Stratcoman - Formative Assessment Quiz 3

5/7/2021 Quiz: Formative Assessment - Quiz 3
Formative Assessment - Quiz 3

Started: May 7 at 2:44pm
Quiz Instructions
Topics (evenly divided)
1. ABSOVAR
2. RELEVANT COSTING
Types of Questions (MCQ):
15 theories
15 problems
Question 1 2.5 pts
A special order was received by Mr. Arturito the manager. The relevant costs of
accepting the special order are as follows, except (assuming the production capacity
is full):
Salaries that will be incurred whether accepted or not.
The special price
Fixed costs savings
The contribution margin of the halted production
Question 2 2.5 pts
Under variable costing method, which of the following would be considered to be a

product cost?
https://feu.instructure.com/courses/66943/quizzes/629012/take 1/16
Indirect material
Depreciation
Variable selling costs
Salaries of warehouse supervisor
Question 3 2.5 pts
Fixed costs are generally irrelevant costs
True
False
Question 4 2.5 pts
All variable costs are relevant costs
False
True
Question 5 2.5 pts
Variable costing Is also known as full-costing
True
False
Question 6 2.5 pts
Volume variance exists only under:
Throughput costing
Variable costing
Direct costing
Full costing
Question 7 2.5 pts
Under what scenario will the absorption costing income be greater than the variable
costing net income
Sales > Production
Production < Sales
Cannot be determined
Production = Sales
Question 8 2.5 pts
Unavoidable fixed costs are considered to be relevant costs:
True
False
Question 9 2.5 pts
The minimum acceptable price of accepting an outsourcing decision is the total of:
Direct fixed costs and variable costs
Avoidable costs only
Direct fixed costs, variable costs and cost savings
Out-of-pocket costs, cost savings and opportunity costs.
Question 10 2.5 pts
Absorption costing income is always greater than variable costing income
False
True
Question 11 2.5 pts
Managers who are considering whether to sell or process further a product should
only consider incremental revenues of processing further
True
False
Question 12 2.5 pts
The shutdown point is considered to be the point where:
Contribution margin of continuing = loss on shutting down
Sales of continuing = loss on shutting down
Break-even point = loss on shutting down
Loss on continuing = shutdown costs
Question 13 2.5 pts
Under throughput costing, only direct materials and direct labor are considered to be
product costs
False
True
Question 14 2.5 pts
When considering to drop a segment, the following costs are relevant in the
decisions, except:
Direct costs of production
Direct fixed costs
Allocated costs
Opportunity costs
Question 15 2.5 pts
An example of a relevant cost is a future cost that remains the same between
alternatives
True
False
Question 16 2.5 pts
SimplengTaksil Company produces furniture. It has four products, tables, chairs,

