ADAMSON UNIVERSITY

College of Business Administration

Bachelor of Science in Accountancy
Manila, Philippines

MANAGEMENT ADVISORY SERVICES

Special Lecturer: JAY-R G. VILDAC, CPA, MBA

MAS-01: COST CONCEPTS

1. Mine and Yours Company uses a regression equation to analyze the behavior of its
transportation costs (T) as a function of travel time (H). They developed the following
equation using two years’ observation:

T = 100,000 + 50(H)

If 500 hours of travel time were logged in one period, the related point estimate of total
transportation costs would be?

2. Jackson, Inc, is preparing a flexible budget for next year and requires a breakdown of
the cost of steam used in its factory into the fixed and variable elements. The following
data on the cost of steam used and direct labor hours worked are available for the last 6
months of this year.

Month Cost of Steam Labor Hours

July P15,850 3,000
August 13,400 2,050
September 16,370 2,900
October 19,800 3,650
November 17,600 2,670
December 18,500 2,650
Total P101,520 16.920

Assuming that Jackson uses the high-low method of analysis. The estimated variable
cost of steam per direct labor hour is?

3. In the Timbugan County, Inc., a maintenance cost is partly fixed and partly variable in
nature. At the low level of activity (150 direct labor hours), maintenance costs total
P2,100. At high level of activity (270 direct labor hours), maintenance costs are P3,000.
Using the high-low method, what is the (1) variable maintenance cost per unit and the
(2) total fixed maintenance cost?

4. Mat Company estimates its material handling costs at two activity levels as follows:

Kilos Handled Cost

80,000 P160,000
60,000 132,000

Determine the estimated cost of handling 75,000 kilos using high-low method.

5. The total production cost for 20,000 units was P21,000 and the total production cost
for making 50,000 units was P34,000. Once production exceeds 25,000 units, additional
fixed costs of P4,000 were incurred. Determine the full production cost per unit for
making 30,000 units.

6. Brandt Company manufactures wood file cabinets. The following information is

available for June

1
 ADAMSON UNIVERSITY
College of Business Administration
Bachelor of Science in Accountancy
Manila, Philippines

MANAGEMENT ADVISORY SERVICES

Special Lecturer: JAY-R G. VILDAC, CPA, MBA

Beginning Ending
Raw material inventory P 6,000 P 7,500
Work in process Inventory 17,300 11,700
Finished Goods Inventory 21,000 16,300

Direct Labor is paid P9.60 per hour and overhead for the was P9,600. If there were
1,500 direct labor hours and P21,000 of raw material was purchased, (1) determine the
prime and conversion costs and (2) compute for the total manufacturing cost and (3)
Cost of Goods Sold.

7. The following information has been taken from the cost records of Wilson Company

Raw material used in the production P326

Total manufacturing cost charged to production during the year 686
(Includes direct material, direct labor, and overhead equal to
60% of direct labor cost)
Cost of goods available for sale 826
Selling and administrative cost 25

Inventories Beginning Ending

Raw Material P 75 P 85
Work in process 80 30
Finished Goods 90 110

Determine the (1) raw materials purchased during the year; (2) direct labor cost charged
to production during the year, (3) cost of goods manufactured