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ReBla-The Review School of lccourdlancy, 3 7359807 / 7343989 W 09104391320 / 09239124121 / 09164383834 i resareview@hotmallcom MANAGEMENT ADVISORY SERVICES A. Lee +E. Arafias MAS Module No. 1 MAS - 01, 02, 03 Multiple-Choice Questions (MCQs) Sources: CMAICINRPCPAIAICPA/Various test banks MAS — 01: COST BEHAVIOR ANALYSIS (35 MCQs| 1 10. aL. 22 Hunger Company has estimated the following cost formulas for overhead: —_____ Cost Formula Lubricants 1,500 plus P0:50 per mactine-hour tities ° 2,000 plus P 0.60 per machine-hour Depreciation 1,000 Maintenance P 200 plus P0.10 per machine-hour Machine setup _P 0.30 per machine-hour Based on the cost formulas, what i the total expected overhead cost at 300 machine hours? a. P4700 ‘c. P5,000 b. P4950 a P5150 Which ofthe following statements is true? ‘2. The higher isthe production within the elevent range, the higher isthe variable cost per unit 'b. The higher isthe production within the relevant range, the higher isthe fed cost per unt ‘c.-_The lower isthe production within tne relevant range, the lower isthe total fixed cost 1d. The lower isthe production within the relevant range, the iower isthe total variable cost ‘As volume inereases, ‘a. Total fixed costs remain constant and per-unt feed costs increase Total fixed costs remain constant and per-unt fined costs decrease Total fixed costs remain constant and per-unit xed costs remain constant 4. Total Fred costs increase and per-uni fixed costs increase Within the relevant range, the amount of variable cost per unt ‘2. Differs at each production level ‘Decreases as production increases . Increases as production increases Remains constant at each production level Which ofthe following best describes a fixed cost? '. Its constant per unt of changes n production, Bb. _emay change in total when such change Is related to changes in production &_Ttmay change in total when such change is unrelated to changes in production. Tt may change i total whven such change depends upon production or within the elevant range. ‘wnat are fied costs tat canna be reduced or avoided within 2 shot period of time? ‘a. Committed Avoidable sable b. Variable 4d. Unnecessary Hed Fac 7 What would bean example ofa cretion ed oe? ‘a. Depreciation on equipment Salaries of top management sp) cori men Rent on a fectory bulling Research and development Which ofthe following best describes a step cost? ‘a. Rpartyvonable and party fed «verses proportionately with volume a EL b.Tremains constant inal cases, It increases abruptly outside the relevant range tn dexrbing the cou foul eqn Y= 2+ BX, which fe olowng Stress creas ° 2. "Y'isthe independent variable b. ‘a’ isthe variable rate c._‘2"and"b’ are valid for ail evels of actvty ‘3. Inthe high-low metodo” equals the change in cost (¥) divided by the change in actty (x) ‘The fixed cost of @ semi-variable costs comparable tothe mathematical concept of 2. Yeintercept & Dependent variable Slope ofthe ine 4. Independent variable Which of the folowing is NOT a method of spitung 2 semy-vanable cost? ‘2. High and low point Scatter chart b. Method of least squares 4. Linear programming ‘Mockingbird Company applies the high-lew method of cust estimation to customer order data forthe fist 4 months of 2018: Month —Qrvers Cost. (P) Jenuary 1,200 3,120 February 1,300 3,185 March 1,800 4,320 pil 1,700 3,895 What isthe estimated variable cost component per order? a 92.00 P24 b. p242 a. P2580 Page 1 of 16 pages RSQ The Review School of Occonedtancy MAS Module 1 MCQs: MAS ~ 01, 02, 03 13, awn Company estimated its materials handing cast at two actvty levels as follows: kilos Handled Cost 80,000 160,000 60,000 132,000 What ts Dawn's estimated cost for handling 75,000 bilos? 8 3. P'180,000 © 157,500 b.P153,000 dP 165,000 14, In March, Starbox had electrical costs of P 225,00 when the total volume was 4,500 cups of coffee served. In Apel electrical costs were P 227.50 for 4,750 cups of coffee. Using the high-low method, what is the estimated fixed cost of electncty per year? a. P180 < P25 b, 200 ._ P2,160 15, Night Inc. uses the high-low method to derive the cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is P 3 per machine hour. Total electrical power cost atthe high level (of activty was P 7,600 and the low level of activity was P 7,300. If the high level of activity was 1,200 machine hours, then what was the low level ofthe actity? «." 