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3. Refers to anything in product, product line, a 19. Standard costing systems may be used with
business segment for which cost is a. Just-in line system
a. Cost object b. Computer integrated manufacturing systems
b. Cost driver c. Total quality management
c. Cost control d. All of the above
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d. Cost variance
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20. Standard costing is used to isolate variances
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4. between standard costs and actual costs. It allows
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5. It is grouping of individual cost __, or an account on management to measure performance and correct
which a variety of similar costs are accumulated inefficiency, thereby helping to
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a. Cost driver rs e a. Allocate costs accurately
b. Cost variance b. Determine the break-even point
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c. Income statement c. Control costs
d. Eliminates managements need for subjective decisions
6.
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7. 21.
8.
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11. The __ of CVP analysis include the ff., except b. Whether the variance is favorable or not.
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a. Total fixed costs c. The possibility that the investigation will eliminate
b. Unit variable costs future ___ of the variance
c. Volume of units d. The__ of variances over time
d. Relevant costs
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a. In a variable costing income statement, sales revenue is d. Direct materials yes yes
typically higher than in absorption costing income 32. Which of the following must be known about a
statement. production process to include a variable costing
b. When production is not equal to its sales, income under system?
absorption costing differs from income under variable a. The direct and indirect costs related to production
costing due to the ___ of the product costs and period b. Standard quantities and price by all product inputs
costs of the __ under the two costing methods. c. The variable and fixed components of manufacturing
c. In a variable costing system, fixed overhead costs are costs
included as part of the cost of the inventory d. The capacity level to be used in allocating fixed
d. In the absorption costing system, fixed overhead costs is overhead costs.
included as a period costs .
33. Budgeting is
26. Which of the following statement is true? a. a process of creating a formal plan and ____ in a
a. Depreciation income is always a product cost quantitative format.
b. Depreciation income is always a period cost b. A technique for comparing the actual costs with
c. Selling and administrative costs, whether variable or standard costs.
fixed is always __ as period costs under both the c. A technique for determining the cost of manufacturing
absorption and variable costing products
d. Income under absorption costing is always greater than d. A means of product costing that emphasizes activities
income under variable costing. as basic and costs objects
27. If production is less than sales in units, in 34. Which of the following statement is correct?
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absorption costing and income will probably be, a. Budgets
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a. Greater than variable costing and income b. Budgets define responsibly centers and promote
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b. Less than variable costing and income communication and coordination among organization
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c. equal than variable costing and income segment
d. Less than __ c. Budgets foster the planning operations and facilitate the __
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28. Ia a ___ variable costing
rs e of blame for missed budget predictions.
d. Budgets foster the planning operations, provide a
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a. is period costs include variable selling and framework by performance evaluation, and promote
administrative costs communication and coordination among organization
b. Profits fluctuates with sales segment
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d. In product costs per unit changes because of changes in 35. Budgets are related to the ff. Except
the number of unit produced a. Planning
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b. Control
29. The inventory costing method that___ direct c. Performance evaluation’
manufacturing costs and indirect manufacturing d. None of the above
costs both variable and fixed as inventoriable cost
ed d
approved plan.
30. Which of the following statements regarding a. Cost control
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a. To communicate the company’s plan throughout the 7. What is the indifference point in terms of peso sales
entire business organization volume where the peso profits of the two companies are
b. To provide a basis for comparison of actual performance equal?
c. To control revenues and expenses during a given period 8. At the indifference point, how much is the profit of either
d. To make sure that the company expands its operation company?
