MTG – MAS Review # 001
INSTRUCTIONS: Encircle the letter of the best answer.
1. Which of the following would NOT be a period cost for a manufacturing firm?
A. Selling expenses
B. Salary paid to the CEO of the company
C. Repairs to the Receptionist's computer
D. Utilities in manufacturing plant
2. What kind of costs can be conveniently and economically traced to a cost object or pool?
A. Indirect Costs.
B. Direct Costs.
C. Relevant Costs.
D. Overhead Costs.
3. Direct product expenses
A. are incurred for the benefit of the business as a whole
B. cannot be identified readily with a given product
C. can be assigned to product only by a process of allocation
D. would not be incurred if the product did not exist
4. Product costing system design or selection:
A. requires an understanding of the nature of the business
B. should provide useful cost information for strategic and operational
decision needs
C. should be cost effective in design and selection
D. all the above answers are correct
5. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
A. cost driver.
B. overhead rate.
C. cost pool.
D. product activity.
6. Direct materials and direct labor costs total P120,000, conversion costs total P100,000, and
factory overhead costs total P400 per machine hour. If 150 machine hours were used for Job
#201, what is the total manufacturing cost for Job #201?
A. 120,000
B. 160,000
C. 180,000
D. 280,000
Use the following information that pertains to beta manufacturing company to answer questions:
Beginning direct materials inventory P 20,000
Beginning WIP inventory 20,000
Beginning finished goods inventory 40,000
Ending direct materials inventory 10,000
Ending WIP inventory 100,000
Ending finished goods inventory 50,000
Purchases 140,000
Direct labor 160,000
Factory overhead 200,000
7. What is the amount of direct materials used during the period?
A. P140,000
B. P 60,000
C. P130,000
D. P150,000
8. What is the amount of cost of goods manufactured during the period?
A. P430,000
B. P470,000
C. P420,000
D. P510,000
9. What is the amount of cost of goods sold during the period?
A. P430,000
B. P420,000
C. P470,000
D. P510,000
10. Machine hours used to set the predetermined overhead rate were 25,000, actual hours
were 24,000, and overhead applied was P60,000. Budgeted overhead for the year was
A. P57,600.
B. P59,000.
C. P60,000.
D. P62,500.
11. Last month a manufacturing company had the following operating results:
Beginning finished goods inventory ............ $74,000
Ending finished goods inventory ................. $50,000
Sales ............................................................. $438,000
Gross margin ................................................ $63,000
12. What was the cost of goods manufactured for the month?
A. $375,000
B. $414,000
C. $399,000
D. $351,000
13. Inventoriable costs are expensed on the income statement
A. When direct materials for the product are purchased.
B. After the products are manufactured.
C. When the products are sold.
D. Not at any particular time, it varies.
14. All of the cost categories listed below are usually found in a company’s accounting records,
except for:
A. Sunk costs
B. Inventoriable costs
C. Opportunity costs
D. Marketing costs
15. The units that failed inspection during the current month would be classified as
A. Abnormal spoilage.
B. Normal scrap.
C. Normal reworked units.
D. Normal waste.
16. A job-order costing system is less likely to distort job costs if it assigns overhead costs to
individual jobs based on
A. Direct labor hours.
B. Machine hours.
C. Direct material cost.
D. The consumption of different cost drivers.
17. The two dimensions of managerial accounting are:
A. a decision-facilitating dimension and a decision-influencing dimension.
B. a decision-facilitating dimension and a financial-influencing dimension.
C. a decision-influencing dimension and a cost-minimizing dimension.
D. a cost-minimizing dimension and a profit-maximizing dimension.
E. a decision-influencing dimension and a profit-maximizing dimension.
18. Which of the following statements represents a similarity between financial and managerial
accounting?
A. Both are useful in providing information for external users.
B. Both are governed by GAAP.
C. Both draw upon data from an organization’s accounting system.
D. Both rely heavily on published financial statements.
E. Both are solely concerned with historical transactions.
19. Managerial accounting:
A. focuses only on historical data.
B. focuses primarily on the needs of personnel within the organization.
C. provides information for parties external to the organization.
D. focuses on financial statements and other financial reports.
20. The costs that follow all have applicability for a manufacturing enterprise. Which of the
choices listed correctly denotes the costs’ applicability for a service provider?
Period Cost
Uncontrollable cost
Opportunity Cost
A
Applicable
Not Applicable
Applicable
B
Not Applicable
Not applicable
Applicable
C
Not Applicable
Applicable
Applicable
D
Applicable
Applicable
Applicable
In the Omara Manufacturing Company, at an activity level of 80,000 machine hours, total overhead
costs were P223,000. Of this amount, utilities were P48,000 (all variable) and depreciation was P60,000
(all fixed). The balance of the overhead cost consisted of maintenance cost (mixed). At 100,000 machine
hours, maintenance costs were P130,000. Assume that all of the activity levels mentioned in this
problem are within the relevant range.
21. The variable cost for maintenance per machine hour is:
A. P1.30
B. P1.44
C. P0.75
D. P1.35
22. The total fixed overhead cost for Omara is:
A. P115,000
B. P130,000
C. P 60,000
D. P 55,000
23. If 110,000 machine hours of activity are projected for the next period, total expected overhead
cost would be:
A. P256,000.
B. P263,500.
C. P306,625.
D. P242,500.
St John Hospital contains 450 beds. The average occupancy rate is 80 percent per month. In other
words, on average, 80 percent of the hospital’s beds are occupied by patients. At this level of
occupancy, the hospital’s operating costs are P32 per occupied bed per day, assuming a 30daymonth. This P32 figure contains both variable and fixed cost components. During the month of June,
the hospital’s occupancy rate was only 60 percent. A total of P326,700 in operating cost was incurred
during that month.
24. Using the high-low method, the amount of variable cost per occupied bed per cay is
A. P 7.00
B. P 9.00
C. P12.00
D. P15.00 0
25. Using the variable cost as determined in number 23, the total fixed operating costs per month
are:
A. P240,000
B. P270,000
C. P290,000
D. P300,000
26. Assuming an occupancy rate of 75 percent in a particular month, what amount of total
operating costs would you expect the hospital to incur?
A. P310,000
B. P315,500
C. P340,875
D. P375,500
27. In a job-costing system, issuing indirect materials to production increases which account?
A. Materials control.
B. Work in process control.
C. Manufacturing overhead control.
D. Manufacturing overhead allocated.
28. Management accountants would not
A. assist in budget planning.
B. prepare reports primarily for external users.
C. determine cost behavior.
D. be concerned with the impact of cost and volume on profits.
29. Management accounting is similar to financial accounting in that both:
A. are governed by financial reporting framework.
B. deal with economic events.
C. concentrate on historical data.
D. classify reported information in the same manner.
30. Which of the following is not an objective of management accounting?
A. Maximization of profit and minimization of costs.
B. Measuring the performance of managers of subunits.
C. Providing information for planning and decision making.
D. Providing assistance in directing and controlling operations.
31. Compared to financial accounting, managerial accounting places more emphasis on:
A. The flexibility of information
B. The precision of information
C. The timeliness of information
D. Both A and C
END OF EXERCISES