Final Exam COST

Final Exam
Points:
68/100
Correct
1/1 Points
1.Advocates of variable costing for internal reporting purposes do not rely on which of the
following points?
The matching concept.
Price-volume relationships.
Production influences income under absorption costing.
Absorption costing does not include selling and administrative expenses as part of inventoriable
cost.
Correct
1/1 Points
2.Budgets are related to which of the following management functions?
Planning
Performance evaluation
Control
all of these
Correct
1/1 Points
3.A comprehensive budget operational budget starts with
Sales forecast.
Production budget.
Budgeted income statement.
Raw materials purchase budget.
Correct
1/1 Points
4. ABC Company produces a part for its production cycle. The costs per unit for 5,000 units
of this part are as follows:
Direct materials 16
Direct labor 20
Variable overhead 8
Fixed overhead 16
DEF Company has offered to supply ABC Company 5,000 units of the part for ₱56 per unit. If
ABC Company accepts DEF Company’s offer, total fixed costs will be reduced to ₱30,000.
What alternative is more financially advantageous and by what amount is it more
advantageous?
Make, ₱10,000
Make, ₱30,000
Buy, ₱20,000
Buy, ₱50,000
Correct
1/1 Points
5.Roberts, which began business at the start of the current year, had the following data:
• Planned and actual production: 40,000 units

• Sales: 37,000 units at P15 per unit
Production costs:
• Variable: P4 per unit
• Fixed: P260,000
Selling and administrative costs:
• Fixed: P32,000
The gross margin that the company would disclose on an absorption-costing income
statement is:
P97,500.
P147,000.
P166,500.
P370,000.
Incorrect
0/1 Points
6.Dell Company has budgeted sales of 60,000 units in July; 80,000 units in August; and
120,000 in September. The company has 6,000 units of finished goods and 49,600 pieces of
raw materials on hand on July 1. Each unit of product requires 4 pieces of materials. The
desired inventory of finished goods is 10% of the next month’s sales. The desired inventory
of materials is 20% of the next month’s production needs. Each raw material can be
purchased for ₱0.50 per material. How many pieces of raw materials are purchased in July?
248,000 pieces.
265,600 pieces.
345,600 pieces.
355,200 pieces.
Incorrect
0/1 Points
7.ABC Company manufactures a single product and has the following cost structure:
Variable costs per unit:
• Direct materials 72
• Direct labor 96
• Variable manufacturing overhead 24
• Variable selling and administrative expenses 48
Fixed costs per month:
• Fixed manufacturing overhead 2,400,000
• Fixed selling and administrative expenses 1,400,000
• The company produces 24,000 units each month.
Assume that there are no beginning inventories and 24,000 units were produced and 23,600
units were sold in a month. If the unit selling price is ₱420, what is the net income under
absorption costing?
448,000
488,000
428,800
408,000
Correct
1/1 Points
8.ABC Company desires an ending inventory of ₱62,000 and a beginning inventory of
₱55,000. Gross profit is estimated to be 25% of sales. The expected sales amounted to
₱320,000. Budgeted purchases would amount to
230,000
240,000
247,000
370,000
Correct
1/1 Points
9.Delaware has computed the following unit costs for the year just ended:
• Variable manufacturing cost P85
• Fixed manufacturing cost 20
• Variable selling and administrative cost 18
• Fixed selling and administrative cost 11
Which of the following choices correctly depicts the per-unit cost of inventory under
variable costing and absorption costing?
Variable - P85; Absorption - P105

Correct
1/1 Points
10.93. ABC Company operates a factory with a capacity to produce 10,000 units of its
product a year. The follow data pertains to the production costs at this capacity:
Variable costs 20,000

Fixed costs 30,000
A vendor has offered to sell 2,000 units to ABC Company annually. What is the price per unit
that makes ABC Company indifferent between the “make” and “buy” options?
3
5
2
0
Correct
1/1 Points
11.Which of the following is NOT an advantage of budgeting?
It forces managers to plan.

