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WorksheetsMAS
Total questions: 91
Worksheet time: 2hrs 31mins
The following information pertains to Bronze Co. for the year ended December 31, 2021: Sales: P 600,000 Income: P 100,000 Capital investment: P 400,000 Which of the following equations should be used to complete Bronze’s return on investment?
(4/6) x (6/1) = ROI
(6/4) x (1/6) = ROI
(4/6) x (1/6) = ROI
(6/4) x (6/1) = ROI
Which of the following best describes a fixed cost?
It is constant per unit of changes in production.
It may change in total when such change is related to changes in production.
It may change in total when such change is unrelated to changes in production.
It may change in total when such change depends upon production or within the relevant range.
Dawn Company estimated its materials handling cost at two activity levels as follows:
Kilos Handled 80,000 160,000
Cost 60,000 132,000
What is Dawn’s estimated cost for handling 75,000 kilos
Php 150,000
Php 153,000
Php 157,500
Php 165,000
In March, Zenica had electrical costs of P 225.00 when the total volume was 4,500 cups of coffee served. In April, electrical costs were P 227.50 for 4,750 cups of coffee. Using the high-low method, what is the estimated fixed cost of electricity per year?
P180
P 200
P225
P 2,160
One of the elements included in the economic order quantity (EOQ) formula is
Safety stock
Yearly demand
Selling price of the item
Lead time for the delivery
Simple regression analysis involves
One dependent variable and one independent variable
One dependent variable and many independent variables
Many dependent variables and one independent variable
Many dependent variables and many independent variables
Which method of inventory costing treats direct manufacturing costs and manufacturing overhead costs, both variable and fixed, as inventoriable costs?
Conversion costing
Absorption costing
Variable costing
Direct costing
What is the costing method that treats all fixed costs as period costs?
Absorption costing
Job-order costing
Variable costing
Process costing
Which of the following statements is true?
The higher is the production within the relevant range, the higher is the variable cost per unit
The higher is the production within the relevant range, the higher is the fixed cost per unit
The lower is the production within the relevant range, the lower is the total fixed cost
The lower is the production within the relevant range, the lower is the total variable cost
Within the relevant range, the amount of variable cost per unit
Differs at each production level
Increases as production increases
Decreases as production increases
Remains constant at each production level
Total sales amounted to P 3 million. How much was the break-even sales?
P 1,875,000
P 2,500,000
P 2,850,000
P 3,750,000
Assuming a weighted average cost of capital (WACC) of 9%, what is Myrrh Company’s economic value-added (EVA)?
P 1,380,000
P 1,620,000
P 1,830,000
P 3,000,000
Which of the following equations can be used to budget purchases? (BI = Beginning inventory, EI = ending inventory desired, CGS = Budgeted cost of goods sold)
Budgeted purchases = CGS + BI – EI
Budgeted purchases = CGS + BI
Budgeted purchases = CGS + EI + BI
Budgeted purchases = CGS + EI – BI
How much will income change if a company makes an advertising campaign given the following data?
Cost of advertising campaign P 25,000
Increase in sales P 60,000
Variable expense as a percentage of sales 42%
P 200 increase
P 9,800 increase
P 15,000 increase
P 25,200 increase
China Manufacturing Corporation has the following information:
Moving time 8 days
Inspection time 2 days
Processing time 10 days
Storage time 30 days
What is the total amount of value-added time?
10 days
30 days
40 days
50 days
China Manufacturing Corporation has the following information:
Moving time 8 days
Inspection time 2 days
Processing time 10 days
Storage time 30 days
What is the product’s cycle time?
10 days
30 days
40 days
50 days
China Manufacturing Corporation has the following information:
Moving time 8 days
Inspection time 2 days
Processing time 10 days
Storage time 30 days
What is the manufacturing cycle efficiency (MCE)?
25%
80%
20%
60%
What would be the volume variance?
P 300 favorable
P 180 favorable
P 150 favorable
P 120 favorable
One way of analyzing the variable factory overhead variance is breaking it down into
Spending and efficiency variances
Spending and rate variances
Efficiency and volume variances
Spending and capacity variances
One way of analyzing the fixed factory overhead variance is breaking it down into
Spending and volume variances
Spending and budget variances
Efficiency and volume variances
Efficiency and capacity variances
What is the factory overhead variance that serves as a measure of capacity utilization?
