RIZAL TECHNOLOGICAL UNIVERSITY

2ND Semester – SY 2023 – 2024

MANAGEMENT ACCOUNTING Part 1
Midterm Examination

Chapter 7 – Business Planning

Chapter 8 – Basic Cost Management Concepts
CHAPTER 9 – System Design: Job Order Costing and Process Costing

Textbook: MANAGEMENT ACCOUNTING 2017 Ed. By Ma. Elenita Balatbat Cabrera, BBA, MBA, CPA, CMA

Complete Name : SN, GN, MI

________________________________________________________________________________
Section Code: ___________________________________ Scores:
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Set - A

MULTIPE CHOICE: Please shade the letter corresponding your answer in ZipGrade answer sheet.

1. The direct materials and indirect materials used in the production of a motorcycle, combined with the
direct labor costs and manufacturing overhead involved would be called as _____ costs.
A. Direct
B. Period
C. Product
D. Conversion
ANSWER: C

2. When costs are used by outsiders, such as stockholders or creditors, to evaluate the performance of
top management and make investment decisions about the organization we say costs are used for ____
purposes.
A. Financial accounting
B. Managerial accounting
C. Cost accounting
D. Accounting Information System
ANSWER: A

3. The cost of materials still on hand in either account at period end will appear as an asset in their
respective accounts on the _____.
A. Income statement
B. Statement of financial position
C. Statement of owner’s equity
D. Statement of cash flows
ANSWER: B

4. As products are completed and moved from the factory to the storeroom, the accountant moves
direct materials, direct labor, and manufacturing overhead costs from Work in Process account to _____
account.
A. Cost of Goods Sold
B. Manufacturing Cost
C. Product Cost
D. Finished Goods
ANSWER: D

5. _____ are actual cost incurred in the past.

A. Standard costs
B. Normal costs
C. Historical costs
D. Opportunity costs
ANSWER: C

6. When repairing a television set, an electrician uses ____ to accumulate the costs of the repair job.
A. Process costing
B. Job order costing
C. Operation costing
D. Absorption costing
ANSWER: B

7. _____ is appropriate for companies making different components for inventory.

A. Process costing
B. Job order costing
C. Operation costing
D. Absorption costing
ANSWER: B

8. To assign, or apply, overhead costs, the accountant multiplies total monthly output per job, measured
by the chosen cost driver, by the _____.
A. Fixed overhead ratio
B. Predetermined overhead rate
C. Variable overhead ratio
D. Manufacturing overhead ratio
ANSWER: B

9. Over- or underapplied costs are usually subtracted from or added to the ____ on the income
statement.
A. Cost of Goods Sold
B. Manufacturing Cost
C. Product Cost
D. Finished Goods
ANSWER: A

10. ____ is used when products are produced continuously, that is, when there are no distinguishable
starting and stopping points in the production process.
A. Process costing
B. Job order costing
C. Operation costing
D. Absorption costing
ANSWER: A

11. _____ best meets the needs of a batch of manufacturer whose products have variations of single
design and require a varying sequence of standardized operations.
A. Process costing
B. Job order costing
C. Operation costing
D. Absorption costing
ANSWER: C

12. _____ meets the needs of a batch manufacturer whose products have variations of a single design
and require a varying sequence of standardized operations.
A. Process costing
B. Job order costing
C. Operation costing
D. Absorption costing
ANSWER: C

13. _____ enables a quick appraisal of the proposal by the interested parties who are reading the
document.
A. Executive Summary
B. Operations Plan
C. Marketing Plan
D. Business Profile
ANSWER: A

14. Which of the following statements is true?

A. Quality control is proactive approach
B. Each individual will take responsibility for quality of product and service in TQM
C. Inspections is an example of quality assurance
D. None of above
ANSWER: B

15. Research of the potential customer’s profile

A. Market analysis
B. Balance sheet
C. Mission statement
D. Legal considerations
ANSWER: A

16. Costs that categorize as administrative costs, except

A. Office clerk salaries
B. General manager salaries
C. Phone and postage
D. Stockholder driver’s salary
ANSWER: D
17. A cleaner who work in a factory, may best be classified as ____.
A. Indirect labor
B. Direct labor
C. Indirect expenses
D. Direct expenses
ANSWER: A

18. Direct materials + Direct labor = _____ ?

A. Prime costs
B. Conversion costs
C. Product costs
D. Mixed costs
ANSWER: A

19. For a manufacturing company, which of the following is a period, but not a product cost?
A. Salary of accounts executive
B. Salary of factory supervisors
C. Rental cost of factory building
D. Depreciation on factory machineries
ANSWER: A