It provides resource information that can be used to improve decision making.
It aids in the use of resources and employees by setting a benchmark that can be used for the
subsequent evaluation of performance.
It provides organizational independence.
Correct
1/1 Points
12.88. Algae Company produces a single product. The cost of producing and selling a single
unit of this product at the company’s normal activity level of 30,000 units per month is as
follows:
Direct materials 10.20 Fixed manufacturing overhead 5.30

Direct labor 4.35 Variable selling and administrative expense 1.30
Variable manufacturing overhead 0.60 Fixed selling and administrative expense 2.95
The regular selling price of the product is ₱25.55 per unit. An order has been received from
a vital customer for 3,000 units to be delivered this month at a special discounted price. The
variable period expense will be ₱0.25 less per unit on this order than on normal sales. Direct
labor is a variable cost in this company.
Suppose there is not enough idle capacity to produce all units for the vital customer and
accepting the special-order would require sacrificing 1,200 units of what could have been
sold to regular customers. The minimum acceptable price per unit for this special order is
25.55
19.84
20.45
24.70
Correct
1/1 Points
13.Which of the following is the best reason for using variable costing?
All costs are variable in the long term.
Variable costing is acceptable for income tax reporting purposes.
Variable costing usually results in higher operating income than if a company uses absorption
costing.
Fixed factory overhead is more closely related to the capacity to produce than to the production
of specific units.
Correct
1/1 Points
14.Which of the following costs would be relevant in short-term decision making?
incremental fixed costs
all costs of inventory
total variable costs that are the same in the considered alternatives
the cost of a fixed asset that could be used in all the considered alternatives
Correct
1/1 Points
15.Which of the following statements is correct?
In a variable costing income statement, sales revenue is typically higher than in absorption
costing income statement.
When production is not equal to sales, income under absorption costing differs from income
under variable costing due to the difference in treatment (product cost and period cost) of the fixed
overhead cost under the two costing methods.
In a variable costing system, fixed overhead cost is included as part of the cost of inventory.
In an absorption costing system, fixed overhead cost is treated as a period cost.
Correct
1/1 Points
16.Which of the following does not contribute to an effective budgeting?
Top management is involved in budgeting.
To give each manager a free hand in the preparation of the budget, the data within the master
budget are flexible.
The organization is divided into responsibility units.
There is communication of results.
Incorrect
0/1 Points
17.Joe Limited provides design services to residential and commercial clients. The residential
services produce a contribution margin of ₱45,000 and have traceable fixed operating costs
of ₱48,000. Management is studying whether to drop the residential operation. If closed, the
fixed operating costs will fall to ₱37,000 and Joe’s income will
Increase by ₱8,000.
Increase by ₱34,000.
Decrease by ₱8,000.
Decrease by ₱34,000.
Correct
1/1 Points
18.Most___________ are relevant to decisions to acquire capacity, but not to short-run
decisions involving the use of that capacity.
sunk costs
incremental costs
fixed costs
prime costs
Incorrect
0/1 Points
19.Lone Star has computed the following unit costs for the year just ended:
• Direct material used P12

• Direct labor 18
• Fixed manufacturing overhead 29
Under variable costing, each unit of the company's inventory would be carried at:
P35.
P55.
P65.
P84.
Correct
1/1 Points
20.If production is less than sales (in units), then absorption costing net income will
generally be
Greater than variable costing net income

