1. Management information is used at different levels of the organization.

(i) Information used by strategic management tends to be summarised

(ii) Information used by strategic management tends to be forward looking
(iii) Information used by operation management tends to contain estimates
(iv) Information used by operation management tends to be required frequently
Which of the above statements are true?
a. (iii) and (iv) only
b. (ii) and (iii) only
c. (i), (ii) and (iv) only
d. (i), (iii) and (iv) only

2. Management accounting is primarily concerned with:

a. Providing investors with useful information for valuing securities
b. Providing creditors information on the status of their loans
c. All are correct
d. Providing managers with relevant information to help achieve organizational goals

3. A manufacturing company prepays its insurance coverage for a three-year period.

The premium for the three years is $2,100 and is paid at the beginning of the first year.
Sixty percent of the premium applies to manufacturing operations and forty percent
applies to selling and administrative activities. What amounts should be considered
product and period costs respectively for the first year of coverage?
a. Product costs: $280; period costs: $420
b. Product costs: $420; period costs: $280
c. Product costs: $700; period costs: $0
d. Product costs: $0; period costs: $700

4. Which of the following costs would be included as part of factory overhead?

a. Paint used for product finish
b. Paper used in the production of books
c. Depreciation of plant equipment
d. Depreciation on the corporation's office building

5. Which of the following production costs, if expressed on a per unit basis, would be
most likely to change
significantly as the production level varies?
a. Direct materials
b. Direct labor
c. Fixed manufacturing overhead
d. Variable costs
6. Z Ltd. prepares to flexible budget for production costs as follows
Capacity 80% 90%
Direct material costs 2,400,000 2,700,000
Direct labor costs 2,120,000 2,160,000
Manufacturing overhead costs 4,060,000 4,080,000
Determine total production costs at the level of 83% of maximum capacity:
a. 8,688,000
b. 6,888,000
c. 6,266,000
d. 8,586,000

7. S Company produces a single product. Last year, the company's net operating
income computed by the absorption costing method was $9,100, and its net operating
income computed by the variable costing method was $6,400. The company's unit
product cost was $17 under variable costing and $20 under absorption costing. If the
ending inventory consisted of 2,100 units, the beginning inventory in units
must have been:
a. 1,200
b. 4,800
c. 3,000
d. 2,100

8. Under variable costing, fixed manufacturing overhead:

a. Are deferred in inventory when production exceeds sales
b. Would be treated the same as variable manufacturing overhead
c. Immediately expensed as a period cost

9. The company applies a job-order costing system. During the period, the order 1012
consumed
VND45,000,000 of direct material costs, VND30,000,000 of direct labor costs based
on the wage rate of
VND7,500,000 each direct labor hour. The manufacturing overhead rate to allocate
production overhead
costs was VND12,500,000 per direct labor hour. The indirect non-production costs
were allocated at the
rate of 60% of the prime costs. The full cost of the order 1012 was calculated:
a. VND240,000,000
b. VND200,000,000
c. VND170,000,000
d. VND195,000,000

10. W Company uses a job-order costing system to account for product costs. The
following information
pertains for a period:
Materials placed into production: $140,000
Indirect labour: $40,000
Direct labour (10 000 hours): $160,000
Depreciation of factory building: $60,000
Other factory overhead: $100,000
Increase in work-in-process inventory: $30,000
Factory overhead rate is £18 per direct labour hour
What is the total amount debited to Finished Goods Inventory for the period?
a. $550,000
b. $490,000
c. $450,000
d. $510,000

11. A corporation has 2 service departments as follows: Service department 1 incurred

the costs of $2,560,000 to provide 20 units to service department 2, 50 units to the
production department, 30 units to sales department and 15 units for self-usage.
Service department 2 incurred the costs of $988,000, to serve 4 and 5 employees at
service department 1, 2, respectively, 40 employees at production department, and 10
employees at sales department. Using the step-down method, the unit cost of
service department 2 could be allocated to production department:
a. $28,000
b. $30,000
c. $32,000
d. All are incorrect

12. The Thomas Corporation has two service departments and two operating
departments. The following
data are available for a recent period:

Service Operating
Departments Departments
 Administration Custodial Assembly Finishing

Overhead costs $80,000 $60,000 $75,000 $92,000

Number of 30 60 360 180

employees

Square feet 18,000 25,000 60,000 90,000

occupied
Thomas allocates service department costs by the step-down method in the following
order: Administrative Department costs are allocated first, based on number of
employees; Custodial Department costs are allocated second, based on square feet
occupied. No distinction is made between fixed and variable costs.
After all allocations, the total amount of overhead cost contained in the Assembly
Department will be:
Select one:
A. $168,550
B. $152,333
C. $150,200
D. $155,700
13. Lucas Corporation uses the weighted-average method in its process costing
system. Data concerning the
first processing department for the most recent month are listed below:

