NATIONAL COLLEGE OF SCIENCE AND TECHNOLOGY

STUDENTNAME Cascolan, Jomari R. SECTION

MULTIPLE CHOICE

1. A catering business has to make decisions about which sandwiches to make itself and which to
buy-in from third party suppliers. The transport costs are a fixed charge if it makes the sandwiches
itself. Which sandwiches should it make?
HAM CHEESE JAM
Estimated sales volume (Qty) 5,000 2,000 4,000
Variable cost of materials/sandwich 0.40 0.80 0.40
Variable labor/sandwich 0.10 0.12 0.25
Fixed overhead/sandwich 0.30 0.30 0.30
Transport cost 2,500 800 2,000
Brought in cost/sandwich 1.40 1.60 1.00

a) Cheese and jam c) Ham, cheese, jam

b) Ham only d) Ham and cheese

2. A clothing company produces wool jumpers. If wool is limited, in what order should these
jumpers be produced to maximize the company's profits?
Woman Man Child
Sales price 45.00 50.00 28.00
Material cost 24.25 30.00 14.40
Labor cost 5.00 5.00 4.00
Fixed cost per jumper 4.00 4.00 4.00
Wool 15 balls 20 balls 12 balls

a) Man, woman, child c) Child, woman, man

b) Woman, child, man d) Woman, man, child

3. A garage faces difficulties with a shortage of skilled labour to repair and service cars.
If there are only 120 hours available, how many repairs and services should they carry out to
optimise the contribution?
Repair Service
Contribution per labor hour 320 180
Expected hours 4 hours per repair 2 hours per service
Expected demand 15 repairs 40 services

a) 20 repairs and 20 services c) 30 repairs and no services

b) 10 repairs and 40 services d) 15 repairs and 30 services

4. A photographic company is estimating the benefits of investing in a new printer to improve its
output. Its current variable costs are P2.50 per photo and current fixed costs are P10,000.
If the new printer increases fixed costs by 15% but reduces variable costs by 5%, at what level of
production should they change to the new machine?

a) 12,000 photos c) 4,842 photos

b) 1,333 photos d) 4,000 photos

5. A catering company is considering investing in 10 microwave ovens costing P800 each to speed up
its cooking times. If they plan to cook 3,000 meals in a year to break even, how much labour cost
do they need to save per meal?

a)P 0.38 c) P 0.27

b) P3.75 d) P 2.67

6. Which of the following shops should be closed down?

London Bristol York
Sales 300,000 500,000 750,000
Cost of purchases 225,000 380,000 620,000
Fixed cost of running the shop 40,300 68,300 135,000
Head Office charge 36,000 45,000 50,000

a) Bristol and York c) London and York

b) York only d) London and Bristol

Use the following information in answering Questions 7 - 8:

During a recent accounting period a company produced 1,000 units of Item Q and 400 units of
Item R. The standard direct labor is 4 hours for each unit of Item Q and 6 hours for each unit of
Item R. The standard cost for one hour of direct labor is P20 per hour. The actual direct labor
for the accounting period was 6,500 hours at P19 per hour.

7. The direct labor efficiency variance for the accounting period was:

a. P1,900 Favorable c. P2,000 Favorable

b. P1,900 Unfavorable d. P2,000 Unfavorable

8. The direct labor rate variance for the accounting period was:

a. P6,400 Favorable c. P6,500 Favorable

b. P6,400 Unfavorable d. P6,500 Unfavorable

Use the following information in answering Questions 9-10:

The direct materials price variance for the recent accounting period is P8,000 unfavorable.
The direct material associated with this variance had a standard cost of P200,000. At the end of
the accounting year, the standard cost of the direct material is residing in the following:
 Direct materials inventory 20,000
Work in process inventory 30,000
Finished goods inventory 50,000
Cost of good sold 100,000
Total standard cost of direct materials 200,000

9. Assuming that the unfavorable variance of P8,000 is a significant (material) amount for this
company, how much of the variance would be charged to the finished goods inventory?

a. P0 d. P4,000
b. P800 e. P8,000
c. P2,000

10. Assuming that the unfavorable variance of P8,000 is an insignificant (immaterial) amount for
this company, what is the maximum amount of the variance that can be charged to the cost of
goods sold?

a. P0 d. P4,000
b. P800 e. P8,000
c. P2,000
Solutions:
1.)
Ham: Made-in: VS Bought-in:
0.4 1.4
0.1
0.5 (2,500/5,000)
1 Make
Cheese: Made-in: VS Bought-in:
0.8 1.6
0.12
0.4 (800/2,000)
1.32 Make
Jam: Made-in: VS Bought-in:
0.4 1
0.25
0.5 (2,000/4,000)
1.15 Buy

2.)
Woman Man Child
45 50 28
-24.25 -30 -14.4
-5 -5 -4
15.75 15 9.6
/ / /
15 balls 20 balls 12 balls
1.05 0.75 0.8

3.)
Contribution
per hr: 320 180
/ /
4 2
80 for repairs 90 for services
all 40 services will be taken up. (total of 80 hrs)
120-80 hrs = 40 hrs / 4 hrs per repair = 10 repairs

4.)
10,000 * 15% = 1,500
2.50 * 5% = 0.125
1,500/0.125 = 12,000 photos
 5.)
800 * 10 = 8,000
8,000/3,000 = 2.67

6.)
London Bristol York
300,000 500,000 750,000
-225,000 -380,000 -620,000
-40,300 -68,300 -135,000
34,700 51,700 -5,000
York should be closed down.

7.)
Item Q: 1,000 * 4 = 4,000 hours
Item R: 400 * 6 = 2,400 hours
4,000 + 2,400 = 6,400 hours

6,500 hrs (actual) - 6,400 hrs = 100 hrs (unfavorable)

100 hrs * P20 (standard cost) =2,000 (unfavorable)

8.)
P20 (standard rate) - P19 (actual rate) = P1
P1 * 6,500 hrs = 6,500 (favorable)

9.)
50,000/200,000 = 25%
8,000 * 25% = 2,000

10.)
Since it is immaterial, the entire amount of
8,000 may be put to the cost of goods sold