34/54
42/54
1. Managerial accounting is concerned with providing information to managers for use
with-in the organization. It is also concerned with providing information to stock-holders,
creditors, and others outside of the organization.
●
True
●
False
2. Managers carry out three major activities in an organization: planning, directing and
motivating, and controlling. Directing involves establishing a basic strategy, selecting a
course of action, and specifying how the action will be implemented
●
True
●
False
3. The controller is responsible for providing timely and relevant data to support planning
and control activities and for preparing financial statements for external users.
●
True
●
False
4. In contrast to managerial accounting, financial accounting: (1) focuses on the needs of
man-agers rather than outsiders; (2) emphasizes decisions affecting the future rather
than the financial consequences of past actions; (3) emphasizes relevance rather than
objectivity and verifiability; (4) emphasizes timeliness rather than precision; (5)
emphasizes the segments of an organization rather than summary data concerning the
entire organization; (6) is not governed by GAAP; and (7) is not mandatory.
●
True
●
False
5. Managerial accounting must adhere to the Ethical Standard set forth for accounting
profession.
●
True
●
False
6. As the anticipated level of activity changes, the level of fixed costs needed to support
operations may also change. Which means that, as activity exceeds outside the relevant
range, fixed cost in total may also change
●
True
●
False
7. The contribution approach income statement organizes costs by behavior, first deducting
variable expenses to obtain gross margin, and then deducting fixed manufacturing
expenses to obtain net operating income.
●
True
●
False
8. The traditional approach income statement organizes costs by function, such as
production, selling, and administration. Within a functional area, fixed and variable costs
are intermingled.
●
True
●
False
9. The formula for a mixed cost is Y = a + bX. In cost analysis, the “a” term represents the
fixed costs, and the “b” term represents the variable cost in total.
●
True
●
False (I - gpt, var “cost in unit” dapat not var cost in total)
10. The high-low method uses only two points to determine a cost formula. These two points
are likely to be less than typical since they represent extremes of activity.
●
True
●
False
11. For capital budgeting decisions, the payback period is superior to the simple rate of
return method.
●
True (I - based on quizlet)
●
False
12. An increase in the expected salvage value at the end of a capital budgeting project will
have no effect on the accounting rate of return based on average investment for that
project.
●
True
●
False
13. The payback method uses cash flows after tax in computing the recovered period for a
capital investment project.
●
True
●
False (I - gpt cashflow “before” tax not ‘after’ are considered)
14. A loss in sale of old asset is considered to provide a tax shield on a company, resulting
to decrease in overall capital cost for an investment project.
●
True
●
False
15. When using the payback method, any cash flows for a project that occur after the
payback period are not considered in computing the payback period for that project.
●
True
●
False
16. The standard quantity or standard hours allowed refers to the amount of the input that
should have been used to produce the actual output of the period
●
True
●
False
17. When the material price variance is recorded at the time of purchase, raw materials are
recorded as inventory at actual cost.
●
True
●
False
18. The variance that is most useful in assessing the performance of the purchasing
department manager is the materials quantity variance
●
True
●
False
19. Total Variable overhead variance will need actual rate used for actual hours incurred in
the production, and the standard rate used for the standard hours expected from actual
production.
●
True
●
False
20. Controllable Variance is equal to total actual fixed overhead less total budgeted fixed
overhead.
●
True
●
False (I - not “fixed” but budgeted variable overhead)
21. An opportunity cost is the benefit that is lost or sacrificed when rejecting some course of
action.
●
True
●
False
22. Variable costs are relevant costs only if they differ in total between the alternatives under
consideration.
●
True (I - based on google and quizlet)
●
False
23. In a decision of whether to drop or continue a product line, only those costs that would
be avoided as a result of dropping the product line are relevant in the decision. Costs
that will not differ regardless of whether the product line is retained or discontinued are
irrelevant.
●
True
●
False
24. If a company decides to make a part internally rather than to buy it from an outside
supplier, then a portion of the company’s facilities have to used to make the part. The
company’s opportunity cost is measured by the benefits that could be derived from the
best alternative use of facilities.
