WESTERN LEYTE COLLEGE

College of Accountancy and Business

COST ACCOUNTING AND CONTROL
SEMI-FINAL EXAMINATION
GENERAL INSTRUCTIONS:
• Cheating is strictly prohibited. If cheating is confirmed, the student(s)
involved will automatically FAIL in this exam
• The borrowing and lending of items during the examination is prohibited and
will be considered cheating
• Be sure to TURN OFF your mobile phone and place it inside your bag. Be
aware that any sounds coming from mobile phone or other devices during
examination will be considered cheating.
PART I. TRUE OR FALSE
____ 1. Reports prepared in financial accounting are general-purpose reports,
whereas reports prepared in managerial accounting are usually special-purpose
reports. TRUE
____ 2. Managerial accounting is primarily concerned with managers and
external users. FALSE
____ 3. Managerial accounting places less emphasis on precision and more
emphasis on flexibility and relevance than financial accounting. TRUE
____ 4. Managerial accounting is not governed by generally accepted
accounting principles (GAAP). TRUE
____ 5. Financial accounting and managerial accounting reports must be
prepared in accordance with generally accepted accounting principles (GAAP).
FALSE
____ 6. Both direct labor cost and indirect labor cost are product costs.
TRUE
____ 7. Manufacturing costs that cannot be classified as direct material or
direct labor are classified as manufacturing overhead. TRUE
____ 8. Direct material costs and indirect material costs are prime costs.
FALSE
____ 9. Indirect materials and indirect labor are both inventoriable costs.
TRUE
____10. Period costs are not inventoriable costs. TRUE
PART II. For each item listed below, indicate in the space provided whether
the item would be considered an inventoriable cost or period cost for a
manufacturing company. Use the following:
I= inventoriable costs P=Period Cost
______ 1. Factory Supervisory salaries I
______ 2. Sales Commissions P
______ 3. Income tax expense P
______ 4. Indirect materials used I
______ 5. Indirect Labor I
______ 6. Office salaries expense P
______ 7. Property taxes on factory building I
______ 8. Sales manager’s salary P
______ 9. Factory wages expense I
______ 10. Direct materials used I

PART III. Presented below is a list of costs and expenses incurred in the
factory by Vanessa Corporation, a manufacturer of vehicles. Classify the
above items into the following categories:
DM — Direct Materials DL — Direct Labor OH — Overhead

OH 1. Property taxes on the factory land

DM 2. Metal used in manufacturing
DL 3. Cabinet maker's wages
OH 4. Nails and glue used in production
OH 5. Factory supervisors’ salaries
OH 6. Depreciation on factory machines
DM 7. Carpeting for the recreational vehicles
OH 8. Insurance on factory equipment

PART IV.
1. The accounting records of Rommel Company revealed the following costs:
direct materials used, P170,000; direct labor, P350,000; manufacturing
overhead, P400,000; and selling and administrative expenses, P220,000. The
product costs total:
a. P 520,000 c. P 920,000
b. P 750,000 d. P 1,140,000
SOLUTION:
DM 170,000
DL 350,000
OH 400,000
920,000
2. The accounting records of Harris Corporation revealed the following
selected costs: Sales commissions, P40,000; plant supervision, P94,000; and
administrative expenses, P185,000. The period costs total:
a. P 40,000 c. P 185,000
b. P 94,000 d. P 225,000
SOLUTION:
Sales Commissions 40,000
Administrative exp 185,000
225,000
3. Total costs are P120,000 when 10,000 units are produced; of this amount,
variable costs are P48,000. What are the total costs when 12,000 units are
produced?
a. P 57,600 c. P 120,000
b. P 72,000 d. P 129,600
SOLUTION:
At 10,000 units:
Total cost= Fixed cost+ Variable cost
120,000= x+48,000
Fixed cost= 120,000-48,000= 72,000
Variable cost per unit= 48,000/10,000 units= 4.8
At 12,000 units:
Total cost= Fixed cost+ Variable cost
72,000+ (4.8 X 12,000)
Total cost= 72,000+ 57,600= 129,600