Less than variable costing net income
Equal to variable costing net income
Less than expected
Incorrect
0/1 Points
21.Which of the following categorization of costs is most important to decision making?
Mixed vs. step.
Joint vs. separable.
Avoidable vs. unavoidable.
Traceable vs. common.
Incorrect
0/1 Points
22.An act of choosing among alternative with the aim of increasing current profits.
Feasible alternative assessment.
Strategic decision making.
Decision model construction.
Short-term decision making.
Correct
1/1 Points
23.If a firm uses variable costing,
Its product costs include variable selling and administrative costs
Its profit fluctuate with sales
It calculates an idle facility variation
Its product cost per unit changes because of changes in the number of units produced.
Incorrect
0/1 Points
24.DEF Company produces and sells delicacies. Direct materials regarding production
amounted to ₱240 per unit. Direct labor was estimated to be ₱45 per unit and variable
manufacturing expenses are expected to be ₱15 per unit. Fixed factory overhead amounted
to a total of ₱5,000,000. Fixed administrative expenses amounted to a total of ₱1,800,000
per year with sales commissions of ₱60 per unit. For the year just ended, out of the 100,000
produced, only 60,000 units were sold. Determine the inventoriable cost per unit using
variable costing.
300
350
368
383.33
Correct
1/1 Points
25.Variable costing is unacceptable for
Transfer pricing.
Financial accounting.
Managerial accounting.
Reporting by product lines for internal purposes.
Incorrect
0/1 Points
26.When evaluating a make or buy decision, which of the following factors should be
considered in addition to its direct impact on profits?
The product quality of the supplier outside the organization.
The product quantities of the supplier outside the organization can provide.
The timing of when the supplier outside the organization can provide the products.
All of these.
Incorrect
0/1 Points
27.Bam makes ₱400,000 a year as an accountant. He decides to quit and study law full time.
Assume Bam does not hold part-time jobs. His tuition, allowance, books, and miscellaneous
fees total ₱700,000 a year. Given this information, the annual total economic cost of Bam’s
law studies is?
400,000
700,000
1,100,000
300,000
Correct
1/1 Points
28.Santa Fe Corporation has computed the following unit costs for the year just ended:

• Direct labor 19

Incorrect
0/1 Points
29.DEF Company’s 20x1 fixed manufacturing overhead costs totaled ₱120,000 and variable
selling costs totaled ₱45,000. Under variable (direct) costing, how much of the costs are
product costs?
None
45,000
120,000
165,000
Incorrect
0/1 Points
30.Last year, a company had sales of 15,000 units and produced 20,000 units. Other
information for the year is shown below:
• Direct manufacturing labor 37,500

• Variable manufacturing overhead 20,000
• Direct materials 30,000
• Variable selling expenses 20,000
• Fixed administrative expenses 20,000
• Fixed manufacturing overhead 40,000
Assuming no beginning inventory, what is the cost of goods sold under variable costing?
65,625
80,625
95,625
110,625
Correct
1/1 Points
31.Under variable costing, all fixed costs are expenses during the current period because
Fixed costs are usually immaterial in amount.
Fixed costs are non-controllable costs.
Fixed costs are incurred whether or not there is production, so it is not proper to allocate these
costs to production and defer a current cost of doing business.
Allocation of fixed costs is usually done arbitrarily and could lead to erroneous decision by
management.
Correct
1/1 Points
32.Which of the following statements is incorrect?
In a variable costing income statement, variable selling and administrative expenses are used
both in the computation of contribution margin and operating income.
When using a variable costing system, the contribution margin discloses the excess of revenues
over variable costs
In an income statement prepared as an internal report using the variable costing method, fixed
FOH is used in the computation of operating income and contribution margin.
Using absorption costing, fixed manufacturing overhead costs are best described as indirect
product cost.
Correct
1/1 Points
33.ABC Company produces a single product. For the most recent year, the company’s net
operating income computed by the absorption costing method was ₱7,400 and its net
operating income computed by the variable costing method was ₱10,000. The company’s
unit product cost was ₱17 under variable costing and ₱22 under absorption costing. If the
ending inventory consisted of 1,480 units, the beginning inventory must have been
920 units.
1,460 units.
2,000 units.
12,700 units.
Correct
1/1 Points
34.Which of the following statements is incorrect?
An imposed budget is the same as a participative budget.
Preparation of the budget would be the responsibility of each responsibility unit.
Top management’s support is necessary to promote budget participation.
The top management should review and approve each responsibility unit’s budget.
Correct
1/1 Points
35.In a make or buy decision, the opportunity cost of capacity could
be considered to decrease the price of units purchased from suppliers.
be considered to decrease the cost of units manufactured by the company.
be considered to increase the price of units purchased from suppliers.
not be considered since opportunity costs are not part of the accounting records.
Correct
1/1 Points
36.Management has prepared a graph showing the total costs of operating branch
warehouses throughout the country. The cost line crosses the vertical axis at P400,000. The
total cost of operating one branch is P650,000. The total cost of operating ten branches is
P2,900,000. For purposes of preparing a flexible budget based on the number of branch
warehouses in operation, what formula would be used to determine budgeted costs at
various levels of activity?
Y = P400,000 + P250,000X
Y = P400,000 + P290,000X
Y = P650,000 + P400,000X
Y = P650,000 + P250,000X
Correct
1/1 Points
37.A disadvantage of absorption costing is
That it is not a useful format for decision making.
That it assigns only manufacturing costs to the product.
All of the choices.
None of the choices.
Correct
1/1 Points
38.Budgeting supports the planning process by encouraging all of the following activities
except:
Requiring all organizational units to establish their goals for the coming period.
Increasing the motivation of managers and employees by providing agreed-upon expectations.
Improving overall decision making by considering all viewpoints, options, and cost control
programs.
Directing and coordinating operations during the period.
Correct
1/1 Points
39.A cost that is to be incurred in the future that differ across alternatives are
Opportunity costs.
Variable costs.
Relevant costs.
Product costs.
Correct
1/1 Points
40.When a scarce resource, such as space, exists in an organization, the criterion that should
be used to determine production is
contribution margin per unit.
selling price per unit.
contribution margin per unit of scarce resource.
total variable costs of production.
Correct
1/1 Points
41.A criticism of absorption costing for managerial accounting purposes is that it
Overstates inventories.
Does not reflect cost-volume-profit relationships.
Is not acceptable for product line segmented reporting.
Might encourage managers to emphasize the short-term at the expense of the long term.
Correct
1/1 Points
42.Indiana Company incurred the following costs during the past year when planned
production and actual production each totaled 20,000 units:
• Direct materials used P280,000

