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BALIUAG UNIVERSITY

CPA REVIEW 2014-15
MANAGEMENT ADVISORY SERVICES

JACF
__________________________________________________________________________________________________

DIRECT AND ABSORPTION COSTING
THEORY
1. When using full absorption costing, what cost attendant to an element of production (material, labor or
overhead) is used in order to compute variances from standard amounts?
a. Controllable costs;
b. Variable costs;
c. Total costs;
d. Fixed costs
2. An income statement is prepared as an internal report. Under which of the following methods would the
term contribution margin appear?
Absorption Costing
Direct Costing
a.
No
No
b.
No
Yes
c.
Yes
No
d.
Yes
Yes
3. The direct costing method includes in inventory:
a. Direct material cost, direct labor cost, but not all factory overhead cost.
b. Direct material cost, direct labor cost, and variable factory overhead cost.
c. Prime cost but not conversation cost.
d. Prime cost and all conversion cost.
4. What factor, related to manufacturing costs, causes the difference in net earnings computed using
absorption costing and net earnings computed under direct costing?
a. Absorption costing considers all costs in the determination of net earnings, whereas direct costing
considers only direct costs.
b. Absorption costing allocates fixed costs between cost of goods sold and inventories and direct costing
considers all fixed costs to be period cost.
c. Absorption costing “inventories’ all fixed costs for the period in ending finished goods inventory, but
direct costing expensed all fixed costs.
d. Absorption costing “inventories” all direct costs, but costing considers direct costs to be period costs
5. Which of the following must be known about a production process in order to institute a direct costing
system?
a. The variable and fixed components of all costs related to production;
b. The controllable and uncontrollable components of all costs related to production;
c. Standard production rates and times for all elements of productions;
d. Contribution margin and breakeven point for all goods in production
6. A basic tenet of direct costing is that period costs should be currently expenses. What is the basic rationale
behind this procedure?
a. Period costs are incontrollable and should not be charged to a specific product.
b. Period costs are generally immaterial in amount and the cost of assigning the amounts to specific
products would outweigh the benefits.
c. Allocation of period costs is arbitrary at best and could lead to erroneous decisions by management.
d. Period costs will occur whether or not production occurs and so it is improper to allocate these costs to
production and defer a current cost of doing business.
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Units sold exceed units produced b. 13. Direct costing always produces less taxable income than absorption. Inventoried discretionary costs in the beginning and ending inventories: c. Revenue over fixed over fixed costs b. 9. The unit fixed cost is zero ________________________________________________________________________________________ Page 2 of 15 Learn the rules like a pro. The difference in net earnings cannot be determined from the information given. Fixed as to the total cost d. The basic assumption made in direct costing system with respect to fixed cost is that fixed costs are: a. Direct costing may be used only in situation where production is essentially homogenous but e. b. c. Units sold equal units produced d. Units sold are less than units produced c. d. A period cost 12. Revenue over variable costs d. Net earnings computed using direct costing will be higher. the contribution margin discloses the excess of a. What is the basic difference between direct costing and absorption costing? a. c. The operating earnings computed using variable (direct) costing would exceed operating earnings computed using absorption costing if: a. Sales as recorded under the direct costing method and sales as recorded under the absorption costing method 11. Net earnings computed using direct costing will be lower 10.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 7. b. Gross margin (absorption costing method) and contribution margin (direct costing method). 8. . Variable costs over fixed costs. Net earnings are always overstated when using direct costing procedures. Direct costing cannot use standards. When using direct costing system. Inventoried fixed costs in the beginning and ending inventories and any deferred over or under applied fixed factory overhead b. There will be no difference in net earnings b. d. d. Net earnings determined using absorption costing can be reconciled to net earnings determined using direct costing by computing the difference between: a. Projected revenues over the breakeven point c. Why is direct costing not in compliance with generally accepted accounting principles? a. Fixed manufacturing costs are assumed to be period costs. What will be the difference in net earnings computed using direct costing as opposed to absorption costing if the ending inventory increases with respect to the beginning inventories in terms of units? a. Direct coating recognizes fixed costs as a period cost and absorption costing recognizes fixed costs as product cost. c. Absorption costing may be used under any manufacturing condition. Direct costing procedures are not well known in industry. A sunk cost b. so you can break them like an artist. whereas standards may be used with absorption costing d. Direct costing ignores the concept of lower of cost or market when valuing inventory. Product cost c.

