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:

(1) Multiple-choice questions - The questions in this LEARNING OBJECTIVE:

section is with four answer choices. The test is
composed of 40 questions and is rated as 1 point each. This assessment measures the
competence of the student in terms of
All things unnecessary for the test must be put in front of the his/her application of knowledge and skills
testing area. Use BLACK or BLUE ink ballpen only. Write all your in the following topics:
answers on the designated answer sheet. Further, erasures are 1. Objectives, role and scope of
strictly NOT allowed and will invalidate your answers. Managerial Accounting.
2. Cost terms and concepts
You may NOT use smart phones or reference materials during 3. Cost Behavior
the testing session. Only the allowed calculators should be used. 4. CVP Analysis

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.

This concludes the instruction page.

You may now begin answering.

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.

1. Managerial accounting is similar to financial accounting in that

a. both are governed by generally accepted accounting principles.
b. both deal with economic events.
c. both concentrate on historical costs.
d. both classify reported information in the same way.

2. Which item is NOT an IMA Standard for Ethical Conduct?

a. Integrity. b. Competence. c. Loyalty. d. Credibility.

3. Which of the following is a staff position?

a. vice-president of production c. vice-president of finance
b. vice-president of marketing d. plant foreman

4. If a distinction is made between cost accounting and managerial accounting, managerial

accounting is more oriented toward
a. valuation of inventory.
b. analysis of variances including spoilage.
c. financial reporting to third parties.
d. the planning and controlling aspects of the management process.

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

7. Which management position is responsible for raising capital?

a. Internal auditor b. Treasurer c. Controller d. CEO

8. Product costs are:

a. expensed when incurred. c. treated in the same manner as advertising costs.
b. inventoried. d. subtracted from cost of goods sold.

9. Which of the following costs is not a component of manufacturing overhead?

a. Indirect materials. c. Indirect labor.
b. Office utilities. d. Property taxes on the manufacturing plant.

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.
c. The number of employees working in the factory.
d. The number of units produced.

11. The fixed cost per unit:

a. will increase as activity increases. c. will decrease as activity increases.
b. will increase as activity decreases. d. will remain constant.
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. RST's average cost per unit is the same at all levels of volume. Which of the following is true?
a. RST must have only variable costs.
b. RST must have only fixed costs.
c. RST must have some fixed costs and some variable costs.
d. RST's cost structure cannot be determined from this information.

17. Looking at the following scatter diagrams we can conclude that

Cost A Cost B
₱ ₱
| ** | **
| * ** | ** *
| *** * | * *
| * * | **
| |
| |
|__________________ |__________________
activity activity

a. cost A will be easier to predict than cost B. c. cost A is out-of-control.

b. cost B will be easier to predict than cost A. d. cost B has no fixed component.

18. The components of manufacturing cost are

a. variable costs, fixed costs, and overhead costs.
b. materials, direct labor, and overhead.
c. purchases, wages, and manufacturing overhead.
d. wages and salaries, maintenance and repairs, utilities, and depreciation.

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

20. Cost-volume-profit analysis cannot be used if which of the following occurs?

a. Costs cannot be properly classified into fixed and variable costs.
b. The per unit variable costs change.
 c. The total fixed costs change.
d. Per unit sales prices change.

21. As projected net income increases the

a. degree of operating leverage declines. c. break-even 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

24. If a company is operating at a loss,

a. fixed costs are greater than sales.
b. selling price is lower than the variable cost per unit.
c. selling price is less than the average total cost per unit.
d. fixed cost per unit is greater than variable cost per unit.

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

26. DJH 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. Crookston Company 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. Osceola Company 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. An organization'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. Galactica Company 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 Blender Co. for 2007:
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 Blender Company for 2007?
a. 3.67 b. 1.45 c. 5.33 d. 1.67

32. Pansipit Company 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 Pansipit make for the year?
a. P1,066,667 b. P1,000,000 c. P1,280,000 d. P800,000

33. The sales mix for Dial Enterprise is as follows:

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.
Dial Enterprise's fixed costs are P75,950.
What are the composite break-even point?
a. 98,000 b. 2,000 c. 3,500 d. 4,000

34. A firm 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 Harvester Company which sells a single product:
Unit selling price P 80.00
Purchase cost per unit 55.00
Sales commission 15 % of selling price 12.00
Monthly fixed costs P180,000
The firm’s two salespersons would like to change their compensation from a 15 percent
commission to a 7.5 percent commission plus P15,000 each per month in fixed salary.
Currently, they only receive commissions as their compensation.
At what sales volume in units would the two cost structures be indifferent?
a. 2,500 units b. 3,000 units c. 4,000 units d. 5,000 units

Use the following Information to answer questions 36 – 37.

Units Sold @ P60/each
1,000 2,000 3,000
Salary P20,000 P30,000 P40,000
Cost of Goods Sold 15,000 30,000 45,000
Cost/Unit of Depreciation 300 150 100
Rent 20,000 20,000 20,000
36. If 3,000 units are sold what is the contribution margin?
a. P 75,000. b. P105,000. c. P135,000. d. P180,000.
 37. What is total fixed cost?
a. P50,000. b. P60,000. c. P60,100. d. P90,000.

Use the following Information to answer questions 38 – 39.

Dependent variable – Machine maintenance costs
Independent variable – Machine hours
Computed values
Intercept P3,500
Coefficient on independent variable P 3.50
Coefficient of correlation 0.856
r2 0.733

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. P73,500 b. P78,400 c. P82,300 d. P84,750

40. The following activity and cost data that were provided by Hoist Corporation would help in
estimating its future maintenance costs:
Units Maintenance Cost
3 P450
7 P530
11 P640
15 P700
Using the least-squares regression method to estimate the cost formula, the expected total cost
for an activity level of 10 units would be closest to:
a. P612.50. b. P581.82. c. P595.84. d. P601.50.

- End -

Congratulations for finishing this module! Shade the number of this module that you just have finished.