• Direct labor 120,000
• Variable selling and administrative costs 60,000
• Fixed selling and administrative costs 90,000
The per-unit inventoriable cost under absorption costing is:
P9.50.
P25.00.
P28.00.
P33.00.
Correct
1/1 Points
43.ABC Company has 50 units of an obsolete part. The variable cost to produce them was
₱8 per unit. They could now be sold for ₱3 each and it would cost ₱10 to make them now.
The part could be reworked for ₱8 each and sold for ₱17. What is the monetary advantage
of reworking the parts over the next-best action?
300
150
250
667
Correct
1/1 Points
44.Which of the following is least likely a reason why a company prepares its budget?
To provide a basis for comparison of actual performance
To communicate the company’s plans throughout the entire business organization
To control income and expenditure in a particular period.
To make sure the company expands its operations.
Incorrect
0/1 Points
45.A manufacturer at the end of its fiscal year recorded the following:
• Prime cost 960,000

• Variable selling and administrative expenses 96,000
• Fixed selling and administrative expenses 48,000
If the manufacturer uses variable costing, what are the inventoriable costs?
1,080,000
1,272,000
1,176,000
1,224,000
Correct
1/1 Points
46.Which of the following statements is true?
Depreciation expense is always a product cost
Depreciation expense is always a period cost
Selling and administrative costs, whether variable or fixed, is always treated as period costs
under both the absorption and variable costing systems.
Income under absorption costing is always greater than income under variable costing.
Incorrect
0/1 Points
47.Which of the following costing methods is not acceptable for both internal and external
reporting?
Activity based costing
Variable costing
Absorption costing
Process costing
Correct
1/1 Points
48.A planning calendar, for budgeting purposes is the
Calendar year covered by the budget.
Schedule of dates at which goals are to be met.
Schedule of activities for the development and adoption of the budget.
Schedule of dates when new products should be launched in the market.
Incorrect
0/1 Points
49.Roberts, which began business at the start of the current year, had the following data:

