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MEM 4 Cost Tests
MEM 4 Cost Tests
A =)
1- Management accounting differs from financial accounting in respect of
the information of management accounting is:
A. Prepared by using methods that considered useful by management.
B. Prepared according to the accepted rules and standards.
C. Prepared to use by the external parties.
D. None of the above
2- prime cost is:
A. All costs incurred in manufacturing a product.
B. The total of direct costs.
C. The material cost of product.
D. The cost of operating a department.
3- The primary objective of management Accounting is:
A. To provide stockholders and potential investors with useful
information for decision making.
B. To provide banks and other creditors with information useful in
making credit decision.
C. To provide management with information useful for planning and
control of operations.
D. To assist the shareholders in security valuation.
4- Cost behavior analysis focuses on:
A. How costs react to changes in profit.
B. How costs change over time.
C. How cost react to revenue.
D. How costs react to changes in activity levels.
5- You are currently employed as an engineer in a company. You are
contemplating starting your own business. in considering whether or not to
start your own business, your current salary level would be:
A. An opportunity costs.
B. A sunk cost.
C. An incremental cost.
D. An irrelevant cost.
6- Mixed costs contain both:
A. Production and period costs.
B. Fixed and variable costs.
C. Direct and indirect costs.
D. Controllable and non-controllable cost.
Using the high low method, an estimate of supplies cost at 3,000 unit of
production would be:
A. SDG 13,050.
B. SDG 13,200.
C. SDG 13,320.
D. SDG 13,300.
12- XYZ limited has fixed costs of SDG 60,000 per annum. It manufactures a
single product which it sells for SDG 20 per unit. Its contribution margin
ratio is 40%. XYZ Limited’s break-even point (in unit) is:
A. 1,200.
B. 1,800.
C. 5,000.
D. 7,500.
required:
1- Compute the break-even point in units.
2- How many units must be sold to earn a profit of SDG 30,000?
3- Compute the contribution margin ratio. Using that ratio, compute
the additional profit that beta would like to earn if sales were 25,000
more than expected.
4- Suppose beta would like to earn operating income equal to 20
percent of sales revenue. How many units must be sold for this goal
to be realized? Prepare an income statement to prove your answer.
5- For the projected level of sales, compute the margin of safety.