20. What is a business plan?

A. Written document that only outlines the business practices of the new business.
B. Written document that describes all the steps necessary for opening and operating a successful
business.
C. Written document that describes the financial aspects of the business.
D. Written document that only describes the ownership of the business.
ANSWER: B

21. Looks at likely risks to the business

A. Contingency Plan
B. Management team Plan
C. Marketing Plan
D. Industry Overview
ANSWER: A

22. How a company will make customers aware of its products/services

A. Industry Overview
B. Product and Service Plan
C. Growth Plan
D. Marketing Plan
ANSWER: D

23. A brief account of the key points contained in a business plan

A. Executive Summary
B. Company Description
C. Mission Statement
D. Vision Statement
ANSWER: A

24. Who will run the company as well as management’s philosophy

A. Organizational Plan
B. Operational Plan
C. Executive Summary
D. Company Description
ANSWER: A

25. A plan presenting financial forecasts for the business

A. Loan Proposal
B. Financial Plan
C. Business Loan Plan
D. Investor Plan
ANSWER: B

26. Which of the following would not be interested in seeing the business plan of a new company?
A. Potential investors
B. The owners of the company
C. Banks/potential lenders
D. Local council
ANSWER: D

27. It shows and defines the hierarchy of the different positions in the organization.
A. Roles and Responsibilities
B. Form of Business Organization
C. Organizational Structure
D. Salary Requirements
ANSWER: C

28. The third element of manufacturing cost, includes all costs of manufacturing except direct materials
and direct labor.
A. Direct Material Cost
B. Manufacturing Overhead
C. Direct Labor Cost
D. Nonmanufacturing Costs
ANSWER: B

29. Which of the following information is never included in the financial management section of a
business plan?
A. An income statement
B. A cash flow statement
C. A financial statement
D. None of the answers are correct
ANSWER: D

30. If you possess excellent organizational skills, but are risk-averse and don’t like taking initiative, would
being an entrepreneur be a good profession for you?
A. Yes, entrepreneurs should be risk-averse.
B. No, entrepreneurs should rely on others to organize the business.
C. No, entrepreneurs must be risk-takers who take initiative and have excellent organizational skills.
D. Yes, all you need is good organizational skills.
ANSWER: C

31. The ____ phase, the long-term goals of the organization are established.
A. Tactical planning
B. Strategic planning
C. Business planning
D. Profit planning
ANSWER: B

32. The process by which management will direct the company’s growth toward objectives; the
budgeting process is the link between today’s operational capabilities and the objectives derived from
_____.
A. Tactical planning
B. Strategic planning
C. Business planning
D. Profit planning
ANSWER: A

33. Internal factors that can influence business planning.

A. Financial resources
B. Changes in economic and market conditions for the industry or business as a whole.
C. Development of new packaging and transportation methods
D. Development of new or improved competitive products with an advantage in cost, quality, or
availability.
ANSWER: A

34. The following are the desires of the owner and management that influence business planning,
except
A. Desire to raise the quality of products and services
B. Desire to increase the profitability of competitors
C. Desire to diversify or to shift dependence from a product with uncertain demand
D. Desire to increase profitability of money invested
ANSWER: B

35. In planning engagement, a consultant can render assistance in a number of the following different
areas, except
A. Play the “devil’s advocate”
B. Conduct sessions to determine the cause of variance
C. Develop the methods of planning
D. Directly control the business according to business plan
ANSWER: D

36. In planning engagement, a consultant can render assistance in a number of the following different
areas, except
A. Imposed techniques to be used in production process
B. Develop the methods of planning
C. Evaluate the methods for long-range planning
D. Play the “devil’s advocate”
ANSWER: A

37. In a planning engagement, a consultant can render assistance where a company is capable of
developing plans with its own planning function, then the consultant
A. Evaluate the methods for long-range planning
B. Suggest techniques to be used in the planning process
C. Develop the methods of planning
D. Instruct members of management about planning
ANSWER: A

38. Description of the company in a business plan includes the following, except
A. Mission statement
B. Pricing
C. Background /history of the company
D. Capital and ownership structure
ANSWER: B

39. Operations plans in a business plan includes the following, except

A. Equipment, machinery and vehicles
B. Operating systems and procedures
C. New product development
D. Customer service program
ANSWER: C

40. Financial plan in a business plan includes the following, except

A. Benefits program
B. Economic and business assumption
C. Working capital requirement
D. Equipment and facility financing
ANSWER: A

41. Keep the ____ as simple as possible. Identify the business and the institution or party to whom the
business plan is addressed.
A. Executive Summary
B. Cover Sheet
C. Profile of the Business
D. Context of the Business
ANSWER: A

42. This index will not only will not only help the prospective lender to understand the road map the
proponent is placing before him, it will also make a statement about the proponent.
A. Executive Summary
B. Cover Sheet
C. Profile of the Business
D. Table of Contents
ANSWER: D

