COST AND MANAGEMENT ACCOUNTING –I (ACFN-224 )

Group ASSESSMENT
Submission date one week befor final exam
QUESTION-1 Part I: Multiple Choice Questions
Choose the correct answer among the given alternatives.

1) Cost objects include:

A. Products D. All of the above.
B. Customers E. None of the above
C. Departments
2) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is:
A. Cost accumulation D. Conversion costing
B. Cost assignment E. All of the above.
C. Cost tracing F. None of the above
3) Which of the following does NOT affect the direct/indirect classification of a cost?
A. the level of budgeted profit for the next year
B. the materiality of the cost in question
C. available technology to gather information about the cost
D. the design of the operation
E. All of the above. F. None of the above
4)Classifying a cost as either direct or indirect depends upon:
A. the behavior of the cost in response to volume changes
B. whether the cost is expensed in the period in which it is incurred
C. whether the cost can be easily identified with the cost object
D. whether an expenditure is avoidable or not in the future
E. All of the above. F. None of the above
5) Which one of the following items is a direct cost?
A. Customer-service costs of a multiproduct firm; Product A is the cost object.
B. Printing costs incurred for payroll check processing; payroll check processing is the cost object.
C. The salary of a maintenance supervisor in a multiproduct manufacturing plant; Product B is the cost
object.
D. Utility costs of the administrative offices; the accounting department is the cost object.
E. All of the above. F. None of the above
6) Which of the following is a mixed cost?
A. monthly rent payment
B. manager's salary
C. monthly telephone bill
D. direct materials E. All of the above.

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 7) An understanding of the underlying behavior of costs helps in all of the following EXCEPT:
A. costs can be better estimated as volume expands and contracts
B. true costs can be better evaluated
C. process inefficiencies can be better identified and as a result improved
D. sales volume can be better estimated
E. All of the above. F. None of the above
8) The MOST likely cost driver of direct material costs is the:
A. number of parts within the product D. number of production hours
B. number of miles driven E. All of the above.
C. number of products manufactured F. None of the above
9) A relevant range is:
A. The range of activity within which variable costs are constant per unit.
B. The range of activity within which the assumptions about variable costs and fixed costs are valid.
C. The range of activity within which fixed costs are constant in total.
D. All of the above
E. Only B and C F. None of the above
10) Which one of the following is a reason for the difficulty associated with assigning manufacturing
overhead to products?
A. Manufacturing overhead is an indirect cost.
B. Manufacturing overhead consists of many different items.
C. Manufacturing overhead costs tend to remain constant.
D. Manufacturing overhead costs are known at the time of the calculation of the predetermined overhead
rate.
E. All of the above F. None of the above
11) The Work in Process account contains the summarized balance of all units of : A. Completed at a given
point in time.
B. Unfinished at a given point in time
C. Transferred to Finished Goods Inventory and in the process of being sold.
D. Sold and in the process of being recorded in the financial records.
E. All of the above F. None of the above
12) A cost that has been incurred but cannot be changed by present or future decisions is called:
A. Differential cost D. Sunk cost
B. Opportunity cost E. All of the above C. Marginal cost F. None of the above
13) The following information pertains to the CDD Corporation:
 Beginning work-in-process inventory…Br 50,000
 Ending work-in-process inventory………48,000
 Beginning finished goods inventory……180,000
 Ending finished goods inventory……….195,000
 Cost of goods manufactured………….1,220,000 What is cost of goods sold?
A. Br1,235,000 D. Br1,222,000
B. Br1,205,000 E. All of the above
C. Br1,218,000 F. None of the above