Beginning work in process inventory:

Units in beginning work in process inventory 900
Materials costs $ 9,600
Conversion costs $ 7,700
Percent complete with respect to materials 60 %
Percent complete with respect to conversion 45 %
Units started into production during the month 8,100
Units transferred to the next department during the month 6,900
Materials costs added during the month $ 115,800
Conversion costs added during the month $ 120,500
Ending work in process inventory:
Units in ending work in process inventory 2,100
Percent complete with respect to materials 75%
Percent complete with respect to conversion 20%
What are the equivalent units for materials for the month in the first processing
department?
Select one:
A. 9,000
B. 6,900
C. 1,575
D. 8,475

14. Bistrol Corporation uses the weighted-average method in its process costing
system. This month, the
beginning inventory in the first processing department consisted of 800 units. The
costs and percentage
completion of these units in beginning inventory were:

Cost PercentComplete

Materials costs $15,700 75%

Conversion costs $7,700 20%

A total of 8,400 units were started and 7,500 units were transferred to the second
processing
department during the month. The following costs were incurred in the first
processing department
during the month:

Cost
Materials costs $186,300
Conversion costs $329,800
The ending inventory was 70% complete with respect to materials and 60% complete
with respect to
conversion costs.
The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
Select one:
A. $36.68
B. $39.61
C. $38.71
D. $41.59

15. Cost-volume-profit analysis is used primarily by management:

a. As a check on data to be included in the external financial statements
b. To improve the accuracy of actual sales reported the Sales Department
c. As a planning tool
d. For control purposes

16. A company sells two products: M and N. The sales mix is expected to be $3.00 of
sales of Product M for every $5.00 of sales of Product N. Product M has a
contribution margin ratio of 40% whereas Product N has a contribution margin ratio of
50%. Annual fixed expenses are expected to be $259,000. The overall break-even
point for the company in dollar sales is expected to be closest to:
a. $592,000
b. $370,000
c. $560,000
d. $222,000

17. A Ltd. produces a single product. A Ltd. plans to use 8,000 machine hours and
5,000 direct labor hours to produce and sell 10,000 units K yearly. The direct labor
costs are $25 per unit K, and the rate of each direct labor hour is $15. Total variable
production costs are $175,000,000 per year. Total fixed
production costs are $425,000,000 per year. All selling and administrative expenses
are fixed costs of $150,000,000 annually. If A Ltd. wants to make a profit of
$175,000,000 each year, the mark-up percentage of pricing under the marginal costing
approach is:
a. 50%
b. 35.14%
c. 130.43%
d. All are incorrect

18. A company estimates that net profit of $255,000 would be earned when it
produces and sells 10,000
units of product S each month. At this level of activity, the company consumes 9,000
machine hours and
5,000 direct manufacturing labor hours at the rate of $32 per labor hour. The following
information is
available on product S: Direct material per unit: $32; Variable manufacturing
overhead costs per unit: $7;
Fixed manufacturing overhead costs: $200,000; Selling and administrative expenses
costs: $420,000. If
the company uses the absorption costing approach to cost-plus pricing, the required
markup for
product S would be closet to:
a. 74.17%
b. 85%
c. 90%
d. All are incorrect

19.A company makes and sells 3 products for which information is as follows:

Labor hour are limited to 1,300 hours each period and the supply of material is limited
to 1,450 kg each
period. What is the limiting factor(s)?
a. Neither direct material nor direct labor
b. Both direct material and direct labor
c. Direct material
d. Direct labor

20. San Antonio Corporation manufacturers a part for its production cycle. The costs
per unit for 5,000 units
of this part are as follows:
Direct materials $ 32
Direct labor 40
Variable overhead 16
Fixed overhead 32
Total $120
Amarillo Company has offered to sell San Antonio Corporation 5,000 units of the part
for $112 per unit.
If San Antonio Corporation accepts Amarillo Company's offer, total fixed costs will
be reduced to
$60,000. What alternative is more desirable and by what amount is it more desirable?
Alternative Amount
Select one:
a. Buy $40,000
b. Make $120,000
c. Buy $100,000
d. Make $20,000

21.Managers do not use management accounting information to ________.

a. Help external users such as investors, banks, regulators, and suppliers
b. Communicate, develop, and implement strategies
c. Co-ordinate product design, production, and marketing decisions
d. Maintain adequate fixed assets available to implement the strategy

22.Which of the following statements is correct in describing manufacturing

overhead?
Select one:
A. Manufacturing overhead is a period cost.
B. Manufacturing overhead when combined with direct materials cost forms
conversion cost.
C. Manufacturing overhead when combined with direct labor cost forms prime cost.
D. Manufacturing overhead consists of all manufacturing cost except for prime
cost.

