Quiz 6

1. A semi-variable cost would

A. Be more than zero if no products were made and would then increase in direct proportion output.
B. Be zero when output is zero and would increase in direct proportion to output.
C. Be more than zero if no products were made and would then decrease in direct proportion to output.
D. Be zero when output is zero and would decrease in direct proportion to output.

2. Since Anytime Pizza is open 24 hrs. a day, its pizza oven is constantly on and is, therefore, always
using natural gas. However, when there is no pizza in the oven, the oven automatically lowers its
flame and reduces its natural gas usage by 70%. The cost of natural gas would best be described as
A. Step-variable cost
B. Fixed cost
C. Mixed cost
D. True variable cost

3. Critical limited produces nail brushes for domestic use. It sells 80,000 in a year. Raw materials cost
P0.15 per brush and other variable costs per year are P48,000. Fixed costs amounted to P60,000. What
is the total cost per unit?
A. P0.75
B. P1.75
C. P1.50
D. P1.00

4. For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per unit
through total costs have remained stable. This cost per unit increase may be due to costs because the
level of activity at Jinan is
A. Variable, decreasing
B. Fixed, increasing
C. Fixed, decreasing
D. Variable, increasing

5. Expense A is a fixed cost, expense B is a variable cost. During the current year, the activity level has
increased but is still within the relevant range. In terms of cost per unit of activity, you would expect
which of the following statements to be true?
A. Expense B has decreased.
B. Expense A has remained unchanged.
C. Expense B has increased.
D. Expense A has decreased.

6. When the output volume increases by large amounts, fixed costs often increase in
A. Costs
B. Steps
C. Volumes
D. Overheads

7. An example of a semi-variable cost would be

A. The monthly basic salary of a regular permanent management accountant.
B. The property tax of a plant located beside the company’s land.
C. The wages paid to operatives on basic pay topped-up by a production bonus scheme.
D. The depreciation of factory building situated in a company’s property.

8. Within the relevant range, variable costs can be expected to

A. Remain constant in total as the activity level changes.
B. Increase on a per unit basis as the activity level decreases.
C. Vary in total in direct proportion to changes in the activity level.
D. None of these.
E. Increase on a per unit basis as the activity level increases.

9. Which of the following types of cost are assumed to stay the same per unit, irrespective of the
volume of output?
A. Variable cost
B. Opportunity cost
C. Mixed cost
D. Fixed cost

10. The quarterly production and overhead costs for the year are shown below. Identify the variable
overhead cost per unit, using high-low method.
Quarter Production Overheads
(Units)
1 4,900 P66,000
2 5,200 P69,000
3 5,400 P70,000
4 4,000 P60,000
A. P7.14
B. P6.14
C. P8.14
D. P5.14

11. Which of the following is incorrect when referring to fixed costs?

A. Either a cost is committed or discretionary will depend in large part on management’s strategy.
B. Committed fixed costs can often be reduced to zero for short periods of time without seriously
impairing the long-run goals for the company.
C. Discretionary fixed costs arise from annual decisions by management.
D. Fixed costs remain constant in total through the relevant range.
12. As the level of activity increases, how will a mixed cost in total and per unit behave?
A. In total increase Per unit no effect
B. In total decrease Per unit increase
C. In total decrease Per unit no effect
D. In total increase Per unit decrease
E. In total increase Per unit increase

13. Which costs will change with a decrease in activity within the relevant range?
A. Total fixed costs and total variable costs
B. Unit fixed cost and total fixed costs
C. Unit variable cost and unit fixed cost
D. Unit fixed cost and total variable costs

14. Within the relevant range of activity, how will variable cost per unit behave?
A. It will remain constant.
B. It will increase in proportion with the level of activity.
C. It will vary inversely with the level of activity.
D. Its behavior cannot be determined without additional information.

15. When the activity level is expected to decline within the relevant range, what effects would be
anticipated with respect to each of the following?
A. Fixed cost per unit no change, variable cost per unit no change
B. Fixed cost per unit increase, variable cost per unit increase
C. Fixed cost per unit no change, variable cost per unit increase
D. Fixed cost per unit increase, variable cost no change

Quiz 7
1. A graph on which an entire series of observations are plotted and then visually fitted with a
regression line is known as
A. Scatter graph
B. Multiple regression
C. Simple regression
D. Scatter diagram