39. Which of the following is not considered to be a Questions 9 to 11 are based on the following information:
benefit of participative budgeting? During July, a company’s direct materials costs for the
a. Participate budgeting results in greater support of the production of product X were as follows:
organization because individuals at all levels of
organization Standard unit price P12.5
Standard quantity allowed for actual production 6,300 units
40. A budget is a control technique that, among other Actual unit purchase price P13
things, Quantity purchased and used for actual prod 6,900 units
a. Budgetary stock can best to be described as the planned
overestimation of budgeted expenses. 9. What is the total materials cost variance?
b. The use of budgetary slack prohibits the use of the 10. What is the materials usage variance?
budget to control subordinate performance 11. What is the materials price variance?
c. From the perspective of corporate management, the use
of budgetary slack increases the likelihood of inefficient 12. E. Bernardo Corporation produces a product called
resource allocation “Earnest”. It uses a standard costing system and values its
d. Budgetary slack eliminates the likelihood that the stocks at standard cost. The standard cost of raw materials
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manager will receive the personal rewards that follow
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in product Earnest is: 4 kilos of material Y at P10 per kilo =
from meeting the expectations of superiors P40 per unit of Earnest. During May, the company
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purchased 14,200 kilos of Y at a cost of P170,400 or P12 per
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kilo. It produced 3,000 units of Earnest using 12,600 kilos of
II. Short problems
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rs e Y. What was the raw materials price variance for Material Y?
Questions 3 and 4 are based on the following information:
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13. Questions 13 to 16 are based on the following
Data about Anabelle Company’s production and inventories information:
for the month of June are as follows: Produced 1,000 units of Product A with costs as follows:
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Labor 3,300
Purchase returns and allowances 2,440
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Work in progress 110,000 135,000 Selling and administrative costs incurred during the month
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3. How much is Anabelle Company’s prime cost for June? 14. What is the product cost per unit under variable
4. How much is Anabelle Company’s conversion cost for costing?
June? 15. What is the variable cost per unit for purposes of
computing the contribution margin?
Questions 5 to 8 are based on the following information: 16. Under absorption costing, how much is the income for
Genevieve’s Co. and Odessa Co. sell the same product in a January 2019?
competitive industry. Thus, the selling price of the product
for each company is the same. Other data about the two
17. Emie Trading Co. budgeted merchandise purchases of
companies are as follows:
40,000 units next month. The expected beginning inventory
is 12,000 units and the desired inventory at the end of next
Genevieve Co. Odessa Co.
Fixed costs P50,000 P70,000 month is 15,000 units. What are the budgeted sales in units
Contribution margin ratio 40% 52% for next month?
5. How much is Genevieve’s breakeven point in peso? 18. Edil Producers, Inc. will start its commercial operations
6. How much is Odessa’s breakeven point in peso? on January 1, 2019. The sales forecast per the sales
manager’s
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units. However, the production manages estimated that Company 1 Company 2
only 80% of the sales forecast can be produced with the Selling price per deck P3.00 P3.00
available workforce and equipment. The product will be Cost of paper per deck P0.62 P0.65
sold for P20 per unit. How much are the budgeted peso Printing ink per deck P0.13 P0.15
sales for Edil Producers, Inc.’s initial year of operations? Labor per deck P0.75 P1.25
Variable overhead per deck P0.30 P0.35
19. Patay-Buhay Corporation produces push-button Fixed costs P960,000 P252,000
switches used in the manufacture of electric fans. For the
year 2018, the sales of electric fans have been forecasted at
At what volume in units are profits of Company 1 and 2 are
800,000 units. Each unit of electric fans requires 4 pieces of
equal? (4 points)
push-button switches. Patay-buhay regularly supplies 60%
of the push-button switches used in the production of new
electric fans. In addition, a replacement part market also
exists. Over the past 5 years, the sales of the replacement
push-button switches have increased per year by 20% of
the preceding year’s sales. In 2018, Patay-Buhay sold
150,000 pieces of push-button replacement switches. The
trend is expected to continue in 2019. The company sells
the push-button switches for P10 per piece in both markets.
How much is the budgeted sales revenue based on the
expected number of pieces to be sold in 2019?
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20. Hershey company has budgeted sales of 90,000 units in
January; 120,000 in February; and 180,000 units in March.
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The company has 20,000 units on hand on January 1. If
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Hershey Company requires an ending inventory of finished
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goods equal to 20% of the following month’s sales, what is
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the budgeted production during February?
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Bonus Questions
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(2 points)
The company sold 10,000 units during the year, and its
variable costs were P9 per unit, of which P1 was variable
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