43. Executive Summary of a business plan includes the following information, except
A. Its unique “selling advantage”
B. Procedures and timetable for repaying investors
C. The amount of capital being requested
D. Growth potential
ANSWER: D

44. The Context of the Business in a business plan should include the following, except
A. Industry outlook and trends
B. Growth potential
C. Economic trends
D. Product
ANSWER: D

45. The Context of the Business in a business plan. This statement provides a perspective of the future of
the industry according to industry leaders, experts, economists, government forecasters, and other
authoritative spokespersons.
A. Economic trend
B. Industry outlook and trends
C. Growth potential
D. New product development
ANSWER: B

46. _____ are costs collected into meaningful groups.

A. Cost Pools
B. Cost Objects
C. Cost Drivers
D. Cost
ANSWER: A

47. Any item to where costs can be traced and that has a key role in management strategy can be
considered a _____.
A. Cost Pools
B. Cost Objects
C. Cost Drivers
D. Cost
ANSWER: B

48. _____ are necessary for the development of cost information to serve the needs of management.
A. Allocation bases
B. Cost classifications
C. Cost assignment
D. Cost allocation
ANSWER: B
49. They are frequently classified as direct materials costs, direct labor costs, factory overhead costs.
A. Manufacturing costs
B. Product costs
C. Absorption costs
D. Direct costs
ANSWER: A

50. _____ should include scrap, waste, and normally anticipated defective units that occur in the
ordinary course of the production process.
A. Manufacturing overhead
B. Indirect Materials Cost
C. Nonmanufacturing costs
D. Materials cost
ANSWER: D

51. Nonroutine quality assurance samples are taken due to manufacturing problems and cost of
marketing sample should be classified as
A. Period cost
B. Variable cost
C. Material cost
D. Direct cost
ANSWER: A

52. Labor costs that cannot be identified or traced to specific units manufactured.
A. Direct labor cost
B. Conversion cost
C. Period cost
D. Indirect labor
ANSWER: D

53. They are costs that “attach” or cling to the units that are produced and are reported as assets until
the goods are sold.
A. Prime cost
B. Cost
C. Period cost
D. Inventoriable costs
ANSWER: D

54. These costs are expensed on the income statement in the period in which they are incurred.
A. Controllable cost
B. Period costs
C. Variable cost
D. Actual costs
ANSWER: B

55. _____ refers to how a cost will react or respond to changes in the business activity.
A. Cost behavior
B. Cost driver
C. Cost pools
D. Cost allocation
ANSWER: A

56. Cost that are not directly traceable to the cost object (i.e. product, department, etc.)
A. Noncontrollable cost
B. Direct cost
C. Indirect cost
D. Controllable cost
ANSWER: C

57. A predetermined cost estimate that should be attained, usually expressed in terms of costs per unit.
A. Budgeted costs
B. Normal costs
C. Standard costs
D. Actual costs
ANSWER: C

58. A type of product costing where fixed costs are charged against revenue as incurred and are not
assigned to specific units of product manufactured.
A. Absorption costing or Full Cost Method
B. Direct costing or Variable Costing
C. Activity based costing
D. Standard costing
ANSWER: B

59. Cost for which the size or the time of incurrence is a matter of choice.
A. Committed cost
B. Discretionary cost
C. Value-added costs
D. Historical costs
ANSWER: B

60. Cost associated with the next unit or the next project or incremental cost associated with an
additional project as opposed to the next discrete unit.
A. Value-added costs
B. Marginal costs
C. Future costs
D. Sunk cost
ANSWER: B

61. Seacrest Company uses a process-costing system. The company manufactures a product that is
processed in two departments: A and B. As work is completed, it is transferred out. All inputs are added
uniformly in Department A. The following summarizes the production activity and costs for November:

Department A Department B
Beginning inventories:
Physical units 5,000 8,000
 Costs:
Transferred in ---- $45,320
Direct materials $10,000 ----
Conversion costs $6,900 $16,800
Current production:
Units started 25,000 ?
Units transferred out 28,000 33,000
Costs:
Transferred in ---- ?
Direct materials $57,800 $ 37,950
Conversion costs $95,220 $128,100
Percentage completion:
Beginning inventory 40% 50%
Ending inventory 80% 50%

61. Using the weighted average method. What is the total number of units to be accounted for in
Department A for November?

