F-ACAD - 22B

ACC5 – COST ACCOUNTING

FIRST SEMESTER A.Y. 2019-2020
NAME: Date:

Professor: Section: Score:

MULTIPLE CHOICE
Choose the best answer from the following choices. WRITE YOUR ANSWERS IN THE
ANSWER SHEET PROVIDED. LETTERS SHOULD BE CAPITALIZED.

1. In a decision analysis situation, which one of the following costs is not likely to contain a
variable cost component?
A. Labor
B. Overhead
C. Depreciation
D. Selling

2. Management accountants are concerned with incremental unit costs. These costs are
similar to the following, except
A. The economic marginal cost
B. The variable cost
C. The cost to produce an additional unit
D. The manufacturing unit cost

3. Opportunity cost are

A. Costs irrevocably incurred by past actions
B. The difference between actual and standard costs
C. Not recorded in the accounting records
D. Partly fixed costs and partly variable costs

4. The salaries you could be earning by working rather than attending college is an example of
A. Outlay costs
B. Misplaced costs
C. Sunk costs
D. Opportunity costs

5. Cost-volume-profit analysis assumes that over the relevant range

A. Variable costs are nonlinear
B. Fixed costs are nonlinear
C. Selling prices are unchanged
D. Total costs are unchanged

6. CVP analysis can be used to study the effect of:

A. Changes in selling prices on a company’s profitability
B. Changes in variable costs on a company’s profitability
C. Changes in fixed costs on a company’s profitability
D. All of the above

7. Which cost is not subtracted from selling price to calculate contribution margin per unit?
A. Variable manufacturing overhead

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B. Variable selling expenses

C. Direct labor
D. Fixed manufacturing overhead

8. Bayolet Company plans to market a new product. Based on its market studies, Bayolet
estimates that it can sell 5,500 units in 2017. The selling price will be P2 per unit. Variable
cost is estimated to be 40% of the selling price. Fixed cost is estimated to be P6,000. What
is the breakeven point?
A. 3,750 units
B. 5,000 units
C. 5,500 units
D. 7,500 units

9. The most likely strategy to reduce the breakeven point would be to

A. Increase both the fixed costs and the contribution margin
B. Decrease both the fixed costs and the contribution margin
C. Decrease the fixed costs and increase the contribution margin
D. Increase the fixed costs and decrease the contribution margin

10. Once the breakeven point has been reached, operating income will increase by the
A. Gross margin per unit for each additional unit sold
B. Contribution margin per unit for each additional unit sold
C. Fixed costs per unit for each additional unit sold
D. Variable costs per unit for each additional unit sold.

11. One of the major assumptions limiting the reliability of breakeven analysis is that
A. Efficiency and productivity will continually increase
B. Total variable costs will remain unchanged over the relevant range
C. Total fixed costs will remain unchanged over the relevant range
D. The cost of production factors varies with changes in technology

12. Dalen Company prepare the following preliminary forecast concerning Product D for 2017
Selling price per unit 10
Unit sales 100,000
Variable costs 600,000
Fixed Costs 300,000
Based on a market study, Dalen estimates that it could increase the unit selling price
by 15% and increase the unit sales volume by 10% if 100,000 was spent in advertising.
Assuming that Dalen incorporates these changes in its 2017 forecast, what should be the
operating income for Product D?
A. Php 175,000
B. Php 190,000
C. Php 205,000
D. Php 365,000

13. A company manufactures a single product. Estimated cost data regarding this product and
other information for the product and the company are as follows (effective income tax rate
is 40%)
Sales price per unit 40
Total variable production cost per unit 22

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Sales commission (on sales) per unit 5%

Fixed cost and expenses
Manufacturing overhead 5,598,720
General and administrative 3,732,480
What number of units must the company sell in the coming year in order to reach its
breakeven point?
A. 388,800 units
B. 518,400 units
C. 583,200 units
D. 972,000 units

14. Reyd Company is planning to sell 200,000 units of Product F. the fixed cost is P400,000 and
the variable cost is 60% if the selling price. In order to realize a profit of P100,000, what
should be the selling price per unit?
A. 3.75
B. 4.17
C. 6.00
D. 6.25