800 machine-hours 1,000 machine-hours . 900 machine-hours , 1,100 machine-hours 16, Back Co, has an average unt cost of P45 at 10,000 uns ang 25 at 3,000 uns. Wats the un vant cos? : nae no units a bP 1s.00 idl. : < P20.00 15 0 coe 4. _An amount that cannot be determined without more information 17, Total producton costs of prior penods for a company are listed below. Assume that the same cost behavior patterns can be extended linearty over the range of 3/00 to 35,000 units and that the cost driver for each product 's the number of units produced. J. ue Production per month (nits) _ 3,000 9,000 16,000 35,009," Product x 23,700 P52,680 86,490 P178,260 Product ¥ 47,280 141840 252,160 581,600. ‘What isthe average cost per unit ata production level of 8,000 units for product x? voc 2. P7.90 c P5aS She bd P5938 6. p48 ¢ < 418. When unit production decreases, the average product cost per unit increases. This increase in the average cost per © unitis due to the ‘2. _ Increase inthe total variable costs ‘Increase inthe unt variable cost Increase in the total fixed costs 4. _Increase in the unit fixed cost 19, White, Inc. provides you with the following flexible budget of factory overhead at three different capacity levels Capacity Factory Overhead 60% 38,000, 70% 106,000, 35% 118,000 ‘what willbe the fexible budget of factory overhead at 90% capacity? c+ x0 a. P 112,000 cP 130,000, Seo b._ P 122,000 ~ dP 132,000 20. ‘The major objective of preparing a scatter diagram isto B ’, Determine the relevant range . Derive an equation to predict future costs Perform regression analysis on the results ‘6. Find the high and low poits to use forthe high-low method of estimating costs ‘24. The principal advantage ofthe scatter-diagram method over the hicvlow method of cost estimation is thatthe scatter-diagram method A ’2. Considers more than two points Includes cost outsde the relevant range Gives precise mathematica fit ofthe points tothe ime 4. Cane used with more types of casts than the high-low method 22. Which is an equation required for applying Jeast square method of computing fixed and variable costs? © a By =aix+ bd? ce ty=na+ box bby =na+ bx a. y= nat be 223, An analysis of maintenance cost at four levels of plant operations is shown below: Hows = Cost’ Hours cost © Hours Squared 40 1,000 40,000 1,600 30 ‘900 27,000 300 ro 1,306 78,000 3,800 501150 57,500 2500 10 Pay 202.500 Under he eas-suares regressions method how much the ed cot of te maetoance? A a. P40 c b. P500 4 P600 Page 2 of 16 pages ReSli- The Review School of leconmtaney MAS Module 1 MCQs: MAS - 01, 02, 03 24, The following cost data for diferent hours of operations are made available to you by Florida Manufacturing ‘Company for your analysis: Number of Months 10 ‘Sum of Hours 350 ‘Sum of Costs 1,000 ‘Sum of Hours x Cost: 39,200 Sum of Hours Squared 14,250 How much is the monthly fixed cost? a 2. P2650 < P318.00 b. P35.00 4. 420.00 Z 25. ‘Simple regression analysis involves ate 2. One dependent variable and one independent ®varable . One dependent variabie and many independent variables Many dependent vargbles and one independent vanable Many dependent variables and many independent varables 26. Multiple reoresson analysis involves ‘2. One dependent vanable and one independent variable . One dependent variable and many independert varables Many dependent vanabies and one incepencent variable @. Many dependent variables and many independent variobles 27. In determining cost behaver, the cost funcuon Is offen expressed as Y = a+ EX. Which of the folowing cost ‘estimation methods should not be used in estimating fixed and venable costs forthe equation? > ‘a. Graphic method High and low point 1b. Simple regression d._ Multiple regression 28. Multiple regression analysis used when > ‘2. There 1s more than one cost catagory to analyze 'b. Allo the points on a scatter graph fll exactly on a regression tine C_ The high-low method cannot be used because there is only one observation ‘6. There © more than one activity