A. 28,000
B. 30,000
C. 33,000
D. 36,000
ANSWER: B

62. Pinugu Corporation is preparing its factory overhead cost budget for the third quarter of 200B. The
management plans to produce 200,000 units for the said quarter. Past experience has shown that the
company’s product is produced at the rate of 4 units per hour. Variable rates per direct labor hour are as
follows:
Indirect materials and supplies P0.76
Power 1.36
Repairs and maintenance 2.80
Other variable overhead 0.96
Total P5.88

Total fixed overhead cost is budgeted at P147,200. For product costing purposes, a fixed factory
overhead rate of P3.20 per direct labor hour has been established.

How much is the total budgeted factory overhead for the quarter?
A. P417,680
B. P454,000
C. P441,200
D. P294,000
ANSWER: C

63. Edil Producers, Inc. will start its commercial operations on January 1, 200A. The sales forecast per
the sales manager’s estimates for its first year of operation is 50,000 units. However, the production
manager estimated that only 80% of the sales forecast can be produced with the available workforce
and equipment. The product will be sold for P20 per unit. The budgeted pesos sales for Edil Producers,
Inc.’s initial year of operations is
A. P800,000
B. P1,000,000
C. P50,000
D. P40,000
ANSWER: A

64. Fame Company has the following budget formula for factory overhead costs:

FOH = P5,000,000 per month + P300 per unit of product

If the company plans to produce 50,000 units in January, how much is the budgeted factory overhead
cost?
A. P20,000,000
B. P15,000,000
C. P5,000,000
D. P5,050,300
ANSWER: A

65. The Avenida Company has the following historical pattern on its credit sales.
70 percent collected in month of sale
15 percent collected in the first month after sale
10 percent collected in the second month after sales
4 percent collected in the third month after sale
2 percent uncollectible

The sales on open account have been budgeted for the last six months of 2010 are shown below:
July P 60,000
August 70,000
September 80,000
October 90,000
November 100,000
December 85,000

The estimated total cash collections during the fourth calendar quarter from sales made on open
account during the fourth calendar quarter would be
A. P172,500
B. P230,000
C. P265,400
D. P251,400

ANSWER: B

66. Bolt Company started its commercial operations on September 30 of the current year. Projected
manufacturing costs for the first three months of operations are P1,568,000, P1,952,000, and
P2,176,000, respectively. Depreciation, insurance, and property taxes represent P288,000 of the
estimated manufacturing costs. Insurance was paid on September 30, and property taxes will be paid in
July next year. Seventy-five percent of the remainder of the manufacturing costs are expected to be paid
in the month in which they are incurred, with the balance to be paid in the following month. The cash
payments for manufacturing costs in the month of November are:
A. P1,568,000
B. P1,952,000
C. P1,664,000
D. P1,856,000
ANSWER: A

67. Compute for the inventory value under the direct costing method using the data given: units unsold
at the end of the period 45,000; raw materials used, P6.00 per unit; raw materials inventory, beginning
P5.90 per unit; direct labor, P3.00 per unit; variable overhead per unit, P2.00 per unit; indirect labor for
the month, P33,750. Total fixed costs, P67,500.
A. P16.90
B. P11.00
C. P17.45
D. P19.15
ANSWER: B

68. Precise, Inc. manufactures specialized precision electronics kits. In late March, Job orders #0311 and
#0322 were started. Estimated materials cost were P90,000 for both orders (60% for #0311) while direct
labor hours were estimated at 700 for #0311 and 400 for #0322. Labor rate is P18 per hour while
variable overhead rate is P10 per hour.

By the end of April, 755 of the required materials have been issued to production in the amount of
P90,000 and both job orders have been 50% converted with 360 hours charged to #0311 and 180 hours
charged to #0322 at the hourly rates given.

The total cost charged to Job Order #0311 was:

A. P45,800
B. P52,350
C. P64,080
D. P67,600
ANSWER: C

69. Department II of Charity Manufacturing Company presents the following production data for the
month of May, 2011:

Opening inventory, 3/8 completed 8,000 units

Started in process 26,000 units
Transferred 18,000 units
Closing inventory, ½ completed 8,000 units
¾ completed 8,000 units

What are the equivalent units of production for the month of May, 2011

FIFO Method Average Method

 A. 25,000 units 26,000 units
B. 25,000 units 28,000 units
C. 34,000 units 25,000 units
D. 30,000 units 28,000 units
ANSWER: B

70. A company uses a process costing system in which all materials are added at the beginning of the
first process. Conversion costs are added evenly throughout the process. During the past month, 30,000
units were started in the production and 20,000 were completed and transferred to the next
department. There were no beginning inventories. The ending inventories were 60% complete at the
end of the month. The company uses a weighted-average method for inventory valuation.

If materials used in production cost P500,000 and conversion costs incurred were 750,000, what is the
value (rounded) of the ending work-in-process inventory in the first processing department?
A. P500,000
B. P339,800
C. P316,700
D. P365,400

ANSWER: B