●
True
●
False
25. All fixed cost are sunk cost, therefore, all fixed cost are irrelevant costs.
●
True
●
False
26. Shipping cost at Junk Food Imports is a mixed cost with variable and fixed components.
Past records indicate total shipping costs was $18000 for 16,000 pounds shipped and
$22,500 for 22,000 pounds shipped. Assuming that this activity is within the relevant
range, if the company plans to ship 18,000 pounds next month, the expected shipping
cost is.
19,500
27. The following production and average cost data for a month’s operation have been
supplied by a company that produces a single product.
Production volume ……. 1,000 units
2000 units
Direct materials ………… $ 5.00 per unit $ 5.00 per unit
Direct labor …………….. $ 5.50 per unit $ 5.50 per unit
Manufacturing overhead …. $ 10.00 per unit $6.20 per unit
The total fixed manufacturing cost is: 7,600
28. The following production and average cost data for a month’s operation have been
supplied by a company that produces a single product.
Production volume ……. 1,000 units
2000 units
Direct materials ………… $ 5.00 per unit $ 5.00 per unit
Direct labor …………….. $ 5.50 per unit $ 5.50 per unit
Manufacturing overhead …. $ 10.00 per unit $6.20 per unit
The variable manufacturing cost per unit is: 12.90
29. Gamad Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for $131.00 per unit.
Sales volume (units) ……… 3,000
5,000
Cost of sales………………… $262,800 $328,500
Selling and administrative …. $230,400 $244,500
The best estimate of the total monthly fixed cost is: 164,250
30. Gamad Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for $131.00 per unit.
Sales volume (units) ……… 3,000
5,000
Cost of sales………………… $262,800 $328,500
Selling and administrative …. $230,400 $244,500
The best estimate of the variable cost per unit is: 32.85
31. Sorin Inc., a company that produces and sells a single product, has provided its
contribution format income statement for January.
Sales (4,000 units)
$155,400
Variable expenses
100,800
Contribution margin
54,600
Fixed expenses
42,400
Net operating income
$12,200
If the company sells 5,600 units, its total net income should be closest to: 34,040
32. Sorin Inc., a company that produces and sells a single product, has provided its
contribution format income statement for January.
Sales (4,000 units)
$155,400
Variable expenses
100,800
Contribution margin
54,600
Fixed expenses
42,400
Net operating income
$12,200
If the company’s fixed cost increases by 10% due to expansion, how much is the new
computed net income based on 5,600 sold units? 29,800
33. The BIGBANG Company reported the following information:
Sales (500 cases)
$100,000
Variable expenses
60,000
Contribution margin
40,000
Fixed expenses
35,000
Net operating income
$5,000
How much will the sale of one additional case add to net operating income? 80
34. The BIGBANG Company reported the following information:
Sales (500 cases)
$100,000
Variable expenses
60,000
Contribution margin
40,000
Fixed expenses
35,000
Net operating income
$5,000
If peso sales will increase to P750,000 by next year, the contribution margin ratio will be:
(answer in decimal) 0.4
35. The BIGBANG Company reported the following information:
Sales (500 cases)
$100,000
Variable expenses
60,000
Contribution margin
40,000
Fixed expenses
35,000
Net operating income
$5,000
If Net Operating income will increase by 20%, the expected increase in revenue will be in
what percentage: (answer in decimal) 1.025
36. Garner Company’s variable expenses are 60% of sales. At a $600,000 sales level, the
degree of operating leverage is 10.
If sales increase by $60,000, the degree of operating leverage after the increase will be:
5.5
37. Garner Company’s variable expenses are 60% of sales. At a $600,000 sales level, the
degree of operating leverage is 10.
The net income prior to increase in sales is: 24,000
38. Garner Company’s variable expenses are 60% of sales. At a $600,000 sales level, the
degree of operating leverage is 10.
The net income after increase in sales is 48,000
39. A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800
per month and the product has a contribution margin ratio of 40%.