23. Babuca Corporation has provided the following production and total cost data for
two levels of monthly
production volume. The company produces a single product.

Production volume 15,400 units 17,000 units

Direct materials $ 883,960 $ 975,800
Direct labor $ 254,100 $ 280,500
Manufacturing overhead $ 1,012,800 $ 1,040,480
The best estimate of the total variable manufacturing cost per unit is:
Select one:
A. $91.20
B. $73.90
C. $80.05
D. $77.70

24. P manufactures rustic furniture. The cost accounting system estimates

manufacturing costs to be $240 per
table, consisting of 60% variable costs and 40% fixed costs. The company has surplus
capacity available. It is
P's policy to add a 75% markup to full costs. A large hotel chain is currently
expanding and has decided to
decorate all new hotels using the rustic style. P is invited to submit a bid to the hotel
chain. What per unit
price will P most likely bid on this long-term order?
a. $180
b. $168
c. $420
d. $252

25. In a short-decision making context, which one of the following would be a

relevant cost?
a. The cost of special material which will be purchased
b. Depreciation on existing equipment
c. Specific development cots already incurred
d. The original cost of raw material currently in stock that will be used on the project

26. Sunk costs are:

a. Future costs that have no benefit
b. Relevant costs that have only short-run benefits
c. Cannot be avoided
d. Target costs

27. Which of the following is not an example of committed fixed cost?

a. Real estate taxes
b. Salaries of highly trained engineers
c. Factory insurance expense
d. Advertising expenses for a specific product

28. S Inc. manufactures a variety of products. Variable costing net operating income
was $86,800 last year
and ending inventory increased by 1,900 units. Fixed manufacturing overhead cost
was $6 per unit.
What was the absorption costing net operating income last year?
a. $86,800
b. $98,200
c. $75,400
d. $11,400
29. Which one is the correct statement?
a. For performance evaluation purposes, budgeted service department costs
should be allocated to operating departments
b. In step-down methods of allocating service department costs, the cost of service
departments could
be allocated each other reciprocally
c. Sales dollar would be the most appropriate allocation base to allocate the cost of a
human
resources department to other departments
d. The direct method has the disadvantage that it may leave some service department
costs unallocated

30. A company owns 800 units of work-in-process at the beginning of the period,
10,000 units started in
process and 400 units of work-in-process at the end of the period, with a completion
rate of 60% for
labor costs. The equivalent units of production for labor under FIFO approach is
10,080 units. What is
the completion percentage of beginning work-in-process for the labor item?
a. 50%
b. 30%
c. 70%
d. 40%

31. For the coming year, D plc’s variable costs are budgeted to be 60% of sales dollars
and fixed costs are budgeted to be 10% of sales dollars. If sales price increases by
10%, but if total fixed costs, unit variable costs, and sales volume remain the same,
the effect on D plc’s marginal contribution would be:
a. Remain unchanged
b. An increase of 25%
c. An increase of 15%
d. An increase of 5%

32. A manufacturer of food and beverages is considering the following actions. Which
of these is likely to
increase its contribution margin ratio?
a. Reducing exports to countries where there is intense price competition
b. Offering sales team a higher commission if they sell the products which have higher
selling prices
c. All are correct
d. Introducing the programs of total quality management to improve product quality

33. Consolidated Corporation had the following information:

Revenues $250,000
Cost of goods sold:
Direct materials $50,000
Direct labor 37,500
Overhead 62,500 150,000
Gross profit $100,000
Selling and administrative expenses 37,500
Operating income $ 62,500
What would be the price for a product that has a cost of $500, assuming that the
markup is based on
cost of goods sold?
Select one:
a. $2,000
b. $834
c. $625
d. $708