Prime costs mean: a. The net income reported under absorption costing will exceed net income reported under direct costing for a period if: a. Inventory valuation b. Production exceeds sales for that period c.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 14. If the net earnings were higher using standard direct costing than using standard absorption costing. Direct materials d. Variable factory overhead b. Prime costing c. Which of the following costs is a product cost under absorption costing but not under direct costing a. Production equals sales for that period b. Direct costing is used for internal purposes only which included the following except: a. Income measurement c. b. Sales exceed production for the period d. Change in the quantity of all units in inventory times the relevant fixed cost per unit. Relevant cost analysis d. Sales decreased 18. Change in the quantity of all units produced times the relevant variable cost per unit 17. Direct materials and direct labor d. Change in the quantity of all units produced times the relevant fixed cost per unit c. How is the difference calculated? a. Sales exceeded production c. Fixed factory overhead c. Sales were less than production d. Production equals sales for the period b. The variable costs exceeds the fixed costs 16. Sales increased b. The variable overhead exceed the fixed overhead 15. Net income reported under variable costing will exceed net income reported under absorption costing for the period if: a. Direct labor ________________________________________________________________________________________ Page 3 of 15 Learn the rules like a pro. so you can break them like an artist. Change in the quantity of all units in inventory times the relevant variable cost per unit d. Indispensable as distinguished from avoidable cost c. Cost incurred on joint products before split-off point 21. Capital investment decision 20. . Production is greater than sales for the period c. when can be said about sales during the period if inventory is priced using the LIFO method? a. Net profit under absorption costing may differ from net profit determined under direct costing. Relevant costing 19. Variable costing d. Sales is greater than production for the period d. The first costs incurred on a job b. Which of the following cost accounting terminology is commonly referred to as direct costing? a. Absorption costing b.

Reporting under the direct costing concept is accomplished by a. Other things being equal. so you can break them like an artist. A direct may not become a product cost c. operations and accounting are similar in all respects except that A uses direct costing and B uses absorption costing a. No overhead costs are charged to the product c. except: a. Including only direct costs in the income statement b. Amount of costs assigned to individual units of product b. Fixed manufacturing costs were to increase c. Under direct costing procedure a. Fixed costs are treated as period costs 27. and if their assets. Absorption costing differs from direct costing in the a. All of the above 25. Units produced were to exceed units sold d. Amount of net income that will be reported when there is no change inventory c. Operating using direct costing as compared to absorption costing would be higher a. Absorption costing b. Kinds of activities for which they may be used to report 29. All fixed manufacturing costs are recognized as period cost b. Matching variable costs against revenues and treating fixed costs are periods costs c. A would report a higher inventory value than B for the year in which production exceeds sales b. net income computed by the direct costing method would exceed net income computed by an absorption costs if a. Units sold were to exceed units produced b. If companies A and B manufacture similar products that require negligible distribution costs. B would report a higher net income than A for the years in which production equals sales 26. A would report a higher inventory value than B for the years in which production exceeds the normal or practical capacity c. Inventory values tend to be overstated d. Eliminating the work in process inventory account ________________________________________________________________________________________ Page 4 of 15 Learn the rules like a pro. When the quantity of beginning inventory is less than the quantity of ending inventory d. Treating all costs as period costs d. It is an accepted method for general reporting purposes d. An indirect cost may be assigned as part of product cost e. Amount of fixed costs that will be incurred d. When quantity of beginning inventory is more than the quantity of ending inventory c. None of these 24.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 22. . Imputed costing d. A concept of costing under which costs are classified as fixed or variable a. Under no circumstances 23. The following statements about the adoption of variable costing are true. When quantity of beginning inventory equals the quantity of ending inventory b. B would report a higher inventory value than A for the years in which production exceeds sales d. An increase in inventory decreases marginal income b. Variable manufacturing costs were to increase 28. Direct costing c.