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Answer the following questions using the information below:
 Beginning finished goods, 1/1/20X3…..Br 80,000
 Ending finished goods, 12/31/20X3…..….67,000
 Cost of goods sold……………………..270,000
 Sales revenue…………………………..500,000
 Operating expenses…………………….145,000
14) What is cost of goods manufactured for 20X3?
A. Br230,000 C. Br355,000
B. Br257,000 D. Br283,000
15) What is gross margin for 20X3?
A. Br283,000 C. Br257,000
B. Br355,000 D. Br230,000
16) What is operating income for 20X3?
A. Br85,000 C. Br230,000
B. Br112,000 D. Br62,000
HA Company manufactures several different products. Unit costs associated with Product HA12 are as
follows:
 Direct materials…………………. Br 40
 Direct manufacturing labor……..........8
 Variable manufacturing overhead…...12
 Fixed manufacturing overhead……..23
 Sales commissions (2% of sales)…..…6
 Administrative salaries………………9
 Total……………………………… Br98
17) What are the variable costs per unit associated with Product HA12?
A. Br60 D. Br48
B. Br83 E. All of the above
C. Br66 F. None of the above
18) What are the fixed costs per unit associated with Product HA12?
A. Br23 B. Br32 C. Br35 D. Br44 F. None of the above
19) What are the inventoriable costs per unit associated with Product HA12?
A. Br60 B. Br66 C. Br83 D. Br48 F. None of the above
20) What are the period costs per unit associated with Product HA12?
A. Br15 C. Br27
B. Br6 D. Br9

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 Part II: Discussion & Work out Questions
1) The list of representative cost drivers in the right column below are randomized with respect to the list of
functions in the left column. That is, they do not match.

Function Representative Cost Driver

1. Purchasing A. Number of employees
2. Billing B. Number of shipments
3. Shipping C. Number of customers
4. Computer Support D. Number of invoices
5. Personnel E. Number of desktop computers
6. F. Number of purchase orders
Required: Match each business function with its representative cost driver.
2) During 20x9, FD Corporation incurred manufacturing expenses of Br20, 000,000 to produce 400,000
finished units. At year-end, it was determined that 370,000 units were sold while 30,000 units remained
in ending inventory.
Required:
a) What is the cost of producing one unit?
b) What is the amount that will be reported on the income statement for cost of goods sold?
c) What is the amount that will be reported on the balance sheet for ending inventory?
3) Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data
apply for sales to regular customers:
Direct materials……………………..Br200
Direct manufacturing labor……….....30
Variable manufacturing overhead….. 60
Fixed manufacturing overhead…….40
Total manufacturing costs….…Br330
The plant has capacity for 2,000 axles.
Required:
a) What is the total cost of producing 1,000 axles?
b) What is the total cost of producing 1,500 axles?
c) What is the per unit cost when producing 1,500 axles?
4) GT Company had the following activities during 20X5:
Beginning inventory Br 40,000
Purchases 123,200
Ending inventory 20,800
Direct manufacturing labor 32,000
Manufacturing overhead 24,000
Beginning work-in-process inventory 1,600
Ending work-in-process inventory 8,000
Beginning finished goods inventory 48,000
Ending finished goods inventory 32,000

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 Required:
a) What is the cost of direct materials used during 20X5?
b) What is cost of goods manufactured for 20X5?
c) What is cost of goods sold for 20X5?
d) What amount of prime costs was added to production during 20X5?
e) What amount of conversion costs was added to production during 20X5?
6) MG Manufacturing Company had the following account balances for the quarter ending March 31,
unless otherwise noted:
 Work-in-process inventory (January 1) Br 140,400
 Work-in-process inventory (March 31) 171,000
 Finished goods inventory (January 1) 540,000
 Finished goods inventory (March 31) 510,000
 Direct materials used 378,000
 Indirect materials used 84,000
 Direct manufacturing labor 480,000
 Indirect manufacturing labor 186,000
 Property taxes on manufacturing plant building 28,800
 Salespersons' company vehicle costs 12,000
 Depreciation of manufacturing equipment 264,000
 Depreciation of office equipment 123,600
 Miscellaneous plant overhead 135,000
 Plant utilities 92,400
 General office expenses 305,400
 Marketing distribution costs 30,000
Required:
a) Prepare a cost of goods manufactured schedule for the quarter.
b) Prepare a cost of goods sold schedule for the quarter.
7) Several costs incurred by MB Inc. are listed below. For each cost, indicate which of the following
classifications best describe the cost. More than one classification may apply to the same cost item .For
example; a cost may be both a variable cost and a product cost.
Group A: Cost Items Group B: Cost Classifications
1) Metal used in MB a) Variable
Inc. b) Fixed
2) Salary of plant manager c) Period
3) Cost of natural gas used to heat factory d) Product
4) Commissions paid to sales personnel e) Administrative
5) Wages paid to employees assemblers f) Marketing
6) Salary of engineer who is working on a proto-type of g) Manufacturing
a new solar-powder. h) Research and development
7) Depreciation on the word processing equipment used i) Direct material
by the company president’s secretary j) Direct labor
k) Manufacturing overhead

