1. Over-applied overhead that is material in amount is allocated between Finished Goods inventory, Work in process Inventory and Cost of Goods sold at year end. Over-applied factory overhead that is immaterial in amount is closed to Cost of Goods Sold at year end.

1. First and second sentence are true
2. First and second sentence are false
3. Only the first statement is true
4. Only the second statement is true

2. Process costing is most appropriate when manufacturing large batches of homogeneous products. Conversion cost includes all manufacturing cost other than direct materials.

1. First and second sentence are true
2. First and second sentence are false
3. Only the first statement is true
4. Only the second statement is true

3. Under applied overhead occurs when

1. Actual overhead is less than applied overhead
2. The actual overhead rate is less than the predetermined overhead rate
3. The predetermined overhead rate is less than the actual rate
4. The predetermined overhead rate is overstated

4. The Apple Manufacturing Company manufactures a product exclusively to customer order, employing a job order cost system.

On August 1, 2008, its work in process inventory (5 partially completed jobs) had a cost of P3, 000. During August, no additional orders were put into production and 18 orders were completed (total cost, P24, 000) of which 14 (cost P20, 000) were shipped.

Materials requisition in August totalled P17, 000 and direct labor costs were P8, 000. At the beginning of the year 2008, a predetermined overhead rate of 150% of expected direct labor cost was established.

The August 31, 2008 work in process inventory is:

1. P4, 000
2. P16, 000
3. P14, 000
4. 20, 000

5. Job no. 210 has, at the end of the second week of February, an accumulated total cost of P4, 200. In the third week, P1, 000 of direct materials were used on the Job, together with P10 of indirect materials. Twenty hours of direct labor services were applied to the job at a cost of P5 per hour.

Manufacturing overhead was applied at the basis of P2. 50 per direct labor hour for fixed overhead and P2 per hour for variable overhead.

Job no. 210 was the only job completed during the third week. The total cost of Job Order No. 210 is:

1. P5, 390
2. P5, 350
3. P5, 360
4. P5, 400

6. M. Munda Company produces and sells rattan baskets. The number of units produced and the corresponding total production costs for six month, which are representatives for the year, are as follows:

Month Units produced Production costs

April 500 P4, 000

May 700 P8, 000

June 900 P6, 000

July 600 P7, 500

August 800 P8, 500

September 550 P7, 250

The monthly production cost can be expressed as

1. Y = a + bx
2. Y = b +ax
3. Y = ax + b
4. X = a +by

7. (SAME PROBLEM) Using the least-square method, the variable production cost per unit is

1. P5
2. P10
3. P0.27
4. P3.74

8. (SAME PROBLEM) Using the least-square method, the monthly fixed production cost is

1. P1, 500
2. P18, 000
3. P4, 350
4. P52, 200

9. (SAME PROBLEM) If the high-low points method is used, the results when compared to those under the method of least squares are

Variable cost per unit Total fixed costs

1. Equal Equal
2. Higher by P1.26 Lower by P2, 850
3. Lower by P1.26 Higher by P2, 85
4. Higher by P5 Lower by P1, 500