Assessment No.

1 (STRAMA)
1. The controller of Granger Co. has requested an estimate of the manufacturing
supplies needed for the month of June when production is expected to be
470,000 units to meet the ending inventory requirements and sales of 475,000
units. Granger's budget analyst has the following actual data for the last 3
months. Using the high-low method, what would be the estimate of the needed
manufacturing supplies for June? *

 P652,500
 P749,180
 P 681,50
 P752,060
SOLUTION:
 2. Ana, Karen and Nina is a large, local accounting firm located in Pampanga.
Ana, one of the Firm’s founders, appreciates the success her firm has enjoyed
and wants to give something back to her community. She believes that an
inexpensive accounting services clinic could provide basic accounting services
for small businesses located in the province. She wants to price the services at
cost. Since the clinic is brand new, it has no experience to go on. Ana decided
to operate the clinic for two months before determining how much to charge per
hour on an ongoing basis. As a temporary measure, the clinic adopted an
hourly charge of P50, half the amount charged by Ana, Karen and Nina for
professional services. The accounting services clinic opened on January 1.
During January, the clinic had 120hours of professional service. During
February, the activity was 150 hours. Costs for these two level of activity usage
are as follows. The clinic’s monthly fixed costs amount to: *

P8,600
 P9,025
 P425
 P12,189
SOLUTION:
Diff. in costs (P12,415 – P11,737) P 678
÷ diff. in hours (150 – 120) 30
Variable rate per hour P22.60

iff. in costs (P12,415 – P11,737)

P 678
 ÷ diff. in hours (150 – 120)
30
Variable rate per hour
P22.60
Total cost P12,415
P11,737
Less variable cost (22.60x150)
3,390 (22.60x120) 2,712
Fixed costs P 9,025 P
9,02
Total cost P12,415 P11,737
Less variable cost:
(22.60x150) 3,390
(22.60x120) 2,712
Fixed costs P 9,025 P 9,025

3. Using the information above, what is the clinic's variable rate per hour? *

 P22.60
 P27.15
 P30.00
 P36.00
 SOLUTION:
Diff. in costs (P12,415 – P11,737) P 678
÷ diff. in hours (150 – 120) 30
Variable rate per hour P22.60

4. Boss Baby, the chief professional of the clinic, has estimated that the clinic will
average 140 professional hours per month. If the clinic is to be operated as a
non profit organization, how much will it need to charge per professional hour?
(Note: This is a continuation of the problem above) *

 P97.81
 P87.06
 P82.77
 P22.60

SOLUTION:
Variable cost (140 x P22.60) P 3,164
Fixed cost 9,025
Total cost P12,189
÷ number of hours 140
Cost per hour P 87.06

5. The food & beverage section of XYZ Ltd incurred the following costs for March
2021: Supervisor’s salary P2,000; Hourly workers’ wages & benefits P10,903;
Food P11,357; Equipment depreciation & rental P9,100; Supplies P2,750; Total
F & B costs P36,110. The F & B section served 10,505 meals during the month.
Using an account analysis to classify costs, the cost function for XYZ Ltd’s
Food & beverage section is

 P11,100+P2.381 per meal

 P4,000 + P3.222 per meal
 P6,105 +P3.039 per meal
 P11,200+P5.381 per meal
SOLUTION:
6. The following data pertain to activity and costs for two recent months. Assuming
that these activity levels are within the relevant range, the mixed costs for

November were: *

 P40,000
 P35,000
 P25,000
 P20,000

SOLUTION:
75,000 – [(10,000/5,000) x 10,000] – 30,000 = 25,000
7. An analysis of past maintenance costs indicates that maintenance cost is an
average ofP0.20 per machine-hour at an activity level of 10,000 machine-hours
and P0.25 per machine-hour at an activity level of 8,000 machine-hours.
Assuming that this activity is within the relevant range, what is the total
expected maintenance cost if the activity level is 8,700 machine-hours? *

 P2,250
  P1,740
 P400
 P2,000

8. Snake Mining Company shipped 9,000 tons of copper concentrate for P450,000
in March and 11,000 tons for P549,000 in April. Shipping costs for 12,000 tons
to be shipped in May would be expected to be: *

 P548,780
 P549,020
 P594,000
 P598,500

9. Nate Inc. employed several engineers to keep the equipment running in high
condition. Over the past eight months, Nate incurred the following costs for
these engineers. Plant activity is best measured by direct labor hours. Using the
high-low method, determine the variable cost per unit. *
  $3.0
 $2.0
 $1.9
 $1.5
SOLUTION:

10.Using either the high point or low point, total fixed cost is: (Note: This is a
continuation of the problem above) *

 $12,800
 $9,500
 $5,700
 $3,300
11.Perfect Company accumulated the following data for a delivery truck. Determine
the equation to predict total costs for the delivery truck. *
  Y = $7,000 + $0.80x
 Y = $7,000 + $0.60x
 Y = $6,000 + $0.80x
 Y = $6,000 + $0.60x

12.Using the information above, calculate the total costs be if 12,187 miles were
driven. 

 $16,750
 $15,800
 $9,750
 $7,000