INFONET COLLEGE

Department of Accounting and finance

Assignment on Cost and Management Accounting-II
Part I: True or false questions
Write true if the statement is correct or false if the statement is incorrect and give
your answer in the answer sheet given to you.
1. Fixed cost is constant per unit within the relevant range.
2. Avoidable fixed costs are irrelevant in adding or dropping departments.
3. In special sales order decision, the incremental costs usually do not include fixed
manufacturing costs.
4. An avoidable cost can be defined as cost that can be eliminated as a result of
choosing one alternative over another in a decision-making situation.
5. The costs of manufacturing joint products before the split – off are called joint costs
and the are not relevant in further decision making.
Part II: Multiple choice questions
Choose the best answer and give your alternative on the answer sheet given to you.
1. Which of the following cost is relevant cost?
A. Direct materials in make-or-buy decision
B. Joint costs in a sell or process further decision
C. Unavoidable fixed costs in a dropping of a product line decision
D. All are relevant costs
USE THE FOLLOWING INFORMATION FOR QUESTIONS 2-3
AMAKEL Company produces one product that sells for $ 120. Variable costs are $80 per
unit. Fixed costs are $480,000. The tax rate is 40 percent.
2. How many units are sold at the breakeven point?
A. 12,000 units C. 12,550 units E. None of the above
B. 11,250 units D. 11,300 units
3. How many units would AMAKEL have to sell to earn a profit before taxes of $550,000?
A. 20,000 units C. 22,000 units E. None of the above
B. 21,000 units D. 25,750 units
4. How much would the sales revenue have to be for AMAKEL to have a profit after taxes of
$200,000?
A. $2,190,000 C. $2,440,000 E. None of the above
B. $2,040,000 D. $2,150,000
5. How many units would AMAKEL have to sell to earn a profit before taxes of $ 300,000, if
unit variable cost is increased by 10% and other factors remain constant?
A. 22,500 units C. 15,550 units E. None of the above
B. 15,000 units D. 25,000 units
6. Which one is not key factor in cost volume profit (CVP) analysis
A. Unit selling price C. Fixed cost E. None of the above
B. Unit variable cost D. A and B are answers
7. Which one is true about CVP analysis
A. It is applicable to profit seeking organizations only
B. It is applicable to nonprofit oriented organizations only
C. It is used by both profit seeking and nonprofit oriented organization
 D. All of the above E. None of the above
8. Beall Company sells one product for $ 8 per unit. Variable costs are $ 6 per unit. A fixed
cost is total $ 24,000. How many units must Beall Company sell to break even?
A. 3,000 B.4,000 C.12,000 D.96,000
9.Smith Company sells one product for $ 10 per unit. Variable costs are $ 4 per unit. Fixed
costs are $48,000. How many units must Smith Company sell to have a $ 90,000 profit
before taxes? A. 8,000units B.13,800 units C.23,000 units D.34,500 units
10. Horton Company has a contribution margin ratio of 70 percent. Fixed costs are $
280,000. How much sales revenue must Horton realize to have a profit before tax of $
70,000?
A. $ 245,000 B.$266,000 C. $470,000 D. $500,000
11. Which one is false in CVP analysis
A. USP is constant
B. Total variable cost is constant whether output is changed or not.
C. Total fixed cost is constant within relevant whether output is changed or not.
D. Unit fixed cost is variable when output is increased or decreased
12. At breakeven point:
A. Total cost is equal to total revenue
B. fixed costs are equal to contribution margin
C. profit is equal to zero D. All of the above E. None of the above
13. One of the following is relevant C. Salvage value of old equipment
information in old equipment D.Future operating cost of old
replacement decision making equipment
A. Cos of the old equipment E. None of the above
B. Purchase price of new equipment
14. One of the following is advantage of CVP analysis
A. To forecast target profit D. All of the above
B. To calculate quantity at BEP E. None of the above
C. To forecast the target sales revenue
15. A cost that has been incurred but cannot be changed by present or future decisions
is called:
A. Differential cost D. Sunk cost
B. Opportunity cost E. All of the above
C. Marginal cost
Using the following data answer questions from 16-20
GEMCHIS Company has two products: a table and a door. The productive capacity is
the limiting factor because only 10, 000 hours of capacity is available and company
employees need 2 hours and 3 hours to produce table and the door respectively. Unit
data follows:
Table Door
Selling price Br.180 Br.220
Variable costs 80 100
16. Contribution margin per hour for table is.
A. Br. 50 C. Br. 120 E. None of the above
B. Br. 100 D. Br. 40
17. Contribution margin per hour for door is.
 A. Br. 50 C. Br. 120 E. None of the above
B. Br. 100 D. Br. 40
18. Total contribution margin of table is.
A. Br. 500,000 C. Br. 120,000 E. None of the above
B. Br. 100,000 D. Br. 400,000
19. Total contribution margin of door is.
A. Br. 500,000 C. Br. 120,000 E. None of the above
B. Br. 100,000 D. Br. 400,000
20. Which product is more profitable?
A. Table B. Door C. None of the above

PART II: Matching Questions

Match from column B to column A
Column A Column B
1. Breakeven point A. Total revenue = total cost
2. Relevant rang B. Given production level of company
3. Fixed cost C. Vary in total when output vary
4. Variable cost D. The same in total when output vary within the relevant rang
5. Activity E. An event task or unit of work
F. cash or cash equivalent

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