cabinets and bookshelves. It has 50,000 direct labor hours available. Below are the
details pertaining to each product:
Table Chairs Cabinets Bookshelves
CM/Unit P25 P20 P28 P24
DLH/Unit 5 hours 2 hours 7 hours 5 hours
Maximum
3,500 units 12,000 units 5,000 units 3,000 units
demand
What will be the highest contribution margin if we prioritize the products properly?
P399,500
P299,500
P312,000
P304,800
Question 17 2.5 pts
Basiclang Company is assessing whether to sell its unused car parts for P27,000.
The parts were previously purchased for P100,000. The company will incur
refurbishing costs of P15,000 to be able to sell them. Which alternative should the
company pursue?
Sell so that profit will increase by P27,000.
Don’t sell, it will incur a loss of P73,000.
Sell, there will be a net benefit of P12,000.
The company is indifferent.
Question 18 2.5 pts
EasyLang Company provided the following information below:
Variable production costs P400,000
Fixed production costs 270,000
Variable period costs 120,000
Fixed period costs 190,000
How much is the period costs under direct costing?
P460,000
P310,000
P580,000
P390,000
Question 19 2.5 pts
Lido manufactures A and B from a joint process (cost = P80,000). Five thousand
pounds of A can be sold at split-off for P20 per pound or processed further at an
additional cost of P20,000 and then sold for P25. Ten thousand pounds of B can be
sold at split-off for P15 per pound or processed further at an additional cost of
P20,000 and later sold for P16. If Lido decides to process B beyond the split-off
point, operating income will:
decrease by P58,000.
increase by P10,000.
Question 20 2.5 pts
Ortega Interiors provides design services to residential and commercial clients. The
residential services produce a contribution margin of P450,000 and have traceable
fixed operating costs of P480,000. Management is studying whether to drop the
residential operation. If closed, the fixed operating costs will fall by P370,000 and
Ortega's net income will:
Question 21 2.5 pts
Pwedena Company’s inventory decreased by 20,000 units during 2020. The following
were the pertinent information:
Direct materials P300,000
Direct labor 250,000
Variable overhead 220,000
Fixed overhead 300,000
Variable period costs 180,000
Fixed period costs 150,000
Production 100,000 units
If Pwedena will use absorption costing instead of variable costing, its net income will:
Increase by P60,000
Decrease by P60,000
Decrease by P90,000
Increase by P90,000
Question 22 2.5 pts
Maddox, a division of Stanley Enterprises, currently performs computer services for

various departments of the firm. One of the services has created a number of
operating problems, and management is exploring whether to outsource the service
to a consultant. Traceable variable and fixed operating costs total P80,000 and
P25,000, respectively, in addition to P18,000 of corporate administrative overhead
allocated from Stanley. If Maddox were to use the outside consultant, fixed operating
costs would be reduced by 70%. The irrelevant costs in Maddox's outsourcing
decision total:
P25,500.
P18,000.
P25,000.
P17,500.
Question 23 2.5 pts
Warmuplang Corporation showed the following costs for 2020
Warehouse depreciation P300,000
Salaries of warehouse supervisor 200,000
Increase in RM inventory 20,000
Direct material purchases 120,000
Direct labor costs incurred 180,000
Variable selling costs 80,000
Under the absorption costing, the total product costs should be:
P780,000
P800,000
P900,000
P820,000
Question 24 2.5 pts
Using the same information in Warmuplang, if the company produced and sold
100,000 and 90,000 units, respectively during 2020. How much would be the
difference in net income under absorption and variable costing?
P50,000
P80,000
Cannot be determined
P300,000
Question 25 2.5 pts
MahirapTo Company started in 2018, it produced 100,000 units from 2018 to 2020.
The company had an ending inventory of 20,000 and 30,000 units in 2019 and 2020,
respectively. The company always finishes its goods put into process. MahirapTo
provided the following information pertaining to its manufacturing costs for 2020:
Direct materials P150,000
Direct labor 100,000
Indirect materials 40,000
Depreciation of manufacturing equipment 180,000
Rental expense on the warehouse 50,000
Utilities (Mixed costs) @ 40,000 kw/h 80,000
Other information are as follows:
Utilities incurred during 2019 were 78,000, at 38,000 kw/h usage.

There were no additional equipment purchased since the company started
operations.
The company rented only one warehouse since its inception.
The unit cost under absorption costing for 2019 is P5.50.
The company uses the FIFO method of inventory measurement.
In 2018 all units produced were sold.
How much is the total manufacturing cost under variable costing for 2020?
P370,000
P310,000
P350,000
P290,000
Question 26 2.5 pts
Using the same information under MahirapTo, how much is the cost of goods sold
under variable costing?
P271,500
P269,000
P532,500
P530,000
Question 27 2.5 pts
Using the same information for MahirapTo, how much is the difference in net income
for the year 2018 under absorption and variable costing method (assuming it
operated within the relevant range)?
P46,000
None
Cannot be determined.
P58,000
Question 28 2.5 pts
Arturito Company was approached by the Jordan Brand to purchase 10,000 pairs of
shoes for P550. The company currently operates at 45,000 pairs. The maximum
capacity of Arturito is 50,000 pairs. If arturito will accept the order, it will need to stop
some of their operations. The shoes normally sell for P600. Costs pertaining to the
production are as follows:
Manufacturing costs are as follows:
Direct material per unit P200
Direct labor per unit 180

Variable overhead per unit 50
Fixed overhead per unit 30
Period costs are as follows
Variable selling costs P20 per unit
Fixed administrative costs P450,000
If the company will accept the order:
It will not incur any selling costs.