34. W Ltd produces a single product. The budgeted fixed production overheads for
the period are $500,000. The budgeted output for the period is 2,000 units. There
were 800 units of opening inventory at the beginning of the period and 500 units of
closing inventory at the end of the period. If absorption costing principles were
applied, the profit for the period compared to the marginal costing profit would be:

a.
$125,000 higher
b.
$75,000 higher
c.
$75,000 lower
d.
$125,000 lower
35. T uses a standard labour hour rate to charge its overheads to its clients’ work.
During the last annual reporting period production overheads were over-absorbed by
19,250. The anticipated standard labour hours for the period were 38,000 hours while
the standard hours actually charged to clients were 38,500. The actual production
overheads incurred in the period were $481,250. The budgeted production overheads
for the period were:

a.
$456,000
b.
None of the above
c.
$462,000
d.
$494,000

36. The company A owns a machine Z1 which has not been used for many months.
Currently, the company A is considering to use this machine for a special production
contract within one year. The carrying amount of machine Z1 is $100,000, but it
would now cost $150,000 to replace. If not being used for this contract, the machine
Z1 could be sold at $120,000 for scrap. However, after one-year usage for this special
contract, the estimated salvage value of the machine Z1 is nil and the cost to liquidate
is $10,000. This machine has no other use. What is the relevant cost of machine Z1
when deciding whether or not to accept this special production contract?

a.$150,000
b.$120,000
c.$130,000
d.$110,000

37. Which one of the following statements about ethical behaviour is true?

a.Ethical behaviour is best described as doing actions that are permitted by law
b.Ethical behaviour always involves choosing between actions that are clearly right or
wrong
c.Ethical behaviour is not guided by well-defined rules and is often subjective
d.Ethical behaviour is best guided by a policy of placing corporate performance above
individual ends

38. Traceable fixed costs consist of depreciation and plant supervisory salaries. All
depreciation on the equipment is dedicated to the product lines. None of the
equipment can be sold. Each of three products has a different supervisor whose
position would be eliminated if the associated product were dropped.

Which is the correct conclusion?

a.All are incorrect

b.If Sophia drops UA40, it will make an increase of 100,000 in income
c.If Sophia drops UA43, it will make a decrease of 100,000 in income
d.If Sophia drops UA40, it will make a decrease of 100,000 in income

39. Anna Corporation wants to set the selling price of a mass product. The accounting
department has provided cost estimations as shown below.

Unit variable cost Total fixed costs per year

Direct material costs 90

Direct labor costs 30

Production overhead 20 100,000

Selling, administration and 10 60,000
distribution costs

Capacity 2,000 units

Anna Corporation must invest $1,000,000 to produce and sell 2,000 units of the
product each year. Anna expects to obtain a 20% ROI.

Assume that due to recession, Anna Corporation expects to sell only 1,800 units
through regular channels with the selling price at $330 per unit next year. A large
retail chain has offered to purchase 500 units of product. There would be no sales
commissions on this order; thus, variable selling expenses would be decreased by $5
per unit. However, Anna would have to purchase a special machine to engrave the
retail chain’s name on the 500 units. This machine would cost $4,000. Determine the
minimum price per unit for Anna Corporation accepting this special order.

a.$253
b.$150
c.$261
d.$330

40. Introducing the programs of total quality management to improve product quality
THT Ltd. that sells a single product N in a situation of financial difficulty. Financial
information related to the product N as follows: the quoted selling price of $100 per
unit, a gross profit margin ratio of 40%, and 100% of mark-up ratio under marginal
costing approach for pricing. There is an overseas infrequent customer ordering
product N. The unit selling price which THT Ltd. is willing to accept the order from
this overseas customer will be:

a.60
b.50
c.40
d.30

41. Nathan Corporation had production overhead cost at various levels of activity for
the year 20x0 as below:

Labor-hours Total production overhead cost

January 32,000 $335,200

February 51,000 524,000

March 21,000 225,000

April 34,000 354,700

May 55,000 565,000

June 42,000 435,800

Production overhead cost in March was breakdown as follows:

Components of production overhead cost

 Indirect material (variable) $126,000

Supervisor salaries (fixed) 3,000

Rent & Depreciation (fixed) 8,000

Electricity (mixed) 88,000

What total electricity cost would you expect to be incurred at 40,000 labor-hours?

a.$164,000
b.$415,000
c.$167,619
d.All are incorrect
42. Memofax, Inc., produces a single product. Sales have been very erratic, with some
months showing a profit and some months showing a loss. The company's income
statement for the most recent month is given below:

Sales (13.500 units): $270,000

Less variable expenses: 189.000

Contribution margin: 81,000

Less fixed expenses: 90.000

Net loss: $(9,000)

The president is convinced that a 10% reduction in the selling price, combined with an
increase of $35,000 in the monthly advertising budget, will cause unit sales to double.
What will be the effect on the company's monthly net income or loss? (Use the
incremental approach in preparing your answer)

a. The increase in profit: $27,000

b. The increase in profit: $8,000
c. All are incorrect
d. The decrease in profit: $8,000