15. August Company sells Product Rei for P5 per unit. The fixed cost is P210,000 and the
variable cost is 60% of the selling price. What amount of sales is needed to realize a profit of
10% of sales?
A. P 700,000
B. P 525,000
C. P 472,500
D. P 420,000

16. Penk Inc. is planning to produce two products, A and B. Penk is planning to sell 100,000
units of A at Php 4 a unit and 200,000 units of B at Php 3 a unit. Variable cost is 70% of
sales for A and 80% of sales for B. In order to realize a total profit of P160,000, what must
the total fixed cost be?
A. 80,000
B. 90,000
C. 240,000
D. 600,000

17. A company sells two products, X and Y. the sales mix consist of a composite unit of two
units of X for every 5 units of Y (2:5). Fixed costs are P49,500. The unit contribution margins
for X and Y are, respectively P2.50 and P1.20. Considering the company as a whole, what
is the number of composite units to break even?
A. 4,500
B. 8,250
C. 9,900
D. 31,500

18. Assuming the same data in no. 31, if the company had a profit of P22,000, the unit sales
must have been
A. Product X: 5,000 ; Product Y: 12,500
B. Product X: 13,000 ; Product Y: 32,500
C. Product X: 23,800; Product Y: 59,500

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D. Product X: 28,600; Product Y: 71,500

19. Irish Company has sales of P100,000, fixed costs of P50,000 and a profit of P10,000. What
is Irish Company’s margin of safety?
A. P10,000
B. P16,667
C. P33,333
D. P83,333

20. Vivian Corporation sells sets of encyclopedias. Vivian sold 4,000 sets last year at P250 a
set. If the variable cost per set was P175, and the fixed costs for Vivian were P100,000,
what is Vivian’s degree of operating leverage?
A. 0.67
B. 0.75
C. 1.5
D. 3.0

21. At 40,000 units of sales, Rock Corporation has an operating loss of P3.00 per unit. When
sales were 70,000 units, the company had a profit of P1.20 per unit. What is the number of
units to breakeven?
A. 35,457
B. 45,983
C. 52,932
D. 57,647

22. Sari-sari Corporation is a multiple product firm. In their review of operations, they decided to
shift the sales mix from less profitable products to more profitable products, accounting for
30% of gross sales. This will cause the company’s breakeven profit to
A. Decrease
B. Change by 15%
C. Increase
D. Not Change

23. Ipil-ipil Company would like to market a new product at a selling price of P15 per unit. Fixed
costs for his product are P1,000,000 for less than 500,000 units of output and P1,500,000
for 500,000 or more units of output. The contribution margin percentage is 20%. How many
units of this product must be sold to earn a target operating income of P1,000,000?
A. 754,900
B. 833,334
C. 825,530
D. 785,320

24. The margin of safety is a key concept of CVP analysis. The margin of safety is
A. The contribution margin rate
B. The difference between budgeted sales and breakeven sales
C. The difference between the breakeven point in sales and cash flow breakeven
D. The difference between budgeted contribution margin and breakeven
contribution margin

25. Which of the following describes the behavior of the fixed cost per unit?

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A. Decreases with increasing production

B. Decreases with decreasing production
C. Remains constant with changes in production
D. Increases with increasing production

26. Bloo Corporation produces two models of calculators. The business model sells for P60
and has variable expenses of P24. The math model sells for P40 and has variable costs of
P22. Fixed expenses total 75,000 per month. The business model is much more popular
than the math model, normally selling twice the number of the math model. What is the
contribution margin ratio of the business model?
A. 40%
B. 85%
C. 75%
D. 60%

27. Flor Company consumed P450,000 worth of direct materials during May, 2011. At the end of
the month, the direct materials inventory of Flor was P25,000 lower than the May 1 inventory
level. How much was the direct materials procured during May 2011?
A. 475,000
B. 375,000
C. 400,000
D. 425,000

28. The factory ledger of Diamond Corporation contains the following cost data for the year
ended December 31, 2011:
Inventories
Opening Closing
Raw Materials 150,000 170,000
Work-in-process 160,000 60,000
Finished goods 180,000 220,000
Raw materials used 652,000
Total manufacturing costs charged to 1,372,000
production during the year (including raw
materials, direct labor and factory
overhead applied at the rate of 50% of
direct labor cost)
What is the cost of raw materials purchased?
A. 632,000
B. 672,000
C. 645,000
D. 360,000
29. Using the information in no. 28, what is the direct labor charged to production during the
year?
A. 240,000
B. 480,000
C. 720,000
D. 450,000
30. National Marketing Corp. Uses a job-order costing system. It has three production
departments, x, y, and z
The manufacturing cost budget for 2011 is as follows:

