plantwide rate is used, this means that a single rate used to allocate overhead to all departments in the company. 17.Inter-service department activities are fully ignored by both the direct and step methods of cost allocation. 18.The predetermined overhead rate is an amount obtained by dividing the total overhead for the past period by the total overhead allocation base for the coming period. 19.The numerator reason refers to the overhead variance caused by the difference between the estimated and actual overhead costs for the period. 20.The sum of spending variance and the volume variance equals the total manufacturing overhead variance. PART II – MULTIPLE CHOICE THEORIES: Shade the letter that corresponds to your answer. 21.Which of the following is not an avoidable cause of labor turn over? a. disability, making a worker unfit for work c. lack of training facilities b. job dissatisfaction d. low wages and benefits 22.In a job order cost system, the incurrence of indirect labor costs would usually be included in the general ledger as a charge to a. factory overhead control c. work in process inventory b. factory overhead applied d. accrued payroll 23.A direct labor overtime premium should be charged to a specific job when the overtime is caused by a. increased overall level of activity b. management’s requirement that the job be completed before the annual factory vacation closure c. management’s failure to include the job in the production schedule d. customer’s requirement for early completion of job 24.Labor turnover is: a. the cost of labor incurred in a given period. b. the change in the labor force. c. the average labor force in the organization. d. the efficiency of the labor force in a given period. Cost Accounting and Control Part 1 1 of 4 First Term, A.Y. 2024 - 2025 QUIZ 2 John Miller E. Gubot  25.When a manufacturing company has a highly automated manufacturing plant producing many different products, which of the following is the most appropriate basis of applying manufacturing overhead cost to work in process inventory? a. Direct labor hours c. Machine hours b. Direct labor cost d. Cost of material used 26.Over applied overhead will always result when predetermined overhead rate is employed and a. production is greater than defined capacity b. actual overhead costs is higher than applied overhead c. defined capacity is less than normal capacity d. overhead incurred is less than overhead applied 27.In developing a predetermined factory overhead application rate for use in production, which of the following could be used as numerator and denominator? Numerator Denominator a. Actual Factory Overhead Actual Machine Hours b. Estimated Factory Overhead Actual Machine Hours c. Budgeted Factory Overhead Estimated Machine Hours d. Actual Factory Overhead Estimated Machine Hours 28.Which of the following is not a costing method? a. standard costing c. backflush costing b. job order costing d. periodic costing 29.Which of the following entries is prepared to record application of factory overhead to jobs? a. Debit work in process inventory, credit applied factory overhead. b. Debit work in process inventory, credit factory overhead control. c. Debit factory overhead control, credit applied factory overhead. d. Debit factory overhead and credit work in process inventory. 30.Overapplied factory overhead represents a. the amount which the actual overhead exceeds the applied overhead. b. an unfavorable variance. c. the amount which the applied overhead exceeds the actual overhead. d. the amount which the actual overhead exceeds the budgeted overhead. 31.Statement 1: Direct labor is a component of both prime cost and conversion cost. Statement 2: Variable cost is constant if expressed on total amount. a. Only statement 1 is true. c. Both statements are true. b. Only statement 2 is true. d. Both statements are false. 32.All of the following statements are true, except a. Labor cost is part of prime cost. b. Labor cost is directly related to raw materials cost. c. Labor cost is part of prime cost. d. Total labor costs is composed of direct and indirect labor. 33.Statement 1: The issuance of indirect materials would be debited to work in process inventory. Statement 2: Overhead is said to be over applied when the applied overhead exceeds the actual overhead incurred. a. Only statement 1 is true. c. Both statements are true. b. Only statement 2 is true. d. Both statements are false. 34.All of the following are considered as normal cause of idle time, except a. excessive machine breakdown. c. shift time change. b. employees’ break time. d. allotted time for machine set up. 35.Statement 1: Overtime premium, night shift differential pay and other similar types of incentives are treated as direct labor, hence is debited directly to work in process inventory account. Statement 2: If overtime pay is caused by the customer’s request of rush production, any additional cost is charged to factory overhead control. a. Only statement 1 is true. c. Both statements are true. b. Only statement 2 is true. d. Both statements are false. 36.Wages of security guard for a small plant would be an example of a. indirect labor and fixed factory overhead c. indirect labor b. indirect labor and variable factory overhead d. direct labor 37.A direct labor overtime premium should be charged to a. applied factory overhead. c. period cost. b. work in process inventory. d. factory overhead control. Cost Accounting and Control Part 1 2 of 4 First Term, A.Y. 2024 - 2025 QUIZ 2 John Miller E. Gubot  38.Statement 1: Factory overhead includes all costs, which may be variable or fixed other than direct material and direct labor. Statement 2: Mixed costs are overhead costs composed of variable and fixed manufacturing overhead. a. Only statement 1 is true. c. Both statements are true. b. Only statement 2 is true. d. Both statements are false. 