The overhead spending variance
The overhead efficiency variance
The overhead budget variance
The overhead volume variance
C, Inc. uses the high-low method to derive the cost formula for electric power cost. According to the cost formula, the workable cost per unit of activity is P 2 per machine hour. Total electrical power cost at the high level of activity was P 7,500 and the low level of activity was P 7,300. If the high level of activity was 1,200 machine-hours, then what was the rate of the low level of the activity?
800 machine hours
900
1,000
1,100
S Co. has an average unit cost of P 45 at 10,000 yours and P 25 at 30,000 units. What is the unit variable cost?
P 10.00
15
20
An amount that cannot be determined without more information
Which cost is NOT subtracted from selling price to calculate contribution margin per unit?
Variable manufacturing overhead
Variable selling expenses
Direct labor
Fixed manufacturing overhead
Which of the following would cause the break-even point to change?
Sales increased
Total production decreased
Total variable cost increased as a function of higher production
Fixed costs increased as a function of higher production
The margin of safety is a key concept of CVP analysis. The margin of safety is
The contribution margin rate
The difference between budgeted sales and breakeven sales
The difference between the breakeven point in sales and cash flow breakeven
The difference between budgeted contribution margin and breakeven contribution margin
Operating leverage is greatest in companies that have
Low fixed cost, low unit variable cost
High fixed cost, low unit variable cost
Low fixed cost, high unit variable cost
High fixed cost, high unit variable cost
The indifference point is the level of volume at which a company
Earns no profit
Earns its target profit
Earns large amount of profit
Earns the same profit under different schemes
What will be the flexible budget of factory overhead at 90% capacity?
P 112,000
P 122,000
P 130,000
P 132,000
What would be Brown’s operating income for 2022 under variable (direct) costing method?
P 114,000
P 210,000
P 234,000
P 330,000
A flexible budget is
One that can be changed whenever a manager so desires
Adjusted to reflect expected costs at the actual level of activity.
One that uses the formula “total cost = cost per unit x units produced”
The same as a continuous budget.
The actual shipping costs for the month amounted to P 21,000. What should be the appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation?
P 18,000
P 18,492
P 23,760
P 25,500
It is used for situations involving a sequence of events with several possible outcomes associated with each event.
Network analysis
Decision tree analysis
Queuing theory
Linear programming
XYZ Company plans to introduce a new product. To compete effectively, the product could not be priced at more than P30. The company requires a return on investment of 15% on all new products. The plan is to produce and sell 25,000 units a year. If the product requires a P 500,000 investment, then target cost should be:
27.00
23.00
21.50
20.00
If a manufacturing company uses responsibility accounting, which one of the following items is least likely to appear in a performance report for a manager of an assembly line?
Labor payroll
Materials
Repairs and maintenance
Depreciation on equipment
If a cost function behaves that the average costs per unit of output decline systematically as cumulative production doubles, the cost function is referred to as a:
Parabolic curve
Learning curve
Linear cost curve
Growth curve
Cost of capital is
The amount the company must pay for its plant assets
The dividends a company must pay on its equity securities.
The cost the company must incur to obtain its capital resources.
The cost the company is charged by investment bankers who handle the issuance of equity or long-term debt securities.
In determining the standard factory overhead rate, which level of capacity is used?
Maximum capacity
Practical capacity
Normal capacity
Expected actual capacity
In balanced scorecard, a survey of employee satisfaction is a potential measure in which of the four perspectives?
Financial
Customer
Internal business processes
Learning and growth
Which of the following determines the desired cost for a product based upon a given competitive price?
Benchmarking
Target costing
Reengineering
Life-cycle costing
How should a variance that is significant in amount be treated at the end of an accounting period?
Reported as a deferred charge or credit
Allocated among work-in-process inventory, finished goods inventory, and cost of goods sold
Charged or credited to cost of goods manufactured
Allocated among cost of goods manufactured, finished goods inventory, and cost of goods sold
Mercury Co. plans to sell 200 units using P 20,000 of assets. The company incurs total costs of P 8,000 for these units. If a return on investment of 10% is targeted, how much should be the selling price?
P 50
. P 40
P 30
Cannot be determined from given information
Based on the above information, which one of the following statements is correct?