that drives the variable component of a mixed cost 29. In regression analysis, which of the following correlation coefficients (F) represents the strongest relationship between dependent and independent variables? > a. - 1205 © +003 b. 189 a. 078 30. A scatter diagram that mandests a regression line sloping down to the right would most Wkely show a correlation coefficent (9) of © +095 © 095 b. +950 d. +950 31. Ifthe coefficient of correlation (r) between two variables Is 2er0, how might a scatter diagram ofthese variables appear? ‘2. Random points 1. Aleast squares line that slopes up to the right least squares line that slopes down to die nght 1. Under this condition, a scatter diagram could not be potted on a graph, 32, Resquared (F) is a measure of ‘2. The fixed cost component b. The variable cost per unt of actty ‘c._ The spurious relationship between cost and actvty 4. How well the regression line accounts for the changes in the dependent variable 33, After constructing 2 scatter chart, the internal auditor of Madagascar Company provided you with the folowing 2°" Independent variable: 1,000,000 2 Slope of the line: 0.25 5 Yeas intercept: 7,500 ‘Based on the above data, what isthe estimated cost? ‘a. P 250,500 & P.1,000,000 bP 257,500 d. 1,007,500 34, Jackrose Company uses regression analysis to develop a model for predicting overhead costs. Two different cost “vers (machine hours and direct matenais weight) are under consideration as the independent vanable. Relevait data were run on a Compute using one of te standard regression programs, wth the folowing Goeffictent op esis Coetficent| MACHINE HOURS DIRECT MATERIALS WEIGHT ‘Yintercept 2,500 ‘Yainteraept 4,600 8 50 8 26 F=070 = 050 ‘What regression equation should be used? a. Y= 2,500 + 50x = 4,600 4 26x . J. Y= 4,600 + 13x Page 3 of 16 pages ReSQ- The Review School of Occomitaney, MAS Module 1 MCQs: MAS ~ 01, 02, 03 35, The statsbcian of Madame Q has developed the following cost prediction equation, using observations from 12,000 0 30,000 mactune hours: Y = P 236,837 + 3.7625 Resquared = 0.81 Standard error = P 24,363, ‘Several ‘outliers’ are noted within tolerable mts Y= total maintenance cost X= machine hours Compute the esumated maintenance cost at 20,000 machine hou's. c 2. P 236,837 cP 312,087 bP 252,790 d.P336,450 :OST-VOLUME-PROFIT ANALYSIS (50 MC{ ‘Which cost is NOT subtracted from seling price to calculate contribution margin per unit? ©" "a. Vanable manifactnng overnead cDret labor Variable sting expenses 4S. Pred manufacturing overhead 2. Which of the ftlowing would decrease un controuton margin the mos? A 3. 818% decrease in sling price RIS decrease i vanabe expenses 1. A.15% merease in vonable expenses 42.15% crease in ed expenses 3.0 Company sls its only product fr 60 per unt and crs the folowing variable oes er Unt eect materal P16 Diet labor 2 Manufacturing overhead ee Total veabe manufacturing overhead s Seng expenses 5 Tota varabe costs z 40 Jo's annual fixed costs are P 880,000. If prime costs increased by 20% and ail other values remained the same, ‘what would be Jo Company's coctnbution margin rabo (tothe nearest whole percentage)? ¢ a. 75% c 24% b._ 30% 4. 20% 4. Abet Company plans to market a new product. Based on its market studies, Abet estimates that it can sell 5,500, ‘units in 2018. The seling price wil be P 2 per unt. Variable cost is estimated to be 40% of the seling price Fixed cost is estimated to be P 6,000. What i the break even point?” 8 2. 3,750 units ‘5,500 units . 5,000 units 7,500 units 5. In planning is operations for 2019 based on a sales forecast of P 6,000,000, Cynth, Inc. prepared the folowing ‘estimated dat: Fed Direct materias Direct labor Factory overhead ‘900,000 Seling expenses 360,000 ‘administrative expenses 0.00) 140,000 pgop.0o0 —@ 400,000 What would be the amount of peso sales at the brealeven point? ‘a. P2,250,000 ‘ 2. Sales increased '. Total production decreased c. Total variable costs increased as @ function of higher production 4. Fined costs increased owing to addtional equipment in physical plant 12. A company manufactures 2 single product. Estimated cost data regarding this preduct and other information for ‘the product and the company are as folows (effective income tx rate: 40%): ‘Sbles price per unt Pao otal variable producticn cast per unt 2 Sales commvssion (on sales) per unt 5% Faxed costs and expenses: Manufacturing overnea P 5,598,720 General and aaminstrative 3,732,480 What number of units must the company sell inthe coming year in order to reach ts breakeven point? c ‘2,388,800 units 583,200 units b. _518:400 units 972,000 units 13, The present break-even sale of Beng Company is P 550,000 per year. It's computed that ifthe fixed cost wil go Lup by P 60,000, the sales required to break-even wil also increase to P 700,000, without any change in the selling pice per unit and on the vanable expenses. How much isthe total fixed cost Before the increase of P 60,0007 ‘a. P 200,000 280,000 bb. P 220,000 d._ 330,000 14. One of the major assumptions limitirg the reliably of breakeven analysis is that c '2. Efficiency and productivty wil continually crease 'b. Total vanable costs will remain unchanged over the relevant range Total fixed costs wil roman unchanged over the relevant range 1d. The cost of production factors varies wth changes in technology 15. How much will income change if 9 company makes an advertisng campaign given the following data? ‘Cost of advertising campaign P 25,000 Increase in sales P 60,000 arable expense as a percentage of sales 42% 8 2. 200 increase © P15,000 increase b._ P9,800 increase ._P 25,200 increase 116, Sher Company is planning to sll 200,000 units of Product F. The fed cost is P 400,000 and the variable cost i= {60% of the seling price. In order to realze a rroft of P 109,000, what should be the sling rice per unk? ° 2. P375 < P6.00 b. paz 6. 6.25 17, August Company sells Product Cynth fr P'S per unit. The fixed cost is P 210,000 and the variable cost is 60% of the selling price, What amount of sales is needed to realze a profit of 10% of sales? ‘a. P 700,000 c P472,500 b. 525,000 0. 420,000 RSQ The Review School of lecomedorey MAS Module 1 MCQs: MAS ~ 01, 02, 03 18, Dalen Company prepared the folowing preliminary forecast concerning Product D for 2019: ‘Seling pice per unit P10 Unt sales 100,000 Variable costs 600,000 Freed costs 300,000 Based on a market study, Dalen estimates that it could increase the unit sling price by 15% and increase the unt sales volume by 10% if P 100,000 was spent in adversing. Assuming that Dalen incorporates these changes in ts 2019 forecast, what should be the operating income for Product O? c ‘a. P175,000

‘2. 10,700 units 20000 unts BL 12,100 units 28,300 units 23. A company has just completed the production of ts only product. The product has taken 3 years and P 6,000,000 ‘to develop. The following costs are expected to be incurred on a monthly basis forthe normal production level of 1,000,000 pounds of the new product: 1,000,000 Ibs, Direct materials 300,000 Direct labor 1,250,000 Variable factory overhead "450,000 Fixed factory overhead 2,000,000 Variable seling, general and administrative exper ‘900,000 Freed seling, general and administrative expenses 1,500,000 Total p 1f sales price per pound isP 5.90, the sales needed to ear P 3,000,000 profit inthe frst year would be c ’2. 13,017,000 pounds ‘© 15,000,000 pounds ._ 14,000,000 pounds {25,600,000 pounds 124. Mare Company, which i subject to 40% tax, had the folowing operating data forthe perio just ended: Selig price per unit P60 Variable cost pos unt P22 Fed costs 304,000 Management plans to improve the quality of ts only procuct by way of implementing the folowing: (1) Replacing @ component that costs P 3.50 wth a higher-orade unit that costs P 5.50, and (2) Acquring 2 P 180,000 packaging machine. Marz will depreciate the machine over a 10-year period with no ‘estimated salvage value by the straight-line methed of depreciation, Ifthe company wants to earn after-tax of P 172,800 inthe coming year, how many units must be sold? c ‘a, 10,300 unts 22,500 units b. 21,316 unts 27,000 units 2, Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering only . '2. xed and semivariabe costs Relevant vanable costs 1. Relevant fied costs Relevant range of volume bogeys & RSA. The Review School of Uccorntarey MAS Module 1 MCQs: MAS - 01, 02, 03 26, Delphi Company has developed a new project that wall