Acctg.

102 -Cost Accounting MIDTERM EXAMINATION SY 2019- 2020

Instruction: Select the best answer by encircling only the letter corresponding to your choice. Erasure is not
allowed. Show supporting solutions when necessary.( All items that require solutions are good for 3 pts.}

1. Managers use cost-volume-profit (CVP) analysis to ________.

a. forecast the cost of capital for a given period of time
b. to study the behavior of and relationship among the elements such as total revenues, total costs, and income
c. estimate the risks associated with a given job
d. analyze a firm's profitability and help to decide wealth distribution among its stakeholders

2. Which of the following is true of cost-volume-profit analysis?

A) The theory assumes that all costs are variable.
B) The theory assumes that units manufactured equal units sold.
C) The theory states that total variable costs remain the same over a relevant range.
D) The theory states that total costs remain the same over the relevant range

3. The selling price per unit less the variable cost per unit is the ________.
A) fixed cost per unit B) gross margin C) margin of safety D) contribution margin per unit

4. Contribution margin equals ________.

A) revenues minus period costs C) revenues minus variable costs
B) revenues minus product costs D) revenues minus fixed costs

5. Sparkle Jewelry sells 800 units resulting in Php9,000 of sales revenue, Php3,000 of variable costs, and
Php1,500 of fixed costs. How much is the Contribution margin per unit? (Round to the nearest cent.)
A) Php13.75 B) Php11.25 C) Php7.50 D) Php5.00

6. The breakeven point is the activity level where ________.

A) revenues equal fixed costs C) contribution margin equals total costs
B) revenues equal variable costs D) revenues equal the sum of variable and fixed costs

7. Which of the following companies would be most likely to use a job-order costing system rather than a
process costing system?
a. fast food restaurant b. shipbuilding c. crude oil refining d. candy making

8. In a job-order cost system, direct labor costs usually are recorded initially with a debit to:
a. Manufacturing Overhead. b. Finished Goods inventory. c. Direct Labor Expense. d. Work in Process.

9. The Work in Process inventory account of a manufacturing company shows a balance of P2,400 at the end of
an accounting period. The job cost sheets of the two uncompleted jobs show charges of P400 and P200 for direct
materials, and charges of P300 and P500 for direct labor. From this information, it appears that the company is
using a predetermined overhead rate, as a percentage of direct labor costs, of:
a. 80%. b. 125%. c. 300% d. 240%.

10. Sweet Company applies overhead to jobs on the basis of 125% of direct labor cost. If Job 107 shows P10,000
of manufacturing overhead applied, how much was the direct labor cost on the job?
a. P8,000 b. P12,500 c. P11,250 d. P10,000

11. One of the requirements for Just In Time system to be successful is

a. cyclical production c. coupling it with Job order costing
b. adequate inventory stock d. high quality and balanced work loads

12. All of the following are terms used to describe the JIT efforts to reduce inventories of work in process and
raw materials except;
a. backflush production b. stockless production c. lean production d. ZIP production

Test II- Problem solving:

Arthur's Plumbing reported the following:
Revenues Php 4,500.00
Variable manufacturing costs 900
Variable nonmanufacturing costs 810
Fixed manufacturing costs 630
Fixed nonmanufacturing costs 545

Required:
a. Compute contribution margin.
b. Compute contribution margin percentage.
c. Compute gross margin.d. Compute gross margin percentage.
e. Compute operating income.

Answer key:
Answer:a. Contribution margin $4,500 - $900 - $810 = $2,790
b. Contribution margin percentage = ($2,790/$4,500) × 100 = 62%
c. Gross margin $4,500 - $900 - $630 = $2,970
d. Gross margin percentage = ($2,970/$4,500) × 100 = 66%
e. Operating income $4,500 - $