1.

A company is more likely to use a job cost system if

A. it manufactures a large volume of similar products
B. its production is continuous
C. it manufactures products with unique characteristics
D. it uses a period inventory system

2. When incurred, factory labor cost are debited to

A. Work in process C. Factory Labor
B. Factory Wages Expense D. Payroll

3. Sales commissions are classified as

A. prime cost C. product cost
B. period cost D. indirect labor

4. As current technology changes manufacturing processes, it is likely that direct

A. labor will increase C. materials will increase
B. labor will decrease D. materials will decrease

5. The wage of a timekeeper in the factory would be classified as

A. prime cost C. indirect labor
B. direct labor D. administrative expense

6. Which of the following would not be classified as manufacturing overhead?

A. Indirect labor C. Insurance on factory building
B. Direct materials D. Indirect materials

7. For a manufacturing company, the cost of goods available for sale during a given accounting period is
A. The beginning inventory of finished good C. The sum of the above
B. The cost of goods manufactured during the D. None of the above
period

8.Cost of goods sold is

A. An expense C. Is an asset
B. A period cost D. None of the above

Love Co. produced 5,500 outdoor chairs for Job Order No. 610. A total material cost was P 51,700. Each chair
required 2.2 hours of direct labor at P8.90/ hour. A total of P 53,845 of factory overhead was traced to Order
610.

9. What is the prime cost per unit of this order?

A. P 19.58 C. P 29.37
B. P 28.98 D. P 38.77

10.What is the conversion cost per unit of this order?

A. P 19.58 C. P 29.37
B. P 28.98 D. P 38.77

11.What is the unit cost of this order?

A. P 37.88 C. P 28.09
B. P 38.77 D. P 36.99
Salvador, Inc. purchases and sells milk flavored bubble gum. Over the last five months, Salvador had the
following production costs and product volume.
Month Cost Volume(in cases)
March P 6,000 12
April 6,659 14
May 8,370 18
June 8,800 19
July 8,050 17

12.Using the high-low method, what is fixed cost per month for bubble gum production?
A. P 400 C. P 4,800
B. P 1,200 D. P 7,600

13.The variable cost per case is

A. P 400 C. P 1,200
B. P 600 D. P 2,800

The following costs relate to Robi Industries for the last quarter:
Conversion cost P 435,000
Direct materials 215,000
Manufacturing overhead 190,000
Selling and administrative expense 185,000

14.What is Robi’s prime cost for last quarter?

A. P 460,000 C. P 405,000
B. P 410,000 D. P 375,000

15.Robi’s total manufacturing cost is

A. P 460,000 C. P 650,000
B. P 645,000 D. P 840,000

16.Robi’s total period cost is

A. P 185,000 C. P 400,000
B. P 275,000 D. P 620,000

17.Which of the following should not be included as manufacturing overhead in the manufacturing overhead in
the manufacture of a wooden chair?
A. Glue in the chair
B. The amount paid to the individual who stains the chair
C. The worksman’s compensation insurance of the supervisor who oversees production
D. The factory utilities of the department in which production takes place

18.The distinction between indirect and direct costs depends on

A. whether a cost is controllable or non-controllable
B. whether a cost is variable
C. whether a cost is a product or a period cost
D. whether a cost can be conveniently and physically traced to a unit under consideration

19.All of the following are examples of product costs except:

A. depreciation on the company’s retail outlets C. insurance on the factory equipment
B. salary of the plant manager D. rental costs of the factory facility

20.Variable cost
A. increase on a per unit basis as the number of units produced increases
B. is constant if expressed on a per unit basis
C. remains the same in total as production increases
D. is not affected by changes in activity from period to period

21. Indirect cost are also known as:

A. Differential cost C. Opportunity
B. Common cost D. Sunk costs

22.For manufacturing company, which of the following is an example of a period rather than a product cost?
A. Depreciation of factory equipment C. Wages of machine operators
B. Wages of salesperson D. Insurance on factory equipment

23.In general, the cost that could usually be most reliably predicted is:
A. Variable cost per unit C. Total variable cost
B. Fixed cost per unit D. Total fixed cost

