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1P A M A N T A S A N N G L U N G S O D N G V A L E N Z U E L ACOST ACCOUNTINGQuiz 2 - Cost Concepts and ClassificationPROBLEMSChoose the letter that corresponds to the best answer. Write your answer beside each no. Use capital letter only. Erasures are prohibited. Guimaras Corporation has the follow...

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AMANTASAN NG

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UNGSOD NG

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ALENZUELA

COST ACCOUNTING Quiz 2 - Cost Concepts and Classification PROBLEMS Choose the letter that corresponds to the best answer. Write your answer beside each no. Use capital letter only. Erasures are prohibited. 1. Guimaras Corporation has the following information: Increase (Decrease) Raw Materials P 10,000 Work-In Process (5,000) Finished Goods 8,000 Factory supplies 2,000 Other Information: Direct materials purchased P 50,000 Direct Labor 44.45 % of total prime cost Manufacturing Overhead 60% of total conversion cost How much is the cost of goods manufactured by Guimaras Corporation?

a. P135,000

b. P145,000

c. P187,477

d. 172,477

e. None of the choices

2. When 10,000 units are produced, fixed costs are P14 per unit. Therefore, when 20,000 units are produced fixed costs will: a. increase to P28 per unit c. remain at P14 per unit b. decrease to P7 per unit d. total P280,000 e None of the choices 3. TransEx Company operates a fleet of delivery trucks in Luzon. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is P11.40 per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to P13.40 per kilometer. Assuming that in a given year, a truck were driven 80,000 kilometers, what total cost would you expect to be incurred? a. P1,012,000

b. P1,407,000

c. P1,225,143

d. P1,072,000

e. None of the choices

For items no. 4 to 6: St, John hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are P32 per occupied bed per day, assuming a 30-day month. This P32 figure contains both variable and fixed components. During the month of June, the hospital’s occupancy rate was only 60%. A total of P326,700 in operating cost was incurred during that month. 4. Using the high-low method, the amount of variable cost per occupied bed per day is a. P7.00 b. P9.00 c. P12.00 d.P15.00 e. None of the choices 5. Using the variable cost as determined in number 4. The total fixed operating costs per month are: a. P240,000 b. P270,000 c. P290,000 d. P300,000 e. choices

None

of

the

6. Assuming an occupancy rate of 75% in a particular month, what amount of total operating costs would you expect the hospital to incur? A. P310,000

b. P315,500

c. P340,875

d. P375,500

e. None of the choices

1

7. The Bora Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were:

Month March April May June July August September

Guest-Days of Occupancy 40,000 65,000 80,000 105,000 120,000 90,000 75,000

Custodial Supplies Expense P75,000 82,500 105,000 120,000 135,000 107,500 97,500

Using the high-low method in calculating the cost formula for custodial supplies, what amount of this expense would you expect to be incurred at an occupancy level of 110,000 guests? a. P92,500 b. P98,750 c. P110,000j d. P127,500 e. None of the choices 8. Tomas Sanaco has just been appointed chairperson of the Accountancy Department of SANAMAGKASCOREAKO UNIVERSITY. In reviewing the department’s cost records, Tomas has found the following total cost associated with Cost Accounting subject over the last several terms: Semester/Term Number of Subjects Total Cost Offered AY2004, First Semester 4 P10,000 AY2004, Second Semester 6 14,000 AY2004, Summer 2 7,000 AY2005, First Semester 5 13,000 AY2005, Second Semester 3 9,500 Tomas knows that there are some variable costs, such as amounts paid to student assistants, associated with the course. He would like to have variable and fixed cost components separated for planning purposes. using the leastsquares method, what is the variable cost per section of Cost Accounting? a. P1,750P b. 1,500 c.P1,200 d.900 e. None of the choices 9. The following activity and cost data that were provided by Hoist Corporation would help in estimating its future maintenance costs: Units Maintenance Cost Units Maintenance Cost 3 P 450 11 P 640 7 530 15 700 Using the least-squares regression method to estimate the cost formula, the expected total cost for an activity level of 10 units would be closest to: a. P612.50 b. P581.82 c. P595.84 d. P601.50 e. None of the choices 10. Given the cost formula Y = P17,500 + P4X, at what level of activity will total cost will be P42,500? a. 10,625 units b. 4,375 units c. 6,250 units d. 5,250 unitse. None of the choices 11. Palm, Inc. has a total of 2,000 rooms in its nationwide chain of hotels. On the average, 70 percent of the rooms are occupied each day. The company’s operating cost is P21 per occupied room per day at this occupancy level, assuming a 30-day month. This P21 figure contains both variable and fixed cost elements. During October, the occupancy dropped to only 45 percent. A total of P792,000 in operating costs were incurred during the month. What would be the expected operating costs, assuming that the occupancy rate increases to 60 percent during November? a. P1,056,000 b. P 846,000 c. P 756,000 d. P 829,500 e. None of the Choices For items no. 12 to 15. As part of a cost study, the cost accountant of Romblon Corporation Inc. has recorded the cost of operations at seven different levels of material usage. This information s shown as follows: Kilos of Materials Cost of Operations 100 P1,000 75 600 25 400 150 1,500 Kilos of Materials Cost of Operations 175 1,600 50 600 125 1,300 12. Using the high-low method, the variable cost of operations per kilos of materials used is: a. P7.80 b. P8.00 c. P9.14 d. P16.00 e. None of the choices 13. Using the same high-low method, the fixed cost of operation is: a. P200 b. P400 c. P1,200 d. P1,600