Direct costing but not absorption costing d. under which of the following methods would the term gross profit most likely to appear? a. What costs are treated as period costs under direct costing? a. All variable production costs c. Variable cost per units increases d. No b. All variable costs d. All fixed costs d. All variable and fixed costs 34. Yes Variable Factory Overhead No Yes Yes No 32. In an income statement prepared as an internal report.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 30. Yes d. Which of the following is not the excess of net sales over related variable costs? a. so you can break them like an artist. Neither direct costing nor absorption costing ________________________________________________________________________________________ Page 5 of 15 Learn the rules like a pro. c. The absorption costing method includes in inventory Fixed Factory Overhead a. . Fixed costs decrease c. Absorption costing but not direct costing c. b. Only direct costs b. Marginal income d. All variable and fixed manufacturing costs c. Variable cost per units decrease 31. d. None of the above 35. The contribution margin decreases when sales volume remains the same and a. Both absorption costing and direct costing b. Contribution margin b. Fixed costs increase b. What costs are treated as product costs under variable 9direct costing) a. Only direct costs b. Gross margin c. Absorption Costing No No Yes Yes Variable Costing Yes No No Yes 36. If an income statement is prepared as an internal report. Profit contribution 33. No c. operating income would normally be measured under: a.

The cost of a unit of product changes because of changes in number of units manufactured b. Decrease in selling price 40. Product costs include variable administrative cost 42. . Be treated the same as variable factory overhead 38. Which method of inventory costing treats direct manufacturing costs and manufacturing overhead costs both variable and fixed. The alternative that would decrease the contribution margin per unit. Not be used b. Be treated the same as fixed selling and administrative expenses 39. Decrease in variable expenses b. Decrease in fixed expenses d. Decreased output and constant sales result in increased profits 43. Profits will always increase with increase in sales b. An idle facility variation is calculated d. If finished goods inventory increases. as inventories costs? a. Not be used b. variable selling and administrative expenses would a. Be used in the computation of contribution margin c. a. Increase in selling price c. the most is a. Be used in the computation of operating income but not in the computation of contribution margin c.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 37. Amount of costs assigned to individual units of products b. Direct costing b. Profits fluctuate with sales c. Conversion costing 44. Absorption costing d. Be used in the computation of contribution margin d. Profits may decrease with increased sales even if there is no change in selling prices and costs d. Conformity with generally accepted accounting principle 41. To be used in the computation of operating income but not in the computation of contribution margin d. Overhead costs are treated in the same manner under both costing methods b. Absorption costing is similar to direct costing in the a. Treatment for fixed selling and administrative expenses d. Which of the following statements is true for accompany that uses variable costing? a. Gross margin are the same under both costing methods ________________________________________________________________________________________ Page 6 of 15 Learn the rules like a pro. Profits will always decrease with decreases in sales c. In an income statement prepared as an internal report using the variable costing method. so you can break them like an artist. Variable costing c. absorption costing results in higher income c. Kinds of activities for which they may be used to report c. When company prepares financial reports by using absorption costing a. In an income statement prepared as an internal report using the variable costing method. Variable manufacturing costs are lower under variable costing d. Which of the following statements is correct regarding absorption costing and variable costing a. fixed factory overhead would.

Decrease production of those items requiring the most direct labor 48. Which one of the following is correct regarding a relevant range? a. Decrease and sales price remains unchanged c. The relevant range cannot be changed after being established ________________________________________________________________________________________ Page 7 of 15 Learn the rules like a pro. Process costing No No 46. so you can break them like an artist. the amount by which sales can decline before losses occur is known as the a. Of the cost items listed below indentify the one that is not correctly accounted for as a product cost a. Activity-based costing No Yes b. d. Increase and sale price remains unchanged b. Margin of safety 50. The costing method that is properly classified for both external and internal reporting purpose is External Reporting Internal Reporting a. Actual fixed costs usually full outside the relevant d. and overhead is applied on the basis of direct labor hours. Total variable costs will not change b. Absorption costing and variable costing are two different methods of assigning costs to units produced. Hurdle rate c. Increase production schedules independent of customer demands d. c. Total fixed costs will not change c. b. Jaysen. Jaysen’s managers may do all of the following except. For a profitable company. Manufacturing supplies Insurance on factory Direct labor cost Packaging and shipping costs Part of Product Cost under Absorption Cost Variable Cost Yes Yes Yes No Yes Yes Yes Yes 47. To increase bonuses. Decrease and sales price increases 49. Variable sales ratio d. Variable costing No Yes d.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 45. Defer expenses such as maintenance to a future period c. The company uses absorption costing. b. Produce those products requiring the most direct labor. Remain unchanged and sales price increases d. Sales volume variance b. . Job-order costing No Yes c. The breakeven point in units increases when unit costs a. Inc. pays bonuses to its managers based on operating income. a.

