QUIZ 1 AFAR 1- ( 2nd Semester AY 2021-2022)

Quiz on Cost Concept, Absorption Costing, Variable Costing

1. Multiple regression analysis establishes a cause-and-effect relationship

2. Regression analysis is superior to other cost behavior analysis technique because it proves a
cause and effect relationship.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. When a decision is made in an organization, it is selected from a group of alternative courses

of action. The loss associated with choosing the alternative that does not maximize the benefit is
the opportunity cost.
2.Relevant cost are anticipated future costs that will differ among various alternatives.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. AN imputed cost is a cost that does not entail any peso outlay but is relevant to the decision-
making process.
2. Unit variable costs change in varying increments, while unit fixed costs change in equal
increments.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. The relevant range in cost accounting is the range over relevant costs are incurred.
2. When the number of units manufactured increases, the most significant change in average unit
cost will be reflected as a decrease in the non-variable element.
TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

1. The cost of the direct labor associated with the manufacture of a product should be classified
as an expense when the product was sold.
2. Advocates of variable costing for internal reporting purposes do not rely on matching concept.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. Calculating income under variable costing does not require knowing selling price
2. Standard costing differs from normal costing in the treatment of materials, direct labor and
overhead.

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE

FALSE, TRUE

1. Fixed cost that managers can change on short notice are commited fixed cost
2. Identifying cost drivers is an important part of cost management.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1.Correlation is a term frequently used in conjunction with regression analysis and is measured by
the value of the coefficient of correlation, r. The best explanation of the value r is that it Is a
measure of the relative relationship between two variables.
2. In regression analysis, the coefficient of determination is a measure of the predicted value of
the dependent variable.
TRUE, TRUE

FALSE, FALSE

TRUE. FALSE

FALSE, TRUE

1. Throughput costing treats all costs as period costs except for direct materials.
2. Once a company has reduced inventories to zero,absorption costing, variable costing and
throughput costing income will be equal.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. Sunk cost Are relevant to long-term decisions but not to short-term decisions.
2. As part of the data presented in support of a proposal to increase the production of DVD, the
sales manager of Laguna Suppliers reported the total additional cost required for the proposed
increased production level. The increase in total cost is known as out of pocket cost

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE

FALSE, TRUE

1. The term "committed costs" refers to costs that are governed mainly by past decisions the
established the present levels of operating and organizational capacity and that only change
slowly in response to small changes in capacity.
2. Differential costs vary with changes in operations.

FALSE, FALSE

FALSE, TRUE

TRUE, TRUE

TRUE, FALSE
1. Activity based management encompasses all of the actions that managers take to improve
operations or reduce costs bades on ABC data.
2. Designing a ne product, creating and testing a prototype models and creating metal dies and
cast are example of a unit level activities.

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE

FALSE, FALSE

1. Management Accounitng provides monetary and non monetary information and Financial
accounting on the other hand provides quantitative data only.
2. One of the objectives of a cost accounting system is income determination

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1.In a process cost system, the application of factory overhead usually would be recorded as an
increase in Factory overhead Control.
2. Indirect materials are factory overhead cost

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

1. since management accounting information is generally prepared for managers thus it is only
applicable to manufacturing and merchandising entities but not for service entities.
2. Avoidable cost depends on the decision being made.

TRUE, TRUE

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE
Items 16-19 Apple company makes calling personalized calling cards In an average month Apple
produces 100,000 boxes of credit cards each box contains 100 calling cards. The company
manufactures the product in batches of 400 boxes.

The cost of each batch are the folowing for the month of March: Hard Paper P8,000; Ink and
trimmings P800; silver boxes P25,600; labor cost 12,800 ; cost of designing P16,000 and the fixed
overhead charges totalled P360,000.
16. What is the value per box of calling based on average production volume?

17. If the sales volume increases by 20% per month, what will be the cost per box of calling card?

18. If sales volume increases by 25% per month but the company does not want the cost per box
exceed its current level, how much the company can pay for the design cost for each box ,
assuming all other cost are the same as March levels?

19. If apple company set the selling price at P200 and increase its volume to 110,000 boxes per
month, What selling price price per box will be set to generate the same per-unit gross margin
that the firm is now achieving? round off the selling price to two decimal places

Items 20-22 The following data for the period Dec 31, 2021 to February 28, 2022 were given by
Green company which has been burned and destroyed some important data.

Direct Materials purchased P160,000; Work in process beg; P34,000; Direct materials beg P16,000;
Finished goods beg P30,000 ; FOH , 40% of conversion costs

Sales P500,000; Direct labor P180,000; Prime cost P294,000; Sales returns P20,000
Gross profit % based on net sales, 20%; Cost of goods available for sale P450,000

20. How much is the finished goods inventory end?

21. What is the work in process end?

22. How much is the total manufacturing cost incurred up to the date of fire?

Items 23-26 BLUE Company determined that the total predetermined overhead rate for costing
purposes is P26.40 per product per day the following information were given:
23. How much is the total fixed overhead cost ?

24. How much is the total variable overhead unit cost?

25. At a total budgeted unit cost of P26.80, what is the budgeted capacity level?

26. If the company set a level capacity of 10,000 hours (assuming it is still within the relevant
range) how much is the total cost in this capacity?

Items 27-28 The following data have been gathered from a recent operations:

27. Using High-low method how much is the fixed cost element?

28. Using the least square method how much will be the total cost at a level of 3,000 hours?
(consider it is still within the relevant range)

Items 29-30 ACE company uses activity based costing to compute product cost for external
purposes and gives the following data.
29. How much is the overhead applied to production during the year?

30. How much is the factory overhead variance?

Items 31-34 KING corporation manufactures and sells a single product. The following data cover
the two latest years of operations: The denominator level is 30,000 output units per year.

31. How much is the net income using variable costing in year 2021?

32. How much is the net income using Full costing?

33. How much the net income under absorption costing in 2022?

34. How much is the net income using Variable Costing in 2022?

Items 35-36 QUEEN Co. plans to build an office for the company's new director , the following
schedule shows how project time will be allocated .
35. How much of the total time is value added activities?

36. How much is the non-value added activities?