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P1 Quiz FIN 073
P1 Quiz FIN 073
LONG QUIZ 1
GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT
This is an 7 paged test and is composed of 1 section and has a total score of forty (40) points. You have
sixty (60) Minutes to finish this examination. The breakdown of the exam is as follows:
Try to answer all questions. In general, if you have some knowledge about a question, it is better to try
to answer it. You will not be penalized for guessing.
Be sure to allocate your time carefully so you can complete the entire test within the exam session. You
may go back and review your answers at any time during the exam session.
Those who are caught cheating or doing acts not allowed during the exam shall be instructed to surrender
their test papers and shall leave the testing room immediately. Subsequently, their papers shall be rated
as ZERO.
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
Write your final answer on the box provided before the number. Use CAPITAL letters only. Answers
written outside the box will not be considered. Erasures, changing of final answer, and the like will be
considered wrong.
5. Developing a company strategy for responding to anticipated new markets is an example of:
a. planning b. organizing c. directing d. controlling
6. In determining whether planned goals are being met, a manager is performing the function of
a. planning b. organizing c. directing d. controlling
10. Which of the following would likely be a cost driver for the amount of direct materials used?
a. The number of direct labor hours worked.
b. The number of machine hours worked.
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
12. Costs that can be easily traced to a specific department are called:
a. direct costs. b. indirect costs. c. avoidable costs. d. unavoidable costs.
13. The salary that is sacrificed by a college student who pursues a degree full time is a(n):
a. sunk cost. b. out-of-pocket cost. c. opportunity cost. d. marginal cost
14. If the total cost of alternative A is ₱50,000 and the total cost of alternative B is ₱34,000, then
₱16,000 is termed the:
a. opportunity cost. b. average cost. c. sunk cost. d. differential cost.
15. The principal advantage of the scatter-diagram method over the high-low method of cost
estimation is that the scatter-diagram method
a. includes costs outside the relevant range.
b. considers more than two points.
c. can be used with more types of costs than the high-low method.
d. gives a precise mathematical fit of the points to the line.
16. Sipag Co.'s average cost per unit is the same at all levels of volume. Which of the following is
true?
a. Sipag must have only variable costs.
b. Sipag must have only fixed costs.
c. Sipag must have some fixed costs and some variable costs.
d. Sipag's cost structure cannot be determined from this information.
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
b. cost B will be easier to predict than cost A. d. cost B has no fixed component.
19. As the variable cost increases but the selling price remains constant, the
a. Degree of operating leverage declines c. Breakeven point goes down
b. Margin of safety stays constant d. Contribution margin ratio goes up
22. On a cost-volume-profit chart (break-even graph), where are the total fixed costs shown?
a. As the point where the sales line intersects the vertical axis (pesos)
b. As the point where the sales line crosses the total cost line
c. As the point where the sales line crosses the horizontal axis (volume)
d. As the point where the total cost line intersects the vertical axis (pesos)
23. When using conventional cost-volume-profit analysis, some assumptions about costs and sales
prices are made. Which of the following is one of those assumptions?
a. The contribution margin will change as volume increases
b. The variable cost per unit will decrease as volume increases
c. The sales price per unit will remain constant as volume increases
d. Fixed cost per unit will remain the same as volume increases
25. A relatively low margin of safety ratio for a product is usually an indication that the product:
a. is losing money c. is riskier than higher margin of safety products
b. has a high contribution margin d. is less risky than higher margin of safety products
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
26. Sipag Co. has an average unit cost of ₱20 at 20,000 units and ₱13.75 at 40,000 units. What is
the total fixed cost?
a. ₱125,000 b. ₱250,000 c. ₱400,000 d. ₱300,000
27. Sipag Co. breaks even at ₱300,000 sales and earns ₱40,000 at ₱400,000 sales. Which of the
following is true?
a. Fixed costs are ₱120,000. c. The selling price per unit is ₱4.
b. Profit at sales of ₱500,000 would be ₱50,000. d. Contribution margin is 10% of sales.
28. Sipag Co. earned ₱50,000 on sales of ₱400,000. It earned ₱70,000 on sales of ₱450,000.
Contribution margin as a percentage of sales is
a. 30%. b. 40%. c. 60%. d. 70%.
29. Sipag Co.’s break-even point is 4,000 units at a sales price of P50 per unit, variable cost of P30
per unit, and total fixed costs of P80,000. If the company sells 500 additional units, by how much
will its profit increase?
a. P25,000 b. P15,000 c. P10,000 d. P12,000
30. Sipag Co. has fixed costs of P100,000 and breakeven sales of P800,000. Based on this
relationship, what is its projected profit at P1,200,000 sales?
a. P50,000 b. P200,000 c. P150,000 d. P400,000
31. Below is the income statement for Sipag Co. for 2020:
Sales P400,000
Variable costs (125,000)
Contribution margin P275,000
Fixed costs (200,000)
Profit before tax P 75,000
What is the degree of operating leverage for Sipag Co. for 2020?
32. Sipag Co. had a 25 percent margin of safety. Its after-tax return on sales is 6 percent. The
company’s income is subject to tax rate of 40 percent. If fixed costs amount to P320,000, how
much peso sales did Sipag Co. make for the year?
a. P1,066,667 b. P1,000,000 c. P1,280,000 d. P800,000
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
Product A: 12 units @ P5.25 sales price; P4.85 variable cost per unit.
Product B: 10 units @ P7.50 sales price; P6.95 variable cost per unit.
Product C: 6 units @ P12.25 sales price; P10.35 variable cost per unit.
Sipag Co.'s fixed costs are P75,950.
What is the break-even point of Product A?
34. Sipag Co. has fixed costs of P200,000 and variable cost per unit of P6. It plans to sell 40,000
units in the coming year. If the firm pays income taxes on its income at a rate of 40%, what sales
price must the firm use to obtain an after-tax profit of P24,000?
a. P11.60 b. P12.00 c. P11.36 d. P12.50
35. The following data relate to Sipag Co. which sells a single product:
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FIN 073: Strategic Cost Management
Teachers’ Guide Module #9
38. What percentage of the variation in maintenance costs is explained by the independent variable?
a. 85.6% b. 95.2% c. 47.3% d. 73.3%
39. What is the total maintenance cost for an estimated activity level of 20,000 machine hours?
a. P64,500 b. P78,400 c. P82,300 d. P84,750
40. The following activity and cost data that were provided by Sipag Co. would help in estimating its
future maintenance costs:
- End -
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