2. Which of the following is described as the process of determining how a particular behaves?
A. Cost estimation
B. Cost behavior
C. None of the above
D. Cost Prediction
3. A method of analyzing mixed costs into their fixed and variable components that uses one
independent variable to arrive at the dependent variable and is based on the equation Y= a + b(x) is
A. Multiple regression
B. Scatter graph
C. Simple regression
D. Scatter diagram

4. Which of the following is a good example of the equation or cost function, that represents variable
and fixed cost relationships?
A. A= Y + B(X)
B. Y= A + B(X)
C. Y= B(A) + X
D. X= Y + (B) A

5. Which of the following is TRUE about the high-low method?

A. Is more accurate than the least squares method
B. Assumes a curvilinear relationship between cost and activity
C. It is used to estimate fixed and variable cost elements of a mixed cost
D. Can be used unless mixed costs are involved

6. Variable costs with a liner relationship to changes in activity are referred to as

A. True variable
B. Both A and B
C. Curvilinear
D. Proportionally variable

7. Which of the following is true about variable costs?

A. Variable costs are constant in total across changes in activity
B. Variable costs vary in total across changes in activity
C. Variable costs vary on a per unit basis
D. None of the above

8. Which described the flow of relationship between cost behavior, cost prediction and cost
estimation.
A. Cost prediction> cost behavior> cost estimation
B. Cost behavior> cost prediction> cost estimation
C. Cost estimation> cost prediction> cost behavior
D. Cost estimation> cost behavior> cost prediction

9. Assuming a linear cost relationship, if fixed costs are P1,200 and variable costs are P5 per unit, what
would total costs be for 600 units?
A. P1,200
B. P3,000
C. P4,200
D. P5,600

10. Which of the following statements is true about fixed costs within the relevant range?
A. Fixed costs vary in total with changes in activity
B. Committed fixed costs include advertising and research
C. Discretionary fixed costs include buildings, equipment and insurance
D. Discretionary fixed costs are easier to adjust than committed fixed costs

Quiz 8
1. The amount by which an item contributes towards covering fixed cost and providing for profit is
known as
A. Net Margin
B. Contribution Margin
C. Gross Margin
D. Gross Profit

2. Which of the following statements is correct about fixed costs?

A. Fixed costs vary on per unit basis as well as in total as the level of activity changes
B. Fixed costs vary in total as the level of activity changes
C. Fixed costs vary on per unit basis but remain the same in total as the level of activity changes
D. Fixed costs remain the same on per unit basis but vary in total as the level of activity changes

3. Which of the following is a correct formula to calculate contribution margin ratio (CM ratio)?
A. Sales/Contribution Margin
B. Contribution Margin/Fixed cost
C. Contribution Margin/Variable cost
D. Contribution Margin/Sales

4. Consider the following information:

Sales revenue P12,000
Variable manufacturing expenses`P3,000
Variable marketing & admin expenses P1,000
Fixed manufacturing expenses P1,500
Fixed marketing and admin expenses P500
Based on the above information, the contribution is
A. P8,000
B. P10,000
C. P10,500
D. 9,000

5. If the selling price is P32 per unit, the variable cost is P24 per unit, and total fixed cost is P320,000.
What will be the break-even point in sales?
A. 40,000 units
B. 13,333 units
C. 10,000 units
D. 5,714 units

6. A contribution margin income statement is usually used by

A. Customers and suppliers
B. Internal management
C. Tax agencies and banks
D. Creditors and investors

7. If the break-even point in units is 2,000 units and fixed cost is P50,000, the contribution margin per
unit will be
A. P0.04
B. P4
C. P25
D. P250

8. If the contribution margin percentage is 25% and contribution margin per unit is P500, the selling
price per unit will be
A. P1,500
B. P125
C. P2,000
D. P1,250

9. Which of the following is correct about break-even point of a company?

A. Revenue < variable expenses + fixed expenses
B. Revenue = variable expenses + fixed expenses
C. Revenue > variable expenses + fixed expenses
D. None of the above

10. The Fox Company sells product X. Some selected data is given below:
Selling price per unit of product X is P16
Variable cost per unit of product X is P12
Total Fixed cost is P160,000
Based on the above information, how many units of product X would be required to sell to earn an
operating profit of P20,000?
A. 15,000 units
B. 11,250 units
C. 45,000 units
D. 20,000 units

11. Which of the following statements is correct about variable costs?

A. Variable costs vary on per unit basis as the level of activity changes
B. Variable costs vary on per unit basis but remain the same in total as the level of activity changes
C. Variable costs remain in the same total as the level of activity changes
D. Variable costs vary in total in direct proportion to changes in the level of activity