00 per unit.: Selling price per unit Standard costs per unit of product  Materials  Labor  Variable overhead  Fixed overhead at normal capacity of 1. per unit  Total fixed cost The following variances were noted:  Unfavorable price variance  Favorable quantity variance  Favorable time variance  Favorable rate variance  Unfavorable controllable variance Required: Income statements using absorption and variable costing. P200 decrease ________________________________________________________________________________________ Page 8 of 15 Learn the rules like a pro. and the following are its sales and production records for 3 years: Year 1 Year 2 Year 3 Units of production 1. There was n inventory on January 1.000 1.00 450. so you can break them like an artist. in 2012.50  Fixed selling and administrative costs 800. The following data were obtained from APEOPLE Inc.00  Variable selling and administrative costs 1. 2012 if the direct costing method was used instead of the absorption costing method was used instead of the absorption costing method? a. P50. 2012 consisted of 100 units. What would be the changed in the peso amount of inventory on December 31.00 100.00 P23. 800 decrease b.00 600.100 Required: Compute the net income for each year using absorption and variable costing. a new product. Alma Inc.000 1.000 Units sold 1.000 units Total standard cost per unit The following are the actual costs incurred for the month: Production Sales at standard selling price Selling and administrative expenses:  Variable. Product A’s variable and fixed manufacturing costs per unit were P6 and P2 respectively. 200 decrease c.00  Labor per unit 2.50 3. P0 d.000.00 300. 2012.000.00 900 units 850 units P 2.00 Carla sells its product at P15. manufactured 700 units of product A.00 8. The inventory of Product A on December 31.00 3.00  Variable overhead per unit 1.000 800 1.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ PROBLEMS: 1.00 P500. .00 5. Carla Company produces and sells iPon. Assume for 3 years the following are the manufacturing costs:  Materials per unit P 3. 2.00  Total fixed overhead 2.00 3.00 P 7.

factory overhead variable.000. 27. 117.000.000 d. Total annual fixed selling and administrative expenses. 6.P36.000 units were sold.000 c. Nhecy uses direct costing would be a. P35. The ending inventory.000. 4.Direct labor. P40.500 c.000 ________________________________________________________________________________________ Page 9 of 15 Learn the rules like a pro. 40.000 c. 35. 80.000 units produced by the Sta. 20. Production costs during the month were: Materials.000 7. 25. The ending inventory.000 b. 20. The net operating income for September under absorption costing was: a. Total annual fixed manufacturing costs. P35.000 d. P25.000.000 9. P3.000 d.000 Items 6 to 9 are based on the following information: available for Nhecy Corp. assuming Nhecy used absorption costing. There was n inventory at the beginning of the year: During the year 12. 32. P25. 15. Teresita Company during September. 25.000 b. P30. total P60. P30.000 8. Factory Overhead-fixed. P15000. General and administrative expenses. 23.500 b.000 c. all fixed.000 5. assuming. P15.500 d. P8. would be a. P25. so you can break them like an artist.000 b. assuming Nhecy used direct costing. Variable manufacturing costs per unit of production. 27.500 units are produced and 10.’s product line: Selling price per unit. 25.000 d.000 b.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 4 and 5 are based on the following information: Of the 6.500 d.000. 110. would be a. Variable administrative costs per unit of production.000. The net operating income for September under variable costing was a. P26. P21. 100.000 b. P30. 5000 units were sold at P45 per unit. assuming Nhecy uses absorption costing is a. . The total fixed cost charged against the current year’s operations.000 c. P50. The total variable costs charged the expenses for the year.500 c.