Production costs:
• Fixed: P260,000
• Fixed: P32,000
The gross margin that the company would disclose on an absorption-costing income
statement is:
P97,500.
P147,000.
P166,500.
P370,000.
Correct
1/1 Points
50.The inventory costing method that treats direct manufacturing costs and indirect
manufacturing costs, both variable and fixed, as inventoriable costs is called
Variable costing
Absorption costing
Conversion costing
Perpetual inventory
Correct
1/1 Points
51.Bryan is contemplating a job offer with a large salon chain where he will make ₱53,000 in
his first year in the job. Otherwise, Bryan can begin to work in his father, George’s business
where he will earn an annual salary of ₱33,000. If Bryan decides to work with George, the
opportunity cost will be
33,000
53,000
86,000
Irrelevant in deciding which job offer to accept.
Incorrect
0/1 Points
52.Under variable costing there can be no
Fixed overhead.
Fixed overhead variances.
Fixed overhead budget variance.
Fixed overhead volume variance.
Incorrect
0/1 Points
53.The best description of opportunity costs is that they are
Not relevant to decision making and is generally not accounted for in the books.
Relevant to decision making and is generally not accounted for in the books.
Relevant to decision making and is generally accounted for in the books.
Not relevant to decision making but is generally accounted for in the books
Incorrect
0/1 Points
54.JBC Co. manufactures two products in a joint process incurring ₱300,000 of joint costs
per batch that are allocated using the net realizable method. Each batch yields 1,000 units of
Product X and 4,000 units of Product Y. Separable costs are ₱400,000 for Product X and
₱40,000 for Product Y. Both products sell for ₱100 per unit. JBC Co. has the option of
processing Product Y further produce 4,000 units of Product Z, incurring additional costs of
₱16,000. JBC Co. should produce Product Z if the selling price per unit is greater than
114
104
74
64
Correct
1/1 Points
55.A company prepares income statement using both absorption and variable costing
methods. At the end of the period, a comparison of actual and budgeted results revealed
that the actual net income was substantially above the budgeted net income, although
actual sales, gross margin, and contribution margin approximated the budgeted figures.
There were no beginning or ending inventories during the period. The most likely
explanation of the increase in net income is that, compared to budget, actual
Selling prices was higher
Variable costs was lower
Fixed selling and administrative costs was lower.
Fixed factory overhead costs was lower.
Incorrect
0/1 Points
56.Lone Star has computed the following unit costs for the year just ended:

• Direct labor 18
Under variable costing, each unit of the company's inventory would be carried at:
P35.
P55.
P65.
P84.
Correct
1/1 Points
57.The ABC Company has the following historical pattern on its credit sales:
· 60% collected in the month of sale.
· 20% is collected in the first month after sale.
· 12% is collected in the second month after sale.
· 5% is collected in the third month after sale.
· 3% is uncollectible.
The sales on open account have been budgeted for last six months of 20x1 are shown
below:
July ₱84,000 September ₱110,000 November ₱140,000
August 90,000 October 125,000 December 120,000
The estimated total cash collections during the fourth calendar quarter from sales made
during the fourth calendar quarter would be
120,500
247,200
299,000
359,200
Incorrect
0/1 Points
58.ABC Company produces a single product. During the year just ended, the company’s net
operating income under absorption costing method was ₱3,000 lower than under variable
costing. The company sold 9,000 units during the year, and its variable costs were ₱9 per
unit, of which ₱3 was variable selling expense. If production cost is 11 per unit under
absorption costing every year, then how many units did the company produce during the
year?
8,000
8,400
9,600
10,000
Correct
1/1 Points
59.DEF Company produces and sells delicacies. Direct materials regarding production
amounted to ₱240 per unit. Direct labor was estimated to be ₱45 per unit and variable
manufacturing expenses are expected to be ₱15 per unit. Fixed factory overhead amounted
to a total of ₱5,000,000. Fixed administrative expenses amounted to a total of ₱1,800,000
per year with sales commissions of ₱60 per unit. For the year just ended, out of the 100,000
produced, only 60,000 units were sold. Determine the inventoriable cost per unit using
absorption costing.
300
350
368
383.33
Correct
1/1 Points
60.The budgets that are based on a very high levels of performance, like expected costs
using ideal standards,
assist in planning the operations of the company