12. If selling price per unit is P100 and contribution margin percentage is 30% then contribution
margin will be
A. P7
B. P30
C. P70
D. P3

13. Margin of safety =?

A. Actual or budgeted sales – Contribution margin
B. Actual or budgeted sales – Gross Margin
C. Actual or budgeted sales – Break-even sales
D. Actual or budgeted sales – Fixed cost

14. If the amount of contribution margin is not enough to cover all fixed expenses, the business will
A. Earn a profit
B. Neither earn a profit nor suffer a loss.
C. Suffer a loss
D. Be closed

15. If sales are P50,000, variable costs are P200,000, and fixed costs are P260,000, what is the
contribution margin percentage?
A. 40%
B. 60%
C. 52%
D. 48%

16. If actual sales are P50,000, variable cost is P15,000, and margin of safety if P20,000, the break-
even sales will be
A. P35,000
B. P65,000
C. P30,000
D. P70,000

17. If actual sales are P25,000, break-even point is P15,000, and variable cost is P12,000, the margin of
safety will be
A. P27,000
B. P40,000
C. P10,000
D. P13,000

18. If margin of safety is P5,000, break-even point is P20,000, and fixed cost is P50,000, the actual
sales will be
A. P30,000
B. P25,000
C. P15,000
D. P45,000

19. Which of the following is a correct formula of break-even point?

A. Total fixed expenses/Total contribution margin
B. Total variable expenses/Contribution margin per unit
C. Total variable expenses/ Total contribution margin
D. Total fixed expenses/Contribution margin ratio

20. If contribution margin ratio is 0.3 the contribution margin percentage will be
A. 0.3%
B. 3%
C. 0.03%
D. 30%

Quiz 9
1. The Fine Company uses a job order costing system. The following information belongs to current
period
Estimated manufacturing overhead at the beginning of the period is P440,000
Actual manufacturing overhead incurred during the period is P400,000
Manufacturing overhead under-applied is P16,000
Predetermined overhead rate is P20 per direct labor hour
On the basis of above information, how many direct labor hours were worked during the current
period?
A. 20,000 hours
B. 22,000 hours
C. 20,800 hours
D. 19,200 hours

2. The following information belongs to Delta Company which uses job order costing system
Over-applied balance of manufacturing overhead account P22,000
Work in process inventory account-ending balance P10,000
Finished goods inventory account-ending balance P15,000
Cost of goods sold account-ending balance P25,000
On the basis of ending balances, which of the following is a correct allocation of over-applied
overhead balance among work in process, finished goods and cost of goods sold?
A. P10,000, P15,000, P25,000
B. P7,333, P7,333, P7,333
C. None of the above
D. P4,400, P6,600, P11,000

3. Which of the following costs is recorded on the job cost sheet?

A. Direct labor cost
B. All of the above
C. Manufacturing overhead cost
D. Direct material cost

4. In a job order costing, which of the following costs is not an example of manufacturing overhead
cost?
A. Sales commission
B. Salary of production manager
C. Indirect labor cost
D. Fuel used in factory
5. The Robert Company uses a job order costing system and computes its predetermined overhead
rate at the beginning of each period on the basis of direct labor cost. At the end of current period, the
only job in process is the job number 555B. The cost sheet related to job number 555B shows that the
following direct materials and direct labor cost were incurred during the period:
Direct materials cost P800
Direct labor cost P1,200
The work in process inventory account shows a balance of P2,600 at the end of the current period
One of the basis of above information, what is the predetermined overhead rate as a percentage of
direct labor cost?
A. 100%
B. 75%
C. 50%
D. 200%

6. Manufacturing overhead would be over-applied if:

A. Applied overhead > direct materials cost + direct labor cost
B. Actual overhead > applied overhead
C. Actual overhead < applied overhead
D. Actual overhead = applied overhead

7. Under job order costing, which of the following costs would be recorded as debit to manufacturing
overhead account?
A. None of the above
B. Indirect materials cost
C. Direct labor cost
D. Direct materials cost

8. The ABC Company has the following estimated costs for the next year:
Direct Materials P15,000
Indirect Materials P5,000
Direct labor P55,000
Salary of Production supervisor P35,000
Rent on factory equipment P16,000
Sales commission P75,000
Advertising expenses P11,000
It is estimated that P53,000 machine hours and 8,000 direct labor hours will be worked during the
next year. What will be the predetermined overhead cost to jobs on the basis of direct labor hours?
A. P15
B. P17
C. P7
D. P14