00 per unit produced Direct labor -P1. Gerlie uses an actual cost system. P234. 100. absorption or variable costing. Absorption costing P2. P7. would show a higher operating income for 2012 and by what amount? a. 2012.000 units were sold.75 per unit produced Selling & administrative P70.00 per unit produced 10. Expenses Variable selling and adm.500 none none 12. 2012 under absorption costing method a. Which costing method. 104.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 10 and 11 are based on the following information: Gerlie Company began its operations on January 1.500 b. 1 30.500 ________________________________________________________________________________________ Page 10 of 15 Learn the rules like a pro.000 d. .200 b. 124. 2012 under the direct costing method? a.000 P0.000 d. P210. so you can break them like an artist.000 9. P7.500 c. Jan.000 4. Variable costing P2. P9.650 c. P114.000 25.25 per unit produced Factory overhead P120. Expenses Finished goods inventory.000 d. What would be Elma’s finished goods inventory at December 31. P330.000 12.700 13. 2012: Units produced Units sold Direct material used Direct labor incurred Fixed factory overhead Variable factory overhead 10.000 P1. What would be Gerlie’s finished goods inventory at December 31. P80.000 units were produced and P80.000 b. There were no works in process inventory at December 31. What would be Gerlie’s operating income for 2012 under variable (direct) costing method? a.000 b.000 c.000 11. P8.000 Filled selling adm. Manufacturing costs and selling administrative expenses for 2012 were as follows: Fixed Costs Variable Costs Raw materials -P2. In 2012.000 P40. 1 Work in process inventory. 2012 and produces a single product that sells for P10 per unit.500 d.000 Items 12 and 13 are based on the selected information concerning the operations of Elma Company for the year ended December 31. Variable costing P5. 110.000 c. 000 20. Absorption costing P5. Jan.

Peter’s operating income for 2012 would be a.000 c.000 What is Gabby’s unit cost of Product F for January. and products a single product that sells for P9 a unit Brooks uses an actual cost system.20 b. P7..000 15. Gabby Inc.50 17.000 Operating Expenses: Variable P98. 100.000 Fixed P315. 2012: Net sales P1. 2012. During January 2012. P140. began operation on January 1.50 per unit sold There were no variances from the standard variable costs. P90.000 Direct labor 22. Under the absorption costing method.000 d. P374.000 Variable Costs P1.400. produced 10.50 per unit produced P0. so you can break them like an artist. 2012 under the variable (direct) costing method? a. P352. 2012.50 per unit produced P1. P217.000 b.50 d.000 Units manufactured Units sold Finished goods inventory. P105. Manufacturing cost and selling and administrative expenses for 2012 were as follows: Raw materials Direct labor Factory overhead Selling & administrative Fixed Costs --P150. P8.000 units of Product F with costs as follows: Direct materials P40.000 c. Any under or overapplied overhead is written off directly at the year end as an adjustment to cost of goods sold.000 Costs of goods manufactured: Variable P630.00 per unit produced P0.000 units were produced and 90.000 60.000 d. P6. ________________________________________________________________________________________ Page 11 of 15 Learn the rules like a pro. P135. Jan 1 70. .000 none 14.000 P 80. 2012 calculated on the direct costing method? a.20 c.000 units were sold in 1999. P307.000 Fixed P140. P7. Brooks Corp.000 P85.000 b.000 Fixed overhead 10. What would be Peter’s finished goods inventory at December 31. there were no work-in-process inventory at December 31.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 14 and 15 based in the following information from Peter Company’s records for the year ended December 31.000 Variable overhead 13.000 16.

P90. P120.000 b.000 P100.000 d.000 80.000 b. 2012.000 c.50 d.000 How much of this cost should be inventoried? a. P995. Under absorption costing.50 19. the unit cost under absorption costing is a.000 c. Keller’s 2012 manufacturing costs were as follows: Direct materials and direct labor Depreciation of machines Rent for factory building Electricity to run machines P800. P935.000 20. P4. P750.000 Items 21 and 22 are based on the following data: Bates Company incurred the following costs: Direct materials and direct labor Variable factory overhead Straight-line depreciation: Production machinery Factory building P600. What is the net income for 2012 under direct costing? a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ 18. P720. the inventoriable costs are a. P3.00 c.000 c.000 d.000 50. P730. P2. P835.000 60. P750. a manufacturer of rivets. P680. so you can break them like an artist. P50. Under variable (direct) costing. .000 d.000 c. P680.000 d.000 b.000 22. P800. P3. Keller Company.000 35.000 70. In presenting inventory on the balance sheet a December 31. uses absorption costing.50 b. the inventoriable costs are a. P80.000 b. P600. P800.000 21.000 ________________________________________________________________________________________ Page 12 of 15 Learn the rules like a pro.