39.Factory overhead includes a. all manufacturing costs b. all manufacturing costs which may be variable or fixed, except direct material and direct labor c. indirect materials but not indirect labor d. indirect labor but not indirect materials 40.The manufacturing overhead application rate is computed by a. multiplying the predetermined base quantity to the budgeted factory overhead cost. b. dividing the budgeted factory overhead cost to the predetermined base quantity. c. dividing the predetermined base quantity to the budgeted factory overhead cost. d. multiplying the budgeted labor hours to the budgeted factory overhead cost. PART III – MULTIPLE CHOICE PROBLEMS: Shade the letter that corresponds to your answer. For item nos. 41-42, refer to the following problem: Mikha Manufacturing Company produces a variety of products. The firm operates at 24 hours per day with three daily work shifts. The 1st shift workers receive regular pay. The 2nd shift workers receive 10% pay premium, and the 3rd shift workers receive 20% pay premium. In addition, the firm pays overtime premium of 50% based on the pay rate for the 1st shifts. All labor premiums are included in overhead. The actual payroll for the current month is as follows: Total wages for 16,000 hours ? Wage rate for 1st shift workers ₱35/hour Total regular hours worked 15,000 hours 41. The total amount of labor premiums charged to overhead is a. ₱35,000 c. ₱17,500 b. ₱70,000 d. ₱52,500 42. The total amount of payroll for the period is a. 560,000 c. 525,000 b. 630,000 d. 606,600 43. The following information is extracted from the records of Maloi Company for the month of September: No. of employees at the beginning of the month 1,600 No. of employees recruited during the month 50 No. of employees who left during the month 90 No. of employees at the end of the month 1,560 The labor turnover rate using replacement method is a. 3.16% c. 5.70% b. 3.20% d. 8.86% For items 44-46, please refer to the following problem: Aiah Company has two service departments (A and B) and two producing departments (X and Y). Data provided are as follows: Service Departments Operating Departments A B X Y Direct costs ₱150 ₱300 ₱5,000 ₱6,000 Services performed by Dept A. - 40% 40% 20% Services performed by Dept B. 20% - 70% 10% 44. If Aiah uses the direct method of allocating service department costs, the service department cost allocated to department Y is: a. ₱87.50 c. ₱65.00 b. ₱60.00 d. ₱74.50 45. If Aiah uses the step-down method of allocating service department costs starting with Department A, the service department cost allocated to department Y is: a. ₱60.00 c. ₱75.00 b. ₱66.00 d. ₱87.50 Cost Accounting and Control Part 1 3 of 4 First Term, A.Y. 2024 - 2025 QUIZ 2 John Miller E. Gubot  46. If Aiah uses the direct method of allocating service department costs, the service department cost allocated to department X is: a. ₱390.00 c. ₱362.50 b. ₱375.50 d. ₱385.00 47. Jhoanna is employed on the assembly line of a manufacturing company where he assembles a component part for one of the company's products. He is paid ₱14 per hour for regular time and time and a half for all work in excess of 40 hours per week. During the past week, Jhoanna worked a total of 50 hours and had no idle time. The allocation of Jhoanna's wages for the past week between direct labor cost and manufacturing overhead cost would be: a. ₱770 and ₱0 respectively c. ₱560 and ₱210 respectively b. ₱700 and ₱70 respectively d. ₱560 and ₱0 respectively 48. Estimated factory overhead is ₱600,000, and the hours usage of machinery is expected to be 150,000. Factory overhead is applied at the rate of ₱10 per direct labor hour. The wage rate for direct labor is ₱6 per hour, and the total number of estimated direct labor hours for the period is: a. 100,000 c. 300,000 b. 150,000 d. 60,000 49. Colet Co. uses a predetermined factory overhead rate based on direct labor hours. For the month of October, Colet's budgeted overhead was ₱300,000 based on a budgeted volume of 100,000 direct labor hours. Actual overhead amounted to ₱325,000 with actual direct labor hours totaling 110,000. How much was the overapplied or underapplied overhead? a. ₱5,000 overapplied c. ₱30,000 overapplied b. ₱5,000 underapplied d. ₱30,000 underapplied 50. Gwen Company applies factory overhead on the basis of direct labor hours. Budget and actual data for direct labor and overhead for the year are as follows:........................................................................................... Budget Actual Direct labor hours......................................................................... 600,000 550,000 Factory overhead costs................................................................ ₱720,000 ₱640,000 The factory overhead for Gwen for the year is: a. underapplied by ₱40,000 c. overapplied by ₱40,000 b. overapplied by ₱20,000 d. underapplied by ₱20,000 For additional 5 points, write a farewell letter to your professor in the space provided below: As for you, my dear student. Congratulations! You have made it this far. Never give up on your dreams, I am rooting for you. Fight the good fight, get those 3 letters next to your name and be a CPA! Lots of love, Sir G. - NOTHING FOLLOWS - Cost Accounting and Control Part 1 4 of 4 First Term, A.Y. 2024 - 2025 QUIZ 2 John Miller E. Gubot