4. Prime costs of a company are P3,000,000, manufacturing overhead is

P1,500,000 and direct labor is P750,000. What is the amount of direct
materials?
a. P 1,500,000 c. P 2,250,000
b. P 750,000 d. Cannot be determined from the information
provided.
SOLUTION:
TOTAL PRIME COST 3,000,000
Less: DL (750,000)
DM 2,250,000
5. Joseph Company has a beginning inventory of direct materials on March 1 of
P30,000 and an ending inventory on March 31 of P36,000. The following
additional manufacturing cost data were available for the month of March:
Direct materials purchased ............................P84,000
Direct labor............................................60,000
Factory overhead .......................................80,000
During March, prime cost added to production was:
a. P 140,000 c. P 144,000
b. P 138,000 d. P 150,000
SOLUTION:
DM Beg. 30,000
Purchased 84,000
DM, End (36,000)
DM put into production 78,000
DL 60,000
138,000
6. Sherina Company has a beginning inventory of direct materials on March 1
of P30,000 and an ending inventory on March 31 of P36,000. The following
additional manufacturing cost data were available for the month of March:
Direct materials purchased ...................P84,000
Direct labor...................................60,000
Factory overhead ..............................80,000
During March, conversion cost added to production was:
a. P 80,000 c. P 140,000
b. P 144,000 d. P 138,000
SOLUTION:
Conversion cost= Direct Labor + Factory overhead
60,000 + 80,000= 140,000

Use the following information for the next two (2) questions:
 Sarah Company's accounting records reflect the following inventories:
Dec. 31, 20X0 Dec. 31, 20X1
Raw materials inventory P260,000 P310,000
Work in process inventory 160,000 300,000
Finished goods inventory 150,000 190,000
During the year, P500,000 of raw materials were purchased, direct labor
costs amounted to P600,000, and manufacturing overhead incurred was P480,000.
7. The total manufacturing costs incurred amounted to
a. P 1,530,000 c. P 1,390,000
b. P 1,490,000 d. P 1,580,000
SOLUTION:
Raw Materials, Beg. 260,000
Purchased 500,000
Raw Materials, End (310,000)
Raw materials, Used 450,000
DL 600,000
MOH 480,000
TOTAL MANUFACTURING
Cost(TMC) 1,530,000

8. The cost of goods sold for the year is

a. P 1,500,000 c. P 1,350,000
b. P 1,250,000 d. P 1,430,000
SOLUTION:
WIP beg. 160,000
TMC 1,530,000
WIP, End (300,000)
COGM 1,390,000
FG, Beg 150,000
FG, End (190,00)
COGS 1,350,000
9. Abigail Company reported the following year-end information:
Beginning work in process inventory P 46,000
Beginning raw materials inventory 24,000
Ending work in process inventory 50,000
Ending raw materials inventory 20,000
Raw materials purchased 680,000
Direct labor 240,000
Manufacturing overhead 100,000
How much is the cost of goods manufactured for the year?
a. P 684,000 c. P 1,020,000
b. P 1,024,000 d. P 1,028,000

SOLUTION:
Raw Materials, beg 24,000
Raw Material Purchased 680,000
Raw Materials, end (20,000)
Raw Materials put into production 684,000
DL 240,000
MOH 100,000
TMC 1,024,000
Beg. WIP 46,000
End, WIP (50,000)
COGM 1,020,000

10. Erin Company gathered the following information on power costs and
factory machine usage for the last six months:
Month Power Cost Factory Machine Hours
January P24,400 13,900
February 30,300 17,600
March 29,000 16,800
April 22,340 13,200
May 19,900 11,600
June 14,900 6,600
Using the high-low method of analyzing costs, answer the following questions:
a. What is the estimated variable portion of power costs per factory
machine hour?
SOLUTION:
30,300 − 14900
=
17,600 − 6,600
𝟏𝟓,𝟏𝟎𝟎
= = 𝟏. 𝟒/machine hour
𝟏𝟏,𝟎𝟎
b. What is the estimated fixed power cost each month?
SOLUTION: Used either the February Info. Or June Info
Total cost= Variable Cost+Fixed cost
30,300 = (1.4 X 17600)+ Fixed Cost
30,300 =24,640+Fixed Cost
FIXED COST= 30,300-24,640 = 5,660
c. If it is estimated that 10,000 factory machine hours will be run in July,
what is the expected total power cost for July?
Y= 5,660+ (1.4)(10,000)
= 5660+14,000
Total Power Cost = 19,660
11. The management of Joyce Company would like to separate the fixed and
variable components of electricity as measured against machine hours in one
of its plants. Data collected over the most recent six months follow:
Electricity Machine
Month Cost Hours
January ......................P27,000 800
February ......................20,000 500
March .........................31,000 1,000
April..........................19,000 400
May ...........................24,000 600
June ..........................29,000 900
Using the method of least squares, compute the fixed cost and the variable
cost rate for electricity expense.
SOLUTION: Bonus
Y= a+bx