9. Which of the following is a correct journal entry to record direct labor cost?
Debit Credit
a. Production Direct labor
b. Work in process Direct labor
c. Wages payable Work in process
d. Work in process Wages payable
A. Debit Work in Process, Credit Direct Labor
B. Debit Wages Payable, Credit Work in process
C. Debit Production, Credit Direct labor
D. Debit Work in Process, Credit Wages Payable

10. Which of the following journal entries is correct for the issuance of direct materials to production?
A. Debit-Work in process & Credit-Accounts payable
B. Debit-Materials & Credit-Accounts payable
C. Debit-Materials & Credit-Work in process
D. Debit-Work in process & Credit-Materials

11. Estimated manufacturing overhead cost at the beginning of the year is P100,000, estimated direct
labor hours at the beginning of the year is 10,000, actual manufacturing overhead cost incurred during
the year is P118,000, and actual direct labor works worked during the year is 11,000. Based on the
foregoing information, the cost record of the company will show
A. Over-applied overhead of P8,000
B. Over-applied overhead of P18,000
C. Under-applied overhead of P8,000
D. Under-applied overhead of P18,000

12. The GSM Company uses job order costing system and provides you the following data for the
current period
Direct Materials Indirect Materials Direct Labor Manufacturing Manufacturing
overhead applied overhead actual
P180,000 P16,000 P214,000 P226,000 P250,000
There was no beginning and ending work in process and finished goods inventory. The company uses
a predetermined overhead rate to apply manufacturing overhead to work in process (WIP) inventory.
Based on the above information, what is the cost of goods manufactured of GSM Company?
A. P644,000
B. P620,000
C. P604,000
D. P660,000

13. The SK Manufacturing Company computes predetermined overhead rate on the basis of machine
hours in the machining department and direct labor cost in the assembly department. The following
estimates were made at the beginning of the year:
Machining Department Assembly Department
Direct Labor hours
12,000 8,000
Direct Labor cost
18,000 10,000
Machine hours
3,000 1,000
Manufacturing overhead
15,000 20,000

Based on the above information, what are the predetermined overhead rates for machining
department and assembly department?
A. P5 and 200%
B P5 and 50%
C. P5 and 100%
D. P6 and 200%

14. The companies that produce many different products or services usually use
A. Job order costing
B. Process costing
C. None of the above
D. Both A and B

15. Which of the following is correct journal entry to apply manufacturing overhead cost to jobs?
*Debit-Work in process Credit-Manufacturing overhead
*Debit-Manufacturing overhead Credit-Work in process
*Debit-Finished goods Credit-Manufacturing overhead
*Debit-Work in process Credit-Finished goods

A. Debit-Work in Process Credit-Manufacturing Overhead

B. Debit-Manufacturing Overhead Credit-Work in process
C. Debit-Finished Goods Credit-Manufacturing Overhead
D. Debit-Work in Process Credit-Finished Goods

Quiz 10

1. It is a set of statements providing broad direction for the firm.

A. Plan
B. Goal
C. Objective
D. Program

2. A system that relates costs to organizational structure is called

A. Responsibility Accounting
B. Cost Accounting
C. Management Accounting
D. Financial Accounting

3. It is a budget prepared after the fact, showing what costs should have been at the actual level of
activity.
A. Perfect plan budget
B. Plan budget
C. Responsibility plan
D. Profit plan

4. An integrated plan of action for the firm as a whole, expressed in financial term is known as

A. Budgeted income statement

B. Master budget
C. Financial statement budget
D. Budgeted statement of financial position

5. A budget reflecting long-range decision of the company is

A. Budgeted manufacturing overhead

B. Cash budget
C. Performance budget
D. Capital expenditure budget

6. The practice of focusing attention on these activities where the actual performance differs
significantly from planned performance is

A. management by objective
B. management by exception
C. strategic management
D. Management

7. It is quantitative benchmark for measuring company achievement.

A. Objective
B. Goal
C. Plan
D. program

8. An integrated statement of resource levels and their sources is called

A. Financial statements
B. Statement of financial position
C. Income statement
D. Statement of cash flows
9. It is the most important input for budget preparation and all estimates of activity depend upon this
information

A. Master budget
B. Performance budget
C. Sales revenue
D. Sales forecast

10. It is an operating budget for a specific period of time.

A. Budgeted statement of financial position

B. Master budget
C. Performance budget
D. Budgeted income statement