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Dept. X Dept. Y Dept. Z

Direct Materials 600,000 400,000 200,000
Direct Labor 200,000 500,000 400,000
Manufacturing 600,000 100,000 200,000
Overhead

For Job No. 01-90 which was completed in 2011, direct materials cost was P75,000 and
direct labor cost was as follows:
Dept. X P 40,0000
Dept. Y 100,000
Dept. Z 20,000
The corporation applies manufacturing overhead to each job order on the basis of direct
labor cost, using departmental rates predetermined at the beginning of the year based on
the manufacturing cost budget.

The total manufacturing cost of Job No.01-90 which was completed in 2011 is:
A. 235,000
B. 310,000
C. 385,000
D. 150,000

31. The following data were taken from the records of Best Company

08/31/2011 09/30/2011
Inventories:
Raw Materials ? 50,000
Work in Process 80,000 95,000
Finished Goods 60,000 78,000

Raw materials purchases, P46,000

Factory overhead, 75% of direct labor cost, P63,000
Selling and administrative expenses, 12.5% of sales, P25,000
Net income for September, 2011, P25,000

What is the cost of raw materials inventory on August 31, 2011?

A. 30,000
B. 40,000
C. 46,000
D. 50,000

32. Tarzan Co. employs a job order cost system. Its manufacturing activities in July 2011, its
first month of operation, are summarized as follows:
JOB NUMBERS
1201 1202 1203 1204
Direct materials 7,000 5,800 11,600 5,000
Direct Labor Cost 6,600 6,000 8,400 2,400
Direct labor hours 1,100 1,000 1,400 400
Units produced 200 100 1,000 300

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Manufacturing overhead is applied at a rate of P2 per direct labor hour for variable
overhead. P3 per hour for fixed overhead. Jobs 1201, 1202 and 1203 were completed in
July.

What is the cost of the completed jobs?

A. 62,900
B. 62,500
C. 72,900
D. 65,900
33. Johnson uses a job order system and applies factory overhead to production orders on the
basis of direct labor cost. The overhead rates for 2011 are 200% for Department A and 50%
for Department B. Job 123 started and completed during 2011, was charged with the
following costs.

Department A Department B
Direct materials 25,000 5,000
Direct Labor ? 30,000
Factory overhead 40,000 ?

Total manufacturing cost associated with Job 123 should be:

A. 135,000
B. 180,000
C. 195,000
D. 240,000

34. Pink Company incurred the following costs during the month: direct labor, P120,000; factory
overhead, P108,000; and direct materials purchases P160,000. Inventories show the
following costs:

Beginning Ending
Finished Goods 27,000 30,000
Work in Process 61,500 57,500
Direct Materials 37,500 43,500
How much is the cost of goods manufactured?
A. 443,500
B. 382,000
C. 386,000
D. 388,000

35. A major purpose of cost accounting is to

A. classify all costs as operating or nonoperating.
B. measure, record, and report period costs.
C. provide information to stockholders for investment decisions.
D. measure, record, and report product costs.

36. The two basic types of cost accounting systems are

A. job order and job accumulation systems.
B. job order and process cost systems.
C. process cost and batch systems.
D. job order and batch systems.

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37. Which of the following would be accounted for using a job order cost system?
A. The production of personal computers
B. The production of automobiles
C. The refining of petroleum
D. The construction of a new campus building

38. An important feature of a job order cost system is that each job
A. must be similar to previous jobs completed.
B. has its own distinguishing characteristics.
C. must be completed before a new job is accepted.
D. consists of one unit of output.

39. The flow of costs in a job order cost system

A. involves accumulating manufacturing costs incurred and assigning the
accumulated costs to work done.
B. cannot be measured until all jobs are complete.
C. measures product costs for a set time period.
D. generally follows a LIFO cost flow assumption.

40. The labor costs that have been identified as indirect labor should be charged to
A. manufacturing overhead.
B. direct labor.
C. the individual jobs worked on.
D. salary expense.

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