e. None of the choices

14. Using the least-square method, the average rate of variable per kilo of materials used is: a. P5.16 b. P8.71 c. P10.84 d. P11.64 e. None of the choices

15. Using the least-square method, the fixed portion of the cost is: a. P109 b. P129 c. P200 d. P271

e. None of the choices

For budgeting and control purposes, the controller of SUSUKAPERODISUSUKO Corporation is in the process of estimating the variable cost per hour and the fixed cost per month of operating automated equipment. Data for the past 12 months of operations have been gathered as follows: Number of observations Sum of the hours Sum of the costs Sum of the hours multiplied by the costs Sum of the hours squared

12 840 P 9,000 655,000 63,800

The company uses the least-square regression method in cost segregation. 16. What was the variable cost per hour to operate the machine? a. P5.25 b. P10.25 c. P5.00 d. P12.00

e. None of the choices

17 . What was the fixed cost per month? a. P360 b. P400 c. P90

e. None of the choices

d. P420

18. The following information is available for the manufacturing operations of ULITAKOSACOST Company for the month of March: Beginning Balance Ending Balance Direct materials P30,000 P37,000 Work-In Process 12,000 18,000 Finished Goods 72,000 93,000 Direct Materials Purchased 82,000 Direct labor payroll 60,000 Direct labor rate per hour P15.00 Factory overhead rate direct labor hour P10.00 Cost of goods available for sale for the month of March is a. P241,000 b. P169,000 c. P148,000

d. P187,000

e. None of the choices

19. The following information summarizes total production costs and number of units of product produced by Company B over the last 6 months: Month Total Cost Units Produced Month Total Cost Units Produced 1 P24,000 30,000 4 P27,000 34,000 2 30,000 42,000 5 25,000 32,000 3 28,000 40,000 6 23,000 31,000 Using the high-low method, the estimated cost function for this product is a. Y = P9,000 + P0.500 x number of units produced. b. Y = P7,500 + P0.585 x number of units produced. c. Y = P3,285 + P0.636 x number of units produced. d. Y = P 493 + P0.726 x number of units produced. 20. Lampco has determined that, for its “Slender” model of lamp, the direct materials cost is P5 per unit and the direct labor cost is P4 per unit. Based on 20 monthly observations, the company ran a regression that projected overhead associated with this model of lamp as follows: Overhead = P16,500 + P0.75x, where x is the direct labor cost. The selling price for the Slender lamp is P17 per unit. What is the expected gross margin from sales of the Slender lamp next month if sales volume is estimated to be 5,000 units? a. P36,250 b. P23,500 c. P8,500 d. P19,750 e. None of the choices 21. All variable costs of a particular service vary based on direct labor hours. the following relationship pertains to a year’s budgeted activity regarding this service: Direct labor hours Total costs P

300,000 129,000

P

400,000 154,000

What are budgeted fixed costs for the year? a. P25,000 b. P29,000 c. P54,000 d. P75,000 22. The following is information from the records of WALANGAAYAW Corp. for the month of June: Beginning Balance Ending Balance Purchased in June Direct Materials P100,000 P100,000 P920,000 Indirect Materials 20,000 15,000 40,000