12. If a firm produces more units than it sells, absorption costing, relative
to variable costing, will result in
a. Higher income and assets c. Lower income but higher assets
b. Higher income but lower assets d. Lower income and assets
13. Profit under absorption costing may differ from profit determined under
variable costing. How is this difference calculated?
a. Change in the quantity of all units in inventory times the relevant
fixed costs per unit
b. Change in the quantity of all units produced times the relevant
fixed costs per unit
c. Change in the quantity of all units in inventory times the relevant
variable cost per unit
d. Change in the quantity of all units produced times the relevant
variable cost per unit
14. Johanna Company, which has only one product, has provided the following
data concerning its most recent month
of operations:
Selling price ........................... P112

Units in beginning inventory ..............500

Units produced............................2,600
Units sold ...............................3,000
Units in ending inventory...................100

Variable costs per unit:

Direct materials............................P13
Direct labor................................P49
Variable manufacturing overhead.............P 6
Variable selling and administrative ........P10

Fixed costs:
Fixed manufacturing overhead ............. P80,600
Fixed selling and administrative ...........P15,000
The company produces the same number of units every month, although the
sales in units vary from month to month. The company's variable costs per
unit and total fixed costs have been constant from month to month.
• What is the unit product cost for the month under variable costing?
SOLUTION:
DM 13
DL 49
VMOH 6
Unit Product cost 68
• What is the unit product cost for the month under absorption costing?
SOLUTION
DM 13
DL 49
VMOH 6
FMOH(80,600/2,600) 31
Unit Product cost 99
• Compute the net income for the month using the variable costing method.
SOLUTION:
Sales (3,000 X 112) 336,000
Less: COGS (3,000 X 68) (204,000)
Less: OPEX
Variable S&A (3k X 10) 30,000
Fixed S&A 15,000
FIXED MOH 80,600 (125,600)
Net Income 6,400
• Compute the net income for the month using the absorption costing method.
SOLUTION:
Sales (3,000 X 112) 336,000
Less: COGS (3,000 X 99) (297,000)
Less: OPEX
Variable S&A (3k X 10) 30,000
Fixed S&A 15,000 (45,000)
Net Loss (6,000)
15. Job order costing and process costing have which of the following
characteristics?
Job Order Costing Process Costing
a. Homogeneous products Heterogeneous products
and large quantities and small quantities
b. Homogeneous products Heterogeneous products
and small quantities and large quantities
c. Heterogeneous products Homogeneous products
and large quantities and small quantities
d. Heterogeneous products Homogeneous products
and small quantities and large quantities
Use the information below in answering the next five questions
Judy Inc. is employing normal costing for its Job orders. The overhead is
applied using a predetermined overhead rate. The following information
relates to the company for the year ended December 31, 2021:
Job No. 101 Job No. 102 Job No. 103
Job in Process, Jan. 1, 2021:
Direct materials 40,000 30,000 0
Labor 60,000 40,000 0
 Factory overhead 30,000 20,000 0
Costs added during 2021:
Materials 20,000 10,000 100,000
Labor 100,000 200,000 400,000
Factory overhead ? ? ?