If the company’s actual sales are $240,000, its margin of safety is: 48,000
40. The management of Skollin Corporation is investigating purchasing equipment that
would increase sales revenues by $269,000 per year and cash operating expenses by
$156,000 per year.
The equipment would cost $294,000 and have a 6 year life with no salvage value. The
accounting rate of return on investment is closest to: .3844
41. The management of Skollin Corporation is investigating purchasing equipment that
would increase sales revenues by $269,000 per year and cash operating expenses by
$156,000 per year. The equipment would cost $294,000 and have a 6 year life with no
salvage value.
The increase in incremental revenue from this capital investment project is: 384,000
42. If an investment of $90,000 made now has annual cash operating inflows of 5,000 while
net income before tax for this project is $3,500, and if the tax rate it 40%, then the
after-tax cash operating inflow each year would be: 7,100
43. If the $3,500 is a net income after tax, the after tax cash inflow for the year would be
(round off to two decimal places)
●
5000
●
833.33 Solution: N.I. before tax = 3500/(1-0.40) = 5833.33 - 5000 (annual cash
inflow) = 833.33
44. Chararat Company has gathered the following data on a proposed investment project:
Investment required in equipment
$250,000
Annual cash inflows
$50,000
Salvage value
$0
Life of the investment
8 years
Required rate of return
10%
The payback period for the investment is closest to: (only numerical answer, do not type
the word years): 5
45. The following materials standards have been established for a particular project:
Standard quantity per unit of output
2.8 grams
Standard price
$12.50 per gram
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
6,200 grams
Actual cost of materials purchased
$81,530
Actual materials used in productions
5,700 grams
Actual output
1,800 units
What is the materials price variance for the month? (just indicate the value, do not
indicate if favorable or unfavorable, answer key will read only numerical answers)
●
5890
●
4,030 Solution: (AQ*AP) - (SP*AQ) = 81530 - 77500 = 4030
46. The following materials standards have been established for a particular product:
Standard quantity per unit of output
2.8 grams
Standard price
$12.50 per gram
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
6,200 grams
Actual cost of materials purchased
$81, 530
Actual materials used in production
5,700 grams
Actual output
1,800 units
How much is the Standard cost of materials used in the actual production? 71250
47. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Total Material Variance? (just indicate the value, do not indicate if
favorable or unfavorable, answer key will read only numerical answers)
●
348
●
2130
48. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Average Standard Output Cost (ASOC)? (just indicate the value, do not
indicate if favorable or unfavorable, answer key will read only numerical answers) 6.20
49. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Average Standard Input Cost (ASIC)? (just indicate the value, do not
indicate if favorable or unfavorable, answer key will read only numerical answers) round
off to two decimal places 5.39
50. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Material Rate Variance? (just indicate the value, do not indicate if
favorable or unfavorable, answer key will read only numerical answers)
●
210
●
50
51. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Mix variance? (just indicate the value, do not indicate if favorable or
unfavorable, answer key will only read numerical answers)
●
299.10
●
2824
52. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix them
together to create the final product. The following are the standard costing created for
standard production.
Standard Quantity
Total Standard Cost
Material 1
80 Liters
P800
Material 2
50 Liters
P300
Material 3
40 Liters
P80
Material 4
60 Liters
P60
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price
Total Actual cost
Material 1
P9.9
P990
Material 2
P7.0
P3500
Material 3
P1.2
P960
Material 4
P2.0
P400
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will be
prepared to answer the next questions
How much is the Yield Variance? (just indicate the value, do not indicate if favorable or
unfavorable, answer key will only read numerical answers)
●
558.90
●
4904
53. Raven Company (a multi-product firm) produces 5,000 units of Product X each year.
Each unit of Product X sells for $8 and has a contribution margin of $5. If Product X is
discontinued, $18,000 of fixed overhead would be eliminated.
As a result of discontinuing Product X, the company’s overall operating income would:
7,000
54. Brown Company plans to discontinue a division that generates a total contribution
margin of $20,000 per year. Fixed overhead associated with this division is $50,000, of
which $5,000 cannot be eliminated.
The effect of this discontinuance on Brown’s operating income would be an increase of:
25,000