stimulate people to perform better than they ordinarily would
are helpful in evaluating the performance of managers
can lead to low levels of performance
Correct
1/1 Points
61.A cost is sunk if it
is not an incremental cost.
is unavoidable.
has already been incurred.
is irrelevant to the decision at hand.
Incorrect
0/1 Points
62.The ABC Company has the following historical pattern on its credit sales:
· 60% collected in the month of sale.
· 20% is collected in the first month after sale.
· 12% is collected in the second month after sale.
· 5% is collected in the third month after sale.
· 3% is uncollectible.
The sales on open account have been budgeted for last six months of 20x1 are shown
below:
July ₱84,000 September ₱110,000 November ₱140,000
August 90,000 October 125,000 December 120,000
The estimated total cash collection during the fourth calendar quarter would be
120,500
247,200
299,000
359,200
Correct
1/1 Points
63.Variable costing and absorption costing will show the same income when there are no
Variable costs.
Ending inventories.
Beginning inventories.
Beginning and ending inventories.
Correct
1/1 Points
If Indiana uses variable costing, the total inventoriable costs for the year would be:
P400,000.
P460,000.
P560,000.
P620,000.
Incorrect
0/1 Points
65.Machine depreciation is an example of
Relevant cost.
Variable cost.
Opportunity cost.
Sunk cost.
Correct
1/1 Points
66.Which of the following advantages does a budget mostly provide?
Coordination is increased.
Planning is emphasized.
Communication is continuous.
Comparison of actual versus budgeted data.
Correct
1/1 Points
follows:

Suppose there is sufficient idle capacity to produce the units required by the overseas
customer and the special price on the special order is ₱22.35 per unit. By how much would
this special-order increase (decrease) the company’s net operating income for the month?
2,550
(7,050)
18,450
(8,850)
Incorrect
0/1 Points
follows:

Suppose the company is already operating at capacity when this special-order is received.
What would be the opportunity cost of each unit sent to this customer?
3.20
1.10
0.85
9.10
Correct
1/1 Points
69.A qualitative factor consider when accepting or rejecting a special order is the
Variable period costs incurred because of the special order.
Avoidable fixed overhead traceable to the special order.
Effect of accepting the special order on the sales to regular customers.
Incremental sales revenues from the special order sale.
Incorrect
0/1 Points
70.The opportunity cost of making a component part in a factory with excess capacity for
which there is no alternative use is
the total manufacturing cost of the component.
represents an opportunity cost of production.
the fixed manufacturing cost of the component.
zero.
Correct
1/1 Points
71.Chicago began business at the start of the current year. The company planned to
produce 25,000 units, and actual production conformed to expectations. Sales totaled
22,000 units at P30 each. Costs incurred were:
• Fixed manufacturing overhead P150,000

• Fixed selling and administrative cost 100,000
• Variable manufacturing cost per unit 8
• Variable selling and administrative cost per unit 2
If there were no variances, the company's absorption-costing net income would be:
P190,000.
P202,000.
P208,000.
P220,000.
Correct
1/1 Points
72.ABC Company had ₱200,000 income using absorption costing. ABC has no variable
manufacturing costs. Beginning inventory was ₱15,000 and ending inventory was ₱22,000.
Income under variable costing would have been
178,000
193,000
200,000
207,000
Correct
1/1 Points
73.If the required direct materials purchases are 8,000 pounds and the direct materials
required for production is three times the direct materials purchases, and the beginning
direct materials are three and a half times the direct materials purchases, what are the
desired ending direct material in pounds?
20,000
4,000
12,000
32,000
Correct
1/1 Points
74.A manufacturer at the end of its fiscal year recorded the following:
• Prime cost 960,000

• Variable selling and administrative expenses 96,000
• Fixed selling and administrative expenses 48,000
If the manufacturer uses absoprtion costing, what are the inventoriable costs?
1,080,000
1,272,000
1,176,000
1,224,000
Correct
1/1 Points
75.In a make or buy decision, the reliability of a potential supplier is
an irrelevant decision factor.
relevant information if it can be quantified.
an opportunity cost of continued production.
a qualitative decision factor.
Correct
1/1 Points
76.Montalban Company’s sales budget shows the following expected sales for the following
year:
Quarter Units
First 120,000
Second 160,000
Third 90,000
Fourth 110,000
Total 480,000
The inventory at December 31 of the prior year was budgeted at 36,000 units. The quantity
of finished goods inventory at the end of each quarter is to equal 30% of the next quarter’s
budgeted sales of units. How much should the production budget show for units to be
produced during the first quarter?
48,000
96,000
132,000
144,000
Incorrect
0/1 Points
77.Income under absorption costing may differ from income under variable costing. The
difference in income between the two costing methods is equal to the change in the
quantity of all units
Produced multiplied by the variable manufacturing cost per unit.