Return on investment of 4%
Residual income of (P 5,000)
Return on investment of 1.6%
Residual income of (P 22,000)
The primary difference between PERT and CPM is that
CPM uses probabilities on the activity times and PERT does not
PERT considers activity costs and CPM does not
PERT can assign probabilities to activity times and CPM does not
CPM considers activity costs and PERT does not
Using ABC, what would be the inspection costs of P 50,000 allocated to each unit of Model F?
P 5.00
P 10.00
P 20.00
Some other number
South Dakota Company budgets sales of 22,000 units for January, 30,000 for February. The budgeted beginning inventory for January 1 was 7,000 units. South Dakota desires an ending inventory equal to one-half of the following month's sales needs. What is the budgeted production for January?
37,000 units
30,000 units
26,000 units
14,000 units
The information contained in a cost of goods manufactured budget most directly relates to the
Materials used, direct labor, overhead applied, and ending work-in-process
Materials used, direct labor, overhead applied, and work-in-process inventories budgets
Materials used, direct labor, overhead applied, and work-in-process inventories, and finished goods inventories budgets
Materials used, direct labor, overhead applied, and finished goods inventories budgets
Tamarind Company manufactures bookcases. Set up costs are P 2.00. Tamarind manufactures 4,000 bookcases evenly throughout the year. Using the economic order quantity approach, what is the optimal production run would be 200 when the cost of carrying one bookcase in inventory for one year?
P 0.05
P 0.10
P 0.20
P 0.40
In a decision analysis situation, which one of the following costs is generally NOT relevant to the decision?
Incremental cost
Differential cost
Avoidable cost
Historical cost
In a make-or-buy decision, the relevant costs include variable manufacturing costs as well as
Factory management costs
General office costs
Avoidable costs
Depreciation costs
Accepting a special order will improve overall net operating income so long as revenue from the order exceeds
The contribution margin on the order
The sunk costs associated with the order
The variable costs associated with the order
The incremental costs associated with the order
An object of activity-based management (ABM) is to
Eliminate the majority of centralized activities in an organization
Insitute responsibility accounting systems in decentralized organizations
Reduce or eliminate non-value activities done to make a product or provide a service
All of the above
PERT and the critical path method (CPM) are used for
Determining product costs
Project scheduling and control
Determining the optimal product mix
Determining the number of servers needed in a fast-food restaurant
Program evaluation and review technique (PERT) is a system that uses:
Least square method
Linear programming
Economic Order Quantity (EOQ) formula
Network analysis
If a cost function behaves that the average costs per unit of output decline systematically as cumulative production doubles, the cost function is referred to as a :
Parabolic curve
Learning curve
Linear cost curve
Growth curve
The economic order quantity formula indicates that
Annual quantity of inventory to be carried
Annual usage of materials during the year
Safey stock plus estimated inventory for the year
Quantity of each individual order during the year
Which of the following is NOT involved in the computation of the economic order quantity?
Lead-time from order placement until order fulfillment
Number of units expected to be sold or used during the year
Cost of placing and receiving an order
Cost of obtaining capital as carrying costs
Assuming even demand for materials during the year, what is the (A) safety stock and (B) order point?
(A) 600 (B) 750
(A) 600 (B) 1,350
(A) 750 (B) 600
(A) 750 (B) 1,350
Horizontal and vertical analysis are techniques used by analysts in understanding the financial statements of companies. Which of the following is an example of a vertical, common-size analysis?
Commission expense in 2021 is 10% greater than it was in 2020 which serves as base year
A comparison in financial ratio between two or more firms in the same industry
A comparison in financial ratio between two or or more firms in different industries
Commission expense in 2021 is 5% of sales
Dani Company has sales of P 100,000, fixed costs of P 50,000, and a profit of P 10,000. What is Dani Company’s margin of safety?
P 10,000
P 16,667
P 33,333
P 83,333
Ube Company’s variable costs are 75% of sales. At a sales level of P 400,000, the company’s degree of operating leverage is 8. At this level, fixed costs equal
P 87,500
P 100,000
P 50,000
P 75,000
What was the total overhead variance?
P 2,000 unfavorable
P 3,000 favorable
P 4,000 favorable
P 6,000 unfavorable
What is the budget (controllable) variance for February?
1,000 favorable
1,000 unfavorable
6,000 favorable
6,000 unfavorable
Mold has a standard absorption and flexible budget system and uses the two-variance method (two-way analysis) for overhead variances. What is the volume (denominator) variance for January?