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 8) Summit company had inventories for January 19x3 as follows:
Beginning Ending
Direct materials Br30,00 Br40,000
Work in process 15,000 20,000
Finished goods 65,000 50,000

 The income statement for January 19x3 showed:

Cost of goods manufactured Br515,000
Factory overhead 150,000
Direct material used 190,000

Required: Compute:
A. Direct materials purchased during January 19x3
B. Direct labor cost incurred during January 19x3
9) PT Company manufactures furniture including tables. Selected costs associated with the manufacturing
of the tables and the general operations of the company are given below. Match the following two groups.

Group A: Cost Items Group B: Cost Classification

1) The tables are made of wood that costs Br100 per table a) Variable cost
2) The tables are assembled by workers, at a wage cost b) Fixed cost
of Br440 per table c) Period cost
3) Workers assembling the table are supervised by a d) Selling and administrative
factory supervisor who is paid Br25,000 per year e) Direct labor
4) Electrical costs are Br2 per machine- hours. Four machine f) Sunk cost
hours are required to produce a table g) Product cost
5) The department cost of machine used to make the tables h) Manufacturing
Br10,000 per year i) Non-manufacturing
6) The salary of the president of porter Company is j) Direct material
Br100,000 per year k) MOH
7) Porter Company spends Br250, 000 per year to advertise l) Opportunity cost
its products.
8) Sales persons are paid a commission of Br30 for each
table sold
9) Instead of producing the tables, porter Company could rent
its factory space out at a rental income of Br50, 000
per year.

10) Determine the missing amounts (A-Y) in each of the following independent cases.

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 Details Case I Case II Case III
Beginning inventory, raw material Br18,000 Br 19,000 A
Ending inventory, raw material 330,000 B Br89,000
Purchase of raw material (Net) C 85,000 100,000
Direct material used D 95,000 70,000
Direct labor 125,000 100,000 E
Manufacturing overhead 160,000 F 250,000
Current manufacturing cost 340,000 345,000 520,000
Beginning inventory, working process G 20,000 35,000
Ending inventory, working process 5,000 35,000 H
Cost of goods manufactured 350,000 I 525,000
Beginning inventory, finished goods J 40,000 50,000
Cost of goods available for sale 370,000 K L
Ending inventory, finished goods 25,000 M N
Cost of goods sold P 330,000 545,000
Sales 480,000 Q R
Gross Margin S 170,000 255,00
Selling and administrative expenses T 75,000 U
Income before tax expense 60,000 V 150,000
Income tax expense W 45,000 40,000
Net income 20,000 X Y
That is: Find
A. _____________ K. _____________ V. ___________
B. _____________ L. _____________ W. ___________
C. _____________ M. _____________ X. ___________
D. _____________ N. _____________ Y. ___________
E. _____________ P. _____________
F. _____________ Q. _____________
G. _____________ R. _____________
H. _____________ S. _____________
I. _____________ T. _____________
J. _____________ U. _____________

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