be marketed for the fist time during the next Fiscal year. [though the Marketing Department estimates that 35,000 unts could be sodd at P36 per unt, Delphi's ‘management has allocated only enough manufacturing capacty to produce a maximum of 25,000 units of the new Broduct annually. The fixed costs associated withthe new provtuct are budgeted at P 450,000 for the year, wich includes P 60,000 for depreciation on new manufacturing equipment. Delphi is subject to a 40% Income tx rate Data assocated with each unit of product are precentad on the next page: ‘enable Costs Direct mater 7.00 Direct labor 350 Manufacturing overhead 4.00 Total vanable manufacturing cost 1450 Seling expenses i Total vanable cost Pi6.00 Delphi Company's management has stipulated that wi act appreve the continued manufacture of the new Droduct after the next fiscal year unless the after tax prfit isa least P 75,000 the first year. The unt sling price to achieve this target profit must be at least . a. P3460 P3700 b. P3560 4 P3900 22. Dan, Inc. is planning to produce two products, A and 8. Dan is planning to sell 100,000 units of A at P 4a unit and 200,000 unts of B at P 3 a unit. Vanabe cost 1s 70% of sales for A and 80% of sales for B. In order to realize a ‘otal profit of P 160,000, what must the total fixed cost be? A ‘2. P'80,000 © 240,000, b._P90,000, é. 600,000 28. The following data pertain to te two products manufactured by Beng, Inc= ‘Selina Brice — Vanabie Cost A 240, Piso 8 P 1,060 P aoe Fixed cost totals P 600,000 annually. The experted soles mx i units is 608% for Product A and 40% for Product 8. How many units ofthe two products together must Beng sel ta break-even? c a. 857 7,000 bo 1a a 2459 29. A company sels two products, X and Y. The sales mix consists of a composite unt of two units of K for every five Lunt of ¥ (2:5). Fixed costs are P 49,500. The unit contribution margins for X and ¥ are, respectively, P 2.50 and 1.20. Considering the company as a whole, whats the number of campasite unto break even?” A 2. 4,500 9,500 b. 8250 631,506 [NOTE: Usual mistake is letter D. The requirement is to compute "the number of compaste units to break-even” $0 31,500 units should be divided by 7 unts since “a composte unt 1s composed of two unts of X for every five units of ¥ (2:5).” Consider the following 1» The number of compose untsto break-even: 4,500 unts 1» The number of uns to break-even: 31,500 units 30. Assuming same data in No. 2, f the company had a proft of P 22,000, the unit sales must have been 8 ‘2. Product X: 5,000; Product ¥: 12,500 © Product X: 23,800; Product ¥: $9,500 Product X: 13,000; Procuct ¥: 32,500 4. _Prociuc x: 28,600; Product ¥: 71/500 51. Kris Company seis Products M, T and V. Kris seis three units of M for each Unit of V and tho unds of T for each Luni of M.. The contribution margins are P 1 per unit of M, P .S0 per unt of T, and P 3 per unt of V. Fixed costs ‘are P 600,000. How many units of V would Kris sel atthe break-even pont? a. 40,000 units 240,000 units 120,000 units 4 400,000 units 132. There are so many assumptions inherent in CVP analysis. Which of the folowing is not one of these assumptions? ° ‘2. Cost and revenues are predictable and are near over the relevant range b._ Variable costs fluctuate proportionately th vokume ‘Changes inthe beginning and anding inventory ae insignificant in amount {. Sales mix wil change as fixed costs increase beyond the relevant range 33, Ifthe sales mix shits toware higher contrbuton margin products, te break-even point A 2. Decreases Remains constent b._ Increases 4. tsze0 34. Employee, Inc. had the folowing sales resus for 2018. vss olayer Radios Peso sales component ratio 030 0300.40 Contribution margin ratio nao 040 060 Employee, Inc. had Fixed costs of P 2,400,000. The treak-rver sales in pesos for Employee, Inc. are: Tusets —Dolaver Radios ses CDolaver "Radios c a PL8M «= PISM «© P36M PIS PLS Pom bo P1sM 18M PLeM 4. P4,531,915 P1,531,915 72,042,553 35. Fora proftable company, the amount by which sales can dacine before losses occur is known as the ° 2. Soles volume verance cVanable sales ratio b. Hurdle rate 4. Marin of safety Page 7 of 18 pages & KeSQ. The Rewiew School of ecoreanrig MAS Module 1 MCQs: MAS ~ 01, 02, 03 36, ® a 38, 40. at 2 43. 