Additional information:
● Actual overhead for the year 2020 amounted to P350,000
● Jobs No. 101 and 102 were completed and transferred to finished goods
during year 2021
● Job No. 101 was sold during year 2021
● The gross profit rate is 20% based on cost
SOLUTION: (Assumption overhead is based on labor)
*by looking at the JIP, beg Job 101 Factory overhead is 50% (30k/60k); Job
102 is also 50% (20k/40k)
16. What is the total manufacturing cost for 2021?
a. P1,400,000 c. P480,000
b. P1,180,000 d. P1,200,000
Solution: Total Manufacturing cost is simply the total cost added during the
period:
JOB 101 Job 102 Job 103
Materials 20,000 10,000 100,000
Labor 100,000 200,000 400,000
FOH (50% of DL) *50,000 **100,000 ***200,000
170,000 310,000 700,000= 1,180,000
* 100k x50%=50,000
**200k x50%=100,000
***400,000x 50%=200,000
17. What is the cost of goods manufactured for 2021?
a. P680,000 c. P580,000
b. P700,000 d. P780,000
WIP Beg:
Job 101 130,000
Job 102 90,000 220,000
Add: TMC 1,180,000
Less: WIP, End
Job 103 700,000
COGM 700,000
18. What is the cost of goods sold for 2021?
a. P1,180,000 c. P700,000
b. P300,000 d. P1,200,000
SOLUTION:
COGM 700,000
Add: FG, beg 0
Less: FG, End (JOB 102) *(400,000)
COGS 300,000
* JOB 102 COST
WIP, beg cost= 90,000
Add: Cost Added= 310,000
TOTAL= 400,000
19. What is the gross profit for 2021?
a. P236,000 c. P140,000
b. P60,000 d. P240,000
Note: Whatever the bases that is the 100% (in this case COGS is 100%)
Sales 120% *360,000
- COGS 100% 300,000
Gross Profit 20% 60,000
* 300,000 x 120%= 360,000
20. What are the cost of work in process on December 31, 2021 and the cost of
finished goods on December 31, 2021, respectively?
a. P800,000 and P500,000 c. P600,000 and P300,000
b. P700,000 and P400,000 d. P900,000 and P200,000
SOLUTION:
JOB 103 700,000
Job 102 400,000 (refer to the solution above)
Items 21 to 24 are based on the following information:
Roy Company manufactures product X in a two-stage production cycle in
Department A and B. Materials are added at the beginning of the process in
Department B. Conversion costs for Department B were 50% complete as to the
6,000 units in the beginning work in process and 75% complete as to the 8,000
units in the ending work in process. 12,000 units were completed and
transferred out of Department B during February 2016. An analysis of the
costs relating to work in process (WIP) and production activity in Department
B for February 2016 is as follows:

Cost
Transferred- in Materials Conversion
WIP, February 1: Costs attached P 12,000 P 2,500 P 1,000
February activity: Costs Added 29,000 5,500 5,000

21. The cost per equivalent from the preceding department

(rounded to nearest centavo):
FIFO Average FIFO Average
A. P2.07 P2.05 C. P2.77 P2.78
B. P2.78 P2.77 D. P2.05 P2.07
22. The current total unit cost in this department (for
materials, labor, and overhead) for product X (rounded to nearest
centavo):
FIFO Average FIFO Average
C. P .72 P .73 C. P .77 P .78
D. P .78 P .77 D. P .78 P .79
23. The total cost per equivalent unit for February was: (rounded to
nearest centavo):
 FIFO Average Average FIFO
A. P2.79 P2.78 C. P2.77 P2.78
C. P2.78 P2.7 D. P4.78 P2.78

24. The total cost per equivalent unit transferred-out for February 2016
of product X, rounded to the nearest centavo, was:
FIFO Average FIFO Average
A. P2.77 P2.77 C. P2.77 P2.78
B. P2.78 P2.77 D. P2.78 P2.78
SOLUTION GUIDE: (For ITEMS 21-24)
FIFO
Quantity Schedule: Actual WD Trans- WD EP-M WD EP-CC
in
IP, beginning 6,000
Rec’d from PD/Transferred-In 14,000
20,000
Accounted For As Follows:
IP, beg. F & T 6,000 0% 0 -0- -0- 50% 3,000
Received , F and T 6,000 100% 6,000 100% 6,000 100% 6,000
In Process, end _8,000 100% 8,000 100% 8,000 75% 6,000
20,000 14,000 14,000 15,000

Cost per EUP:

Trans-in: (29,000/14,000)= 2.07
Materials: (5,500/14,000)= 0.39
Conversion: (5,000/15,000)= 0.33

WAVE
Quantity Schedule: Actual WD Trans- WD EP-M WD EP-CC
in
IP, beginning 6,000
Rec’d from PD/Transferred-In 14,000
20,000
Accounted For As Follows:
F and T 12,000 100% 12,000 100% 12,000 100% 12,000
In Process, end _8,000 100% 8,000 100% _8,000 75% _6,000
20,000 20,000 20,000 18,000

Cost per EUP:

Trans-in: (12,000+29,000)/20,000= 2.05
Materials: (2,500+5,500)/ 20,000= 0.4
Conversion: (1,000+5,000)/18,000= 0.33
 25. The Wiring Department is the second stage of Flem Company’s production
cycle. On May 1, the BWIP contained 25,000 units which were 60% complete as
to conversion costs. During May, 100,000 units were transferred-in from the
first stage of Flem’s production cycle. On May 31, EWIP contained 20,000
units which were 80% complete as to conversion costs. Materials added at
the end of the process. Using FIFO method, the EUP on May 31 were:
Transferred-in Costs Materials Conversion Costs
B. 100,000 125,000 100,000
B. 125,000 105,000 105,000
C. 125,000 105,000 121,000
D. 100,000 105,000 106,000

SOLUTION:*WD-=Work Done
Quantity Schedule: Actual WD TRANS- EP-M WD EP-CC
IN
IP, beginning 25,000
Rec’d from PD/Transferred-In 100,000
125,000
Accounted For As Follows:
IP, beg. F & T 25,000 0% 0 100% 25,000 40% 10,000
Received , F and T 80,000 100% 80,000 100% 80,000 100% 80,000
In Process, end 20,000 100% 20,000 0% 0 80% 16,000
125,000 100,000 105,00 106,000
0

PART V.
NEGROS OCCIDENTAL MANUFACTURING COMPANY allocates service department budgeted
costs to production departments as a matter of company policy.
The production departments are P1 and P2, the service departments are
S1 and S2, and the monthly data are: The factory overhead rate for P1 is
computed based on 20,000 direct labor hours and P2 based on 15,000 machine
hours.

Budgeted Factory Services Provided by

Overhead
S1 S2
P1 P 564,000 40% 50%
P2 510,000 50% 30%
S1 135,000 - 20%
S2 105,600 10% -

REQUIRED: Compute the factory overhead rate for P1 and P2 after distribution
of service department costs using:
a. Direct Method
SOLUTION:
MAINTENANCE PERSONNEL PRINTING DEVELOPING
1
15,000 3,750 11,2502
3
36,000 7,200 28,8004
(1) 15,000 x (1K/4k)= 3,750
(2) 15,000 x (3K/4K)= 11,250
(3) 36,000 x (500/2500)= 7,200
(4) 36,000 x (2000/2500)= 28,800

b. Step method- start with S1

MAINTENANCE PERSONNEL PRINTING DEVELOPING
15,000 3,0001 3,0002 9,0003
36,000
39,000 7,8004 31,2005
(1) 15,000 X (1k/5k)= 3,000
(2) 15,000 X (1k/5k)= 3,000
(3) 15,000 X (3k/5K)= 9,000
(4) 39,000 X (500/2500)= 7,800
(5) 39,000 X (2,000/2,500)= 31,200

c. Reciprocal method
Maintenance (S1)= 15,000+ 1/6 Personnel
Personnel (S2)= 36,000 + 0.20 Maintenance

S1= 15,000+ 1/6(36,000+0.20S1)

S1 = 15,000+ 6,000+0.0333S1
1S1-0.0333S1= 21,000/0.9667
S1= 21,723.39

S2= 36,000 + 0.20(21,723.39)

= 40,344.68
MAINTENANCE PERSONNEL PRINTING DEVELOPING
15,000 36,000 45,000 30,000
(21,723.39) 4,344.68 4,344.68 13,034.03
6,724.11 (40,344.68) 6,724.11 26,896.45
0 0

PART VI
The Wood Company produces 3 joint products at a joint cost of P100,000. Two
of these products were processed further. Production and sales were
Product Weight Sales Addt’l Processing Cost
A 300,000 lbs. P245,000 P200,000
B 100,000 lbs. 30,000 None
C 100,000 lbs. 175,000 100,000
Q1: If the net realizable value method is used, how much of the joint costs
would be allocated to product A, B, and C?

SOLUTION:
NRV PROPORTION JOINT COST ALLOCATED
A (245k-200k) 45,000 (45k/150k) 30% (100k X 30%) 30,000
B (30,000-0) 30,000 (30k/150k) 20% (100k x 20%) 20,000
C (175k-100k) 75,000 (75k/150k) 50% (100k x 50%) 50,000
150,000

Q2. Assume B is a by-product whose sales value is deducted from the joint
production costs. If net realizable value is used, how much of the joint
costs would be allocated to product A, B, and C?

SOLUTION: NEW JOINT COST: 100k-30k= 70,000

NRV PROPORTION JOINT COST ALLOCATED
A (245k-200k) 45,000 (45k/120K) 37.5% (70k X 37.5%) 26,250
C (175k-100k) 75,000 (75k/120k) 62.5% (70k X 62.5%) 43,750
120,000