P 3,000 unfavorable
P 3,000 favorable
P 4,000 unfavorable
P 4,000 favorable
Ant Company’s budgeted fixed factory overhead cost is P 50,000 per month plus a variable factory overhead rate of P 4 per direct labor hour. The standard direct labor hours allowed for October production was 18,000. An analysis of the factory overhead indicates that in October, Ant had an unfavorable budget (controllable) variance of P 1,000 and an unfavorable volume variance of P 500. Ant uses a two-way analysis of overhead variance.
What is the actual factory overhead measured in October?
P 121,000
P 122,000
P 122,300
P 123,000
Ant Company’s budgeted fixed factory overhead cost is P 50,000 per month plus a variable factory overhead rate of P 4 per direct labor hour. The standard direct labor hours allowed for October production was 18,000. An analysis of the factory overhead indicates that in October, Ant had an unfavorable budget (controllable) variance of P 1,000 and an unfavorable volume variance of P 500. Ant uses a two-way analysis of overhead variance.
What is the applied (standard) factory overhead in October?
P 121,500
P 122,000
P 122,500
P 123,000
What is the materials price variance for the period?
P 1,250 favorable
P 1,500 favorable
P 1,250 unfavorable
P 1,500 unfavorable
What is the materials quantity variance for the period?
P 950 unfavorable
P 1,000 unfavorable
P 5,000 favorable
P 5,000 favorable
What is the labor rate variance for the period?
P 2,700 favorable
P 2,700 unfavorable
P 3,150 favorable
P 3,150 unfavorable
What is the labor efficiency variance for the period?
P 3,000 unfavorable
P 3,000 favorable
P 2,550 unfavorable
P 2,550 favorable
What is the variable overhead spending variance for the period?
P 1,440 favorable
P 1,440 unfavorable
P 1,680 favorable
P 1,680 unfavorable
Queen Company has standard variable costs as follows:
Materials, 3 pounds at P 4.00 per pound P 12.00
Labor, 2 hours at P 10.00 per hour P 20.00
Variable overhead, P 7.50 per labor hour P 15.00
During September, Queen produced 6,000 units using 11,560 labor hours at a total wage of P 113,870 and incurring P88,600 in variable overhead. What is variable overhead efficiency variance?
P 4,400 U
P 3,300 F
P 1,900 U
P 1,400 F
A particular machine is a bottleneck. On that machine, 3 machine hours are required to produce each unit of Product A, 1 hour is required to produce each unit of Product B, and 2 hours are required to produce each unit of Product C. In which order should it produce its products?
C, A, B
A, C, B
B, C, A
The order of production doesn’t matter
A report that measures financial and non-financial performance measures for various units in a single report is a(n):
Balance scorecard
Financial report scorecard
Imbalance scorecard
Unbalanced scorecard
Assuming 360 days in a year, what was the average number of days in the operating cycle for 2020?
72 day
84 days
144 days
168 days
Information on Beatle Company’s direct materials cost is as follows:
Actual units of direct materials used 20,000
Actual direct materials costs 40,000
Standard price per unit of direct materials P 2.10
Direct material quantity variance, favorable P 3,000
What was Beatle’s materials price variance?
P 1,000 favorable
P 1,000 unfavorable
P 2,000 favorable
P 2,000 unfavorable
Ant Company installs solar panels on residential houses. The standard material cost for Type-C house is P 1,250 based on 1,000 units at a cost of P 1.25 each. During April, Ant Company installed solar panels on 20 Type-C houses, using 22,000 units of materials at a cost of P 1.20 per unit, and a total cost of P 26,400. What is Ant Company’s materials
spending (price) variance?
P 1,000 favorable
P 1,100 favorable
P1,400 unfavorable
P2,500 unfavorable
A company has EOQ of 10,000 units and a safety stock of 2,000 units. The cost per unit of inventory is P5.00 and the carrying cost is 10% of the average value of inventory. What is the annual inventory carrying cost?
P3,000
P3,500
P5,000
P6,000
The annual demand for a single product is 4,000 units. The cost to carry one unit is P0.50 while cost per order amounts to P10.00. The average inventory being carried is computed for 225 units. How many units of safety stock are being maintained?
25 units
50 units
200 units
None
Delhi Co. operates at full capacity. The minimum selling price to be set for a special order must cover
Fixed cost
Variable cost
Variable cost plus foregone contribution margin on lost regular sales
Fixed cost plus foregone contribution margin on lost regular sales
What is the expected value of sales?
P 