45, 46. 4”. 48. . The margin of safety is a key concept of CVP analysis. The margin of safety is ‘2. The contribution margin rate 'b. The difference between budgeted sales and breakeven sales The difference between the breakeven point in sales and cash flow breakeven &._ The difference between budgeted contributio! margin and breakeven contnbution margin {nish Company has sales of P 100,000, fixed costs of P 50,000, and a profit of P 10,000. What is Irish Company's margin of safety? a, 10,000 P3333 b. P 16,667 dP 83333 Operating leverage s greatest in companies that have 2. Low fxad cost, low unit vanable cost Low fixed cost high unt variable cost . High fixed cost, low unt variable cost 1. High fxed cost, high unt variable cost \vian Corporation sells sets of encyclopedias, Vivian sold 4,000 sets last year at P 250 a set. Ifthe vanable cost Brant P17, hid enV ere P 100,000, what isthe Vivian's degree of operating leverage (001)? a 067 ce 1s b. 075 a 30 ‘Ube Company's variable costs are 75% of sales. At a sales level of P 400,000, the company’s degree of operating leverage Is 8. At this level, fixed costs equal 2. 87,500 P-$0,000 b. 100,000 J.P 75,000 ‘Ahigher degree of operating leverage compared with industry average implies that the firm ‘2, Has higher variable costs Bb. Has profits that are more sensitve to changes in sles volume c_Is more profitable d._ Isles nsky “Terry Company/s variable costs are 70% of sales. At 2 P 303,000 sales level, the degree of operating leverage is 10. If sales increase by P 60,000, what wil be the degree of operating leverage? a 2 © 6 b. 10 a4 1 used in cost-volume-profit analysis, senstivty analysis ', Determines the most proftable mix of products to be sold . Allows the decision maker to use probabilities in the evaluation of decision alternatives ‘c. _Ts-done through vanous possible scenarios and computes the impact on profit of various predictions of future events 1d. Is limited because in cost-volume-proft analysis, costs are not separated into fixed and variable ‘components |. The indifference point is the level of volume at which @ company 2. Eams.no prof Fam large amount of profit Ears ts target profit __Ezmms the same proft under different schemes ‘Machine XX hes fixed costs of P 225,000 and a variable cost of P 20. Machine YY has fixed costs of P 300,000 and ‘a variable cost of P14. What isthe inference point n units? 2. 11,250 21429 b. 12,500 1d. Cannot be determined from given information Bona Motors employs 40 sales personnel to market Its hne of automobiles. The average car sell for P 1,200,000 ‘and a 6% commission is paid to the salesperson. Bona Motors is considering a change to a scheme that would pay ‘ach salesperson a salary of P 24,000 per month plus a 2% commission of the sales made by that salesperson, Whats the amount of total carsales at which Bong Motors would be iniflerent as to which plan to select? '2. 30,000,000 P22,500,000, 'b._ P 24,000,000 é.P 12,000,000 ‘SOLUTION “656 commission: 1.2M (6%) = 72,000 vs. 2% convmission: 1.2M (29%) = 24,000 72,000 X = 24,000 X + 24,000 (40) X » 960,000 + 48,000 = 20 units Indifference Point: 20 units x P 1,200,000 per unit John Corporation submitted to you the folowing condensea income statement: Sales (80% capacty) 300,000 Vanable costs » 180,000 Foeed costs 82500 __262,500 ‘Net income 232,500 ‘What is the break-even point 3s a percentage of capacity? 2. 45% © 67.85% b._ 55% 6. 58.75% “100% capacty: 300,000 +80% = P 375,000 VCR: 180,000 = 300,000 = 60% (CMR = 4056) Breakeven sales: 82,500 + 40% = P 206,250 -1 based on 100% capacty: 206,250 + 375,000 Contribution margin ratio multiplied by the margin of safety ratio equals '2. Variable cost rato ‘c Break even sales ratio b. Fixed cost ratio 1d. Net profit rato Page 8 of 16 pages ReSlh. The Rerew School of Uaconmtoncy MAS Module 1 MCOs: MAS - 01, 02, 03 49. The following ts Cello Company/s cost behavior S.000 units oriess More than 5,000 units Foret costs 35,000 45,000 Contribution margin ratio 20% 12.5% If selling pice is set at P40, then how many unis must be sold to earn a proft of P 25,0007 2. 