24.Examples of factory overhead costs are

A. Lubricants for factory machinery C. Both of the above
B. Depreciation of factory machinery D. None of the above

25. Factory rent is

A. A prime cost and an inventoriable cost C. A conversion cost and an inventoriable cost
B. A prime cost and a period cost D. A conversion cost and a period cost

26. Financial statements for external users can be described as

A. user-specific C. special purpose
B. general purpose D. management reports

27. Planning is a function that involves

A. hiring the right people for a particular job
B. coordinating the accounting information system
C. setting goals and objectives for an entity
D. analyzing financial statements

28.Which of the following is not a management function?

A. Constraining C. Controlling
B. Planning D. Directing and motivating

29.A manager that is establishing objectives is performing which management function?

A. Motivating C. Planning
B. Directing D. Constraining

30.Management accounting information is generally prepared for

A. stockholders C. managers
B. creditors D. regulatory agencies

31.Managerial accounting is applicable to

A. service entities C. merchandising entities
B. manufacturing entities D. all of these

32. Which of the following is not an internal user?

A. creditor C. cost accountant
B. department manager D. controller
33.Managerial accounting is called
A. management accounting C. analytical accounting
B. controlling D. inside reporting

34.Management accountants would not

A. assists in budget planning
B. prepare reports primarily for external users
C. determine cost behavior
D. be concerned with the impact of cost and volume on profits

35. Internal reports must be communicated

A. daily C. annually
B. monthly D. as needed

36.Which of the following statements about internal reports is not true?

A. The content of internal reports may extend beyond the double-entry accounting system.
B. Internal reports may show all amounts at market values.
C. Internal reports may discuss prospective events.
D. Most internal reports are summarized rather than detailed

37. Internal reports are generally

A. aggregated C. regulated
B. detailed D. unreliable

38. Management accounting information

A. pertains to the entity as a whole and is highly aggregated
B. pertains to subunits of the entity and may be very detailed
C. is prepared only once a year
D. is constrained by the requirements of FASB

39. Financial accounting information is used for reporting to

A. External parties C. creditors
B. Investors D. managers

40. Which of the following statements about cost accounting is not true?
A. Is the intersection between financial and management accounting
B. Information generated by cost accounting is used by both financial and managerial accounting
C. Cost accounting provides product cost information to internal parties such as managers for planning and
controlling
D. Cost accounting is not important to any company

41. Is the process of monitoring the company’s operations and determining whether the objectives identified in
the planning process are being accomplished?
A. Strategic planning C. Operations planning
B. Tactical planning D. Control
42. Indirect material cost is a
Conversion cost Prime cost
A. No No
B. No Yes
C. Yes Yes
D. Yes No

42. Direct labor cost is a

Conversion cost Prime cost
A. No No
B. No Yes
C. Yes Yes
D. Yes No

43. Indirect labor is a

A. Prime cost C. Period cost
B. Conversion cost D. Non-manufacturing

44. In a job cost system, manufacturing overhead is

An indirect cost of jobs A necessary element of production
A. No Yes
B. No No
C. Yes Yes
D. Yes No

45.Prime cost and conversion cost share what common element of total cost?
A. Variable overhead C. Direct materials
B. Fixed overhead D. Direct labor

46. Which of the following is an element of prime cost?

Direct materials Direct labor
A. Yes Yes
B. Yes No
C. No Yes
D. No No

47. Wages paid to factory machine operators of a manufacturing plant are an element of
Prime cost Conversion cost
A. No No
B. Yes Yes
C. No Yes
D. Yes No

48. Costs that vary inversely with changes in volume include

A. Total variable costs C. Total fixed costs
B. Total variable costs divided by volume D. Total fixed costs divided by volume

49. When a unit of product is the cost object, factory overhead generally is:
A. A direct manufacturing cost C. Both of the above
B. An indirect manufacturing cost D. None of the above
50. Factory rent is
A. A prime cost and an inventoriable cost C. A conversion cost and an inventoriable cost
B. A prime cost and a period cost D. A conversion cost and a period cost
“If you wish a thing to be well done, you must do it yourself”