Sold multiplied by the fixed factory overhead cost per unit.
In inventory multiplied by the fixed factory overhead cost per unit.
Sold multiplied by the selling price per unit.
Correct
1/1 Points
78.DEF Corporation produces single product. Variable manufacturing costs is ₱20 per unit
and fixed manufacturing costs is ₱150,000. DEF Corporation uses a normal activity of 5,000
units to set its standards. DEF Corporation began the year with no inventory, produced
5,500 units, and sold 5,250 units.
What is DEF Corporation’s ending inventory cost using absorption costing?
25,000
12,500
5,000
11,818
Correct
1/1 Points
79.PTO Company desires an ending inventory of P140,000. It expects sales of P800,000 and
has a beginning inventory of P130,000. Cost of sales is 65% of sales. Budgeted purchases
are
P 530,000
P 790,000
P 810,000
P1,070,000
Correct
1/1 Points
80.ABC Company has found that its annual budgets are quickly outdated once actual data is
recorded. Sometimes actual preparations have already begun for the period being
budgeted by the time the annual budget is finished, which leaves no time to react to
changing factors. ABC wants the budget to be as up-to-date as possible, and management
is willing to revise budgets as needed. Which budgeting solution would be most
appropriate for ABC?
Flexible budgeting.
Zero-based budgeting.
Continuous budgeting.
Activity-based budgeting.
Correct
1/1 Points
81.Prescott Corporation has computed the following unit costs for the year just ended:

• Direct labor 27
Under absorption costing, each unit of the company's inventory would be carried at:
P75.
P107
P116
P133
Incorrect
0/1 Points
82.The term incremental cost refers to
the profit foregone by selecting one choice instead of another.
the additional cost of producing or selling another product or service.
a cost that continues to be incurred in the absence of activity.
a cost common to all choices in question and not clearly or feasibly allocable to any of them.
Incorrect
0/1 Points
83.Calculating income under variable costing does not require knowing
Unit sales
Selling price
Unit production
Unit variable manufacturing cost
Incorrect
0/1 Points
84.A company provided the following information on sales for the coming year:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Units 40,000 40,000 30,000 30,000
Average selling price ₱5 ₱5 ₱5 ₱6
Assuming that the beginning inventory is 3,000 units, and that the company policy is to
have 25% of the next quarter’s sales in ending inventory, which quarter will have the lowest
production?
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Correct
1/1 Points
85.Santa Fe Corporation has computed the following unit costs for the year just ended:

• Direct labor 19

Correct
1/1 Points

If Indiana uses variable costing, the total inventoriable costs for the year would be:
P400,000.
P460,000.
P560,000.
P620,000.
Incorrect
0/1 Points
87.When comparing absorption costing with variable costing, the difference in operating
income can be explained by the difference between the
Units sold and the units produced, multiplied by the unit sales price.
Ending inventory in units and the beginning inventory in units, multiplied by the unit sales price.
Units sold and the units produced, multiplied by the budgeted variable manufacturing cost per
unit.
Ending inventory in units and the beginning inventory in units, multiplied by the budgeted fixed
manufacturing cost per unit.
Correct
1/1 Points
88.McAfee, which began business at the start of the current year, had the following data:

Production costs:
• Fixed: P260,000
• Fixed: P32,000
The contribution margin that the company would disclose on an absorption-costing income
statement is:
0
P147,000.
P166,500.
P370,000.
Correct
1/1 Points
89.If there were 30,000 pounds of raw material on hand on January 1, 60,000 pounds are
desired for inventory at December 31, and 180,000 pounds are required for annual
production, how many pounds of raw material should be purchased during the year?
150,000 pounds
240,000 pounds
120,000 pounds
210,000 pounds
Incorrect
0/1 Points
90.DEF Company’s 20x1 fixed manufacturing overhead costs totaled ₱120,000 and variable
selling costs totaled ₱45,000. Under variable (direct) costing, how much of the costs are
period costs?
None
45,000
120,000
165,000
Correct
1/1 Points
91.Delaware has computed the following unit costs for the year just ended:
• Variable manufacturing cost P85

• Fixed manufacturing cost 20

Incorrect
0/1 Points
92.DEF Company produces a single product. Last year, the company’s net operating income
computed by the variable costing method was ₱30,000. The company’s unit product cost
was ₱18 under variable costing and ₱20 under absorption costing. During the period,
inventory decreased by 8,000 units. The company’s income under variable costing must
have been
30,000
46,000
14,000
16,000
Correct
1/1 Points
93.Prescott Corporation has computed the following unit costs for the year just ended:

• Direct labor 27
Under absorption costing, each unit of the company's inventory would be carried at:
P75.
P107.
P116.
P133.
Correct
1/1 Points
94.A formal written statement of management’s plans for the future, packaged in financial
terms, is a:
Responsibility report.
Performance report.
Cost of production report.
Budget.
Incorrect
0/1 Points
95.A company manufactures and sells a single product. Planned and actual production in its
first year of operation was 90,000 units. Planned and actual costs for that year were as
follows:
Manufacturing Non-manufacturing
Variable 540,000 450,000
Fixed 360,000 270,000
The company sold 76,500 units for ₱20 each.

Determine the profit using absorption costing
(9,000)
45,000
58,500
112,500
Correct
1/1 Points
96.The potential rental value of space used for production activities
is a variable cost of production.
represents an opportunity cost of production.
is an unavoidable cost.
is a sunk cost of production.
Incorrect
0/1 Points
97.A company manufactures and sells a single product. Planned and actual production in its
first year of operation was 90,000 units. Planned and actual costs for that year were as
follows:
Manufacturing Non-manufacturing
Variable 540,000 450,000
Fixed 360,000 270,000
The company sold 76,500 units for ₱20 each.
Determine the profit using variable costing
(9,000)
45,000
58,500
112,500
Correct
1/1 Points
98.In deciding whether an organization will keep an old machine or purchase a new
machine, a manager would ignore the
estimated disposal value of the old machine.
acquisition cost of the old machine.
operating costs of the new machine.
estimated disposal value of the new machine.
Correct
1/1 Points
99.If a firm uses variable costing then
Its profit fluctuates with sales.
An idle facility variation is calculated.
Product costs include variable administrative costs.
The cost of a unit of product changes because of changes in number of units manufactured.
Correct
1/1 Points
100.The concept of “management by exception” refers to management’s consideration of
only those items that vary materially from expectations.

only rare events.
samples selected at random.
only significant unfavorable deviations.

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• Planned and actual production: 40,000 units

Variable - P85; Absorption - P105

Variable costs 20,000

It forces managers to plan.

Direct materials 10.20 Fixed manufacturing overhead 5.30

• Direct material used P12

Greater than variable costing net income

• Direct material used P25

Variable - P79; Absorption - P119

• Direct manufacturing labor 37,500

• Direct materials used P280,000

The per-unit inventoriable cost under absorption costing is:

• Prime cost 960,000

• Planned and actual production: 40,000 units

• Direct material used P12

assist in planning the operations of the company

Direct materials 10.20 Fixed manufacturing overhead 5.30

Direct materials 10.20 Fixed manufacturing overhead 5.30

• Fixed manufacturing overhead P150,000

• Prime cost 960,000

Produced multiplied by the variable manufacturing cost per unit.

• Direct material used P18

• Direct material used P25

Variable - P79; Absorption - P119

• Direct materials used P280,000

• Planned and actual production: 40,000 units

• Variable manufacturing cost P85

Variable - P85; Absorption - P105

• Direct material used P18

The company sold 76,500 units for ₱20 each.

only those items that vary materially from expectations.

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