7,500 © 12,500 11,000 4 14,000 50, The management of Rhea Company performed cost shies and projected the following annual costs based on 40,000 units of productions and sales: Totalcosts of variabie costs to total costs Dect materials 400,000, 10% wee lavor 360,000 75% Factory overeat 300,000 40% Seling and aorinsratwe expense 200,000 5% wat unt-seing pace wil yd 3 10% prof rom sales of 40,000 uns? 3. P3350 © P4000 b._P35.00 4. 50.00 ‘SOLUTION GUIDE ‘Total Costs: Variable Costs Fixed Costs Direct materials ? 400,000 Direct labor 360,000 Factory overhead 300,000 S& A expense 200,000 _ Total 1,260,000 MAS 03: VARIABLE & ABSORPTION COSTING (35 MCQs) 1. Which method of inventory costng teats direct manufacturing costs and manufacturing overhead costs, both variable and feed, a5 inventoriable costs? ‘@. Direct costing Absorption costing b._ Variable costing 4. Conversion costing 2. What isthe costing methd that treats all fed costs as period costs? '2. Absorption costing Vanable costing b._Job-order costing 1d. Process costing 3. Black Co's 2018 fered manufacturing overhead costs totaled P 100,000 and variable selling costs totaled P 80,000. Under direct (variable) cosing, how should these costs be classified? Product Costs 180,000 P 100,000 P 80,000 Po are based on the folowing information ‘Amanufacturer at the end ofits fiscal year recorded the data below: Prime cost 800,000 \Vanable manufacturing overhead 100,000 Fixed manufacturing overhead 160,000 arable sling and other expenses 80,000 Fixed seling and other expenses 40,000 If the manufacturer uses variable costing, the inventoriable costs fr the fiscal year are ‘2. P-800,000, ‘< P-980,000 '.P-900,000 dP 1,060,000 5. Using absorption (ful) costing, inventorable costs are ‘a. P 800,000

. 45,000 a $7647 it Company has fixed costs of P 300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of #s P 10 per unt sling pice. Product Y has a variable cost percentage equal to 70% OF ts P 30 selling price. For the past several years, sales of product X have averaged 66.67% of the sales of Product Y. That rato isnot expected to change, What i i's breakeven point in pesos? ‘2. 300,000 © Pes7.ta2 b._°750,000 a p942.857 When sales level reaches P 100,000, return on sales is 109. How much the margin of safety the operating leverage at this sles level is 4 umes? a. P2500 25% of sakes 25,000 unts . Cannot be determined from the gwven information Jack Company sels $0,000 units of a gadget. These were taken fram the company’s records! ‘Accounts recenvable: P 123,000 Days sales outstanding: 15 days ‘Contribution margin ratio: 489% Profit forthe period: P 485,040, “The ending receivables balance the average balance during the year. Using @ 360-day year and assuming thet al sales are made on credit, what isthe company’s breakeven point? 3. P 1,032,000 P.2,061,122 b P1,320,000 dP 2,106,122 Julie Company, which 1s subject to 40% income tax rate, had the following operating data for the penod just ended Seling price per writ P60 arable cost per unt p22 Faced cons 504,000 Management plans ta improve the qualty of sole product by way of implementing the following changes: (1) Replaang 2 component that costs P 3.50 witha higher-grade unt that costs P 5.50, and (2) Acquinng 2 P 180,000 packaging mactine. Jue wil deprecate the machine over 3 10-year period with no ‘estimated salage value by the straght-ine method of deprecation. pooe 3 1 poses ® RSQ. lhe Review School of Uecortancy, MAS Module 1 MCas: 18, 19. 20 a. 2, 2, 2s. MAS — 01, 02, 03 Ifthe company wants to eam after-tax of P 172,800 inthe coming yea, then how many units must sot? 10,300 units © 22,500 unts b. 21,316 units 4. 27,000 units are based on the following information Ginger Co. is involved in selling an exclusive toy in the marke. It sold 1,800 units of toys during the current year. The manufacturing capacty of Gingers facies is 3,000 units of toys.’ The operating results of Ginger Co. Gurng the current year show the following, sales 900,00 Varabe costs Monufactusng P3150 Seteg "1,00. _a95o00 Contribution margin 405,000 Fixed coats: Menufoctuing 90,000 Seling 1125500 Adminstration __ 45000. _ 247,500 Net income before tases P1s7,500 Income tax (40%) {63,000 Net income ater taxes 94,500 Wat is the break-even volume i uns of toys forthe year? 2420 pe b 495 @ 1.100 If the sales volume is estimated to be 2,100 units in the next year, and i the prices and costs stay atthe same levels and amounts next year, the after-tax income that Ginger can expect for next year is a P 110,250 =P 184,500 b. 135,000 783,500 Ginger has a potential foreign customer that has offered to buy 1,500 units at P 450 per unt. Assume that all of Gingers costs would be at the same levels and rates as last year. What net income after taxes would Ginger ‘expect if took this order and rejected some business from regular customers 50 as not to exceed capacity? @ P211,500,