P500. What was Product Zee’s unit under variable costing? a.000 80. P2. West Co.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 23 and 24 are based on the following data: Lina Co. Costs incurred during June were as follows: Direct material used Direct labor used Variable manufacturing overhead Fixed manufacturing overhead Variable selling and general expenses Fixed selling and general expenses P100. Luna Company’s 2012 manufacturing costs were as follows: Direct materials and direct labor Depreciation of manufacturing equipment Depreciation of factory building Janitor’s wages for cleaning factory premises P500.20 25. P800. P2.80 24.32 d.70 c. P2. P898.27 b.20 d.000 70. P1. produced 100. P2.000 How much of these costs should be inventoried for external reporting purposes? a. P585. P2.000 40.000 c.000 b.000 What amount should be considered product costs for external reporting purposes? a.70 c.82 b.000 d.000 40. P2. P625.000 units of Product Zee during the month of June.000 d. What was the Product Zee’s unit cost under absorption costing? a.000 18.000 15. so you can break them like an artist.000 P327.000 50.000 ________________________________________________________________________________________ Page 13 of 15 Learn the rules like a pro.’s 2012 manufacturing costs was as follows: Direct materials and direct labor Other variable manufacturing costs Depreciation of factory building and manufacturing equipment Other fixed manufacturing overhead P700.000 45.000 12. P700. . P880.000 26.000 100. P610.000 b.000 c. P3.000 80.000 23.

00 Coronado. P400. P320. P300.000 c. . P24 c.000 Fixed manufacturing overhead 325. P255. Cost data for a special product manufactured by Coronado. P320.000 b.000 27. P255.000 e. so you can break them like an artist.00 P12.00 Fixed P12. P27 d. P36 e. The value to be assigned to the finished goods inventory at the end of he period under the direct costing is: a.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 27 and 28 are based on the following information: Direct material used P350. None of these 28. P22 b. The value to be assigned to the finished goods inventory at the end of he period under the absorption costing is: a. are given below: Selling price per unit Unit costs: Direct materials Direct labor Order cost per unit: Manufacturing Distribution P60.000 b. The unit cost of the special product for inventory purposes is a.000 d. 300. None of these 29.00 7. sells. P400.000 Variable manufacturing overhead 375. Inc.000 d. P300. on the average. None of these ________________________________________________________________________________________ Page 14 of 15 Learn the rules like a pro.000 c.00o units a year.00 Variable P5.00 9. Using the direct costing method. Inc.000 Direct labor 550.000 e.

The unit cost figure the company would use in costing inventory using direct costing is a.00 per unit. 16.000 units at P15. c. present plans call for monthly production and sales of P15.000 increase d.P12. None of these 32.10 . has the capacity to manufacture 20.60 c. b. Costs per unit are as follows: Direct material Direct labor Variable factory overhead Fixed factory overhead Variable marketing expense Fixed administrative expense P7.00 each.00 4.400 decrease P20.00 resulting in a 10% increase in sales volume.000 decrease c.000 units of P21.400 decrease P30. 12.P13. Assume the Yellow Co.500 decrease b.25 b. Assuming that the regular sales price of the company is reduced to P19. 31 and 32 are based on the following data: The Yellow Co. so you can break them like an artist.P5. accepted a special order of 5. none of these 31. 12.BALIUAG UNIVERSITY CPA REVIEW 2014-15 MANAGEMENT ADVISORY SERVICES JACF __________________________________________________________________________________________________ Items 30.P12.40 P16.70 e.000 increase None of these END ________________________________________________________________________________________ Page 15 of 15 Learn the rules like a pro. 14.05 2. However.10 30.20 1.000 increase P33.70 d. P20. .750 increase e. e.000 units per month. the effect in the monthly contribution margin will be a. the increase or decrease in contribution margin shall amount to a.35 1. d.