Variable overhead of P12 per unit will not be incurred.
Exportation costs of P150,000 will be incurred.
Assuming you are the managerial accountant of Arturito Company, what will you
suggest?
Reject the special order because there is an incremental loss of P80,000
Accept the special order because there is an incremental benefit of P70,000
Question 29 2.5 pts
Using the same information in Arturito Company, what is the minimum acceptable
price per pair in order to accept the offer?
P587
P525
P598
P610
Question 30 2.5 pts
WalangLabel Company is a liquor company, the business has not been performing
well this last few months due to the liquor ban imposed by the government. The
company is considering whether it should shutdown temporarily for three months.
The selling price and other costs of operating are presented below:
Selling price P500
Variable manufacturing costs P280 per unit
Variable selling costs P60 per unit
Monthly Fixed costs:
Manufacturing costs P250,000
Selling costs P120,000
Administrative costs P125,000
If the company will temporarily close it would incur P150,000 in retrenchment costs
and P80,000 in reopening costs. Manufacturing costs would not be incurred and
Administrative costs of P50,000 would be avoided per month if they decide to
shutdown. The company expects to sell 100 units per month if it would continue to
operate.
What is the shutdown point in sales?
P7,500,000
P2,875,000
P3,656,250
P7,187,500
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5/7/2021 Quiz: Formative Assessment - Quiz 3

Formative Assessment - Quiz 3

Types of Questions (MCQ):

Question 1 2.5 pts

Salaries that will be incurred whether accepted or not.

The special price

Fixed costs savings

The contribution margin of the halted production

Question 2 2.5 pts

Under variable costing method, which of the following would be considered to be a

Variable selling costs

Salaries of warehouse supervisor

Question 3 2.5 pts

Fixed costs are generally irrelevant costs

Question 4 2.5 pts

All variable costs are relevant costs

Question 5 2.5 pts

Variable costing Is also known as full-costing

Question 6 2.5 pts

Volume variance exists only under:

Question 7 2.5 pts

Sales > Production

Production < Sales

Question 8 2.5 pts

Unavoidable fixed costs are considered to be relevant costs:

Question 9 2.5 pts

Direct fixed costs and variable costs

Avoidable costs only

Direct fixed costs, variable costs and cost savings

Out-of-pocket costs, cost savings and opportunity costs.

Question 10 2.5 pts

Absorption costing income is always greater than variable costing income

Question 11 2.5 pts

Question 12 2.5 pts

The shutdown point is considered to be the point where:

Contribution margin of continuing = loss on shutting down

Sales of continuing = loss on shutting down

Break-even point = loss on shutting down

Loss on continuing = shutdown costs

Question 13 2.5 pts

Question 14 2.5 pts

Direct costs of production

Direct fixed costs

Question 15 2.5 pts

Question 16 2.5 pts

SimplengTaksil Company produces furniture. It has four products, tables, chairs,

Table Chairs Cabinets Bookshelves

CM/Unit P25 P20 P28 P24

DLH/Unit 5 hours 2 hours 7 hours 5 hours

Question 17 2.5 pts

Sell so that profit will increase by P27,000.

Don’t sell, it will incur a loss of P73,000.

Sell, there will be a net benefit of P12,000.

The company is indifferent.

Question 18 2.5 pts

EasyLang Company provided the following information below:

Variable production costs P400,000

Fixed production costs 270,000

Variable period costs 120,000

Fixed period costs 190,000

How much is the period costs under direct costing?

Question 19 2.5 pts

Question 20 2.5 pts