. P54,000 . 2,000 30. The following data are avaiable for Monte Carlo Corporation: Direct materials used 22,500 Payrot 30,000, ‘Variable overheas (budgeted and actual) 2 per unit Fixed overhead (budgeted and actual) 40,000, Units produced 7,500 nts Units sold 7,000 units Beginning inventory None ‘Normal capacity 8,000 units ‘Any capacity variance is dosed to cost of sales, How much isthe cost of sles under (1) ful costing and (2) direct costing? ’2. (1) 98,000 (2) 63,000 (1) 103,333 (2) 65,500 b. (1) 100,310 (2) 65,500 4. (4) 100,500 (2) 63,000 31, The folowing information pertains to Italy Company/s Product A-B10: ‘Standard costs: ‘Variable manufacturing P12 per unt Fixed manufacturing (based on normal production of 20,000 unts) _P4 per unit Variances: Variable manufacturing ~ unfavorable 12,000 Capacity 8,000 (Other data: Production 22,000 units Sales (P 25/unit) 16,000 units Operating costs 64,000 ‘All variances are dosed to cost of goods sold. What isthe company’s profit under GAAP costing? a. 76,000 < P44,000 b.P-52,000 6. 42,000 32. Universal, Inc. began operations on January 1. Standard costs were established in early January assuming a normal production volume of 160,000 units. lH::never, Unive'sal, Inc. produced only 140,000 units of product 3nd ‘01d 100,000 units at a seling price of P 180 per unit dunng the year. Vanable costs amounted to 7,000,000, of which 60% were manufacturing and 40% were saling. Fixed costs totaled P 11,200,000, of which 50% were manufacturing and 50% were-seling. Unwversal, Inc. had no raw materials or workein-process inventories at December 31. Actual input prices and quantities per unit of product were equa to standard Using absorption casting, what wil be the (1) standard cost of goods sold and (2) overhead volume variance? (1) P 8,200,000 (2) P 800,000 U (1) P6,500,000 (2) P 700,000 U . (1) P 7,200,000 (2) P 800,000 F 4. (2) P 7,000,000 (2) P 700,000 F page 1816 aps © REO The Review Schocl of Ueconetnrreg MAS Module 1 MCQs: MAS - 01, 02, 03 P18 per une P32 per unt PS per unt 2 per unt 40,000 {35 Bereo, 13,000 unts were produced.” In the cument penod, 15,000 unts were produced. In each pened, 72.200 wes were sid, Wat te otference in reported come Under BDxOION Cosng and vara Cost fox the coven perce? ‘The vanate cosing income e-eeded absorption cong come 3yP 4,000 ‘The vanable cosang come exceeded abserpban cing come BY P 6000 ‘The absorpeen costing income exceedad varaise cosing income By 800 [The absorpoen costing income exceeded variable costing income Dy P 10,000 ems 4 to 40 etormaton Sosa Corporaton enpioys an absorption costing system for internal reporting purposes; however, the SSmRRNY 's considering using vanable coming. Dats regarang Fuchsa's planned and aco! operaoans Yor Oe ‘lena year are presented below: Planned Aciwty Actual Actnty Beginning finshed goods inventory in unts 35,000 ‘Sees in unas | t 125,000 Producton in uns 10,300 330,000 [The folowng planned per unt cost figures were based on the estmated production and sale of 140,000 unts ‘fo De year. Fuchsa uses a predetermined manufacturing overhead rae for applying manufacturing overhead 1 IS Product; thus, @ combined manufacturing overhead rate of P 9.90 per unt was employed for absorgbon costng Burpeses. Any over. or under apples marvfartunng overnead & Cima to the cost Of goods sold account at the er Of the reportng year eect materiais Direct laser Vanable manufactunng overhead Fored manufacturing overhead 70.00 per une. 34. The value of Fuchsia Corporation's actual ending fnished goods inventory on the absorption costing basis was ‘2. 900,000

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