Work in Process -0Office Supplies 48,000 Other Expenses Additional Information: Direct Labor Selling and administrative expenses Rent Utilities Advertising

-0-

n/a 22,000

P

34,000

680,000 36,000 120,000 80,000 300,000

WALANGAAYAW Corp. allocates 60% of rent and utilities to manufacturing and 40% to selling and administration. What amount of indirect manufacturing costs would be charged to cost of goods manufactured in June? a. P165,000 b. P1,765,000 c. P225,000 d.P1,085,000 e. None of the choices 23. A ski resort calculates that the cost driver for equipment maintenance is number of guests. The resort has the following information: Month Maintenance No. of Guests Cost November P 7,200 6,000 December 6,800 6,500 January 11,600 10,000 February 10,000 9,000 Using the high-low method, the estimated variable cost per guest for equipment maintenance is a. P1.10 b. P1.17 c. P1.20 d. P1.37 e. None of the choices 24. On August 13, BAKITKASINAGKASUNOG Corporation had a fire at its manufacturing plant that completely destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building, and those records revealed the following for the period from July 1 to August 13: Direct materials purchased Work-in-process inventory, July 1 Direct materials, July 1 Finished goods, July 1 Indirect manufacturing costs Sales Direct manufacturing labor Prime costs Gross margin percentage based on sale Cost of goods available for sale

P 360,000 640,000 24,000 82,000 420,000 1,960,000 30% of conversion costs P 490,000 40% P 1,500,000

The loss was fully covered by insurance, and the insurance company wants to know the historical cost of the inventories as part of negotiating a settlement. What is the amount of finished goods inventory lost in fire? a. P 100,000 b. P 324,000 c. P 242,000 d. P 406,000 e.None of the choices

25. Referring to the previous item, what is the amount of work-in-process inventory lost in the fire? a. P 50,000 b. P 230,000 c. P 312,000 d.P 132,000 e. None of the choices 26. A hotel has recorded that the costs incurred were P570 when 340 guests stayed for one night. They know that the fixed laundry cost is P400 per night. What is the variable laundry cost per guest-night (to the nearest cent)? a. P 0.50 b. P 1.18 c. P 1.68 d. None of the choices 27. SAYONALANGAKO CO. has recorded the following data for two recent periods. Transportation costs P 9,680 P 9,860 Deliveries made 840 930 The transport costs for a particular period could be represented by: a. P10.60 x number of deliveries b. P11.52 x number of deliveries c. P8,000 – (P2 x number of deliveries) d. P8,000 + (P2 x number of deliveries) 28. A careful study by a company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is P11.6 per mile. If a truck is driven only 80,000 miles, the average operating cost increases to P13.6 per mile. Using the high-low method, estimate the unit variable cost. a. 7.6 b. 12.4 c. 12.6 d.20,000 e. None of the choices 29. Work-in process of Palawan Corporation increase P11,500 from the beginning to the end of November. Costs incurred during November were direct materials which is 12.5% of total manufacturing costs, direct labor amounting to P63,000 and overhead is applied at the rate of 1/3 of direct labor. What was the cost of goods manufactured during the November? a.

P93,500

b. P84,500

c. P126,000

d. P132,500

e. None of the choices

30. The beginning balance of Raw Materials was P10,000. During the year purchases of raw materials for P125,000 were made, but only P75,000 were paid. The balance of Raw Materials at the end of the year was P30,000. What was the amount of raw materials used in production? A. P55,000

b. P95,000

c. P45,000

d. P105,000

e. None of the choices

31. YESMAYSCORENAKO. is a highly successful farmer who has formed his own company to produce and package banana chips. The recently hired controller for the firm is about to apply the high-low method in estimating the company’s energy cost behavior. The following costs were incurred during the past 12 months: Month January February March April May June July August September October November December

Kilos of Banana chips Produced 105,000 63,000 66,000 72,000 90,000 96,000 2,000 90,000 90,000 84,000 123,000 117,000

Use the high-low method to compute the total fixed cost a.60,000 b. 61,187 c. 58,275

Enery Costs P70,200 66,300 66,000 67,350 68,700 70,050 12,500 68,400 69,000 68,100 72,300 74,850

d. 63,500

e. none of the choices

32. Using the information of previous no., predict the energy cost for a month in which 78,000 kilos of banana chips are produced a. 67,800 b. 58,250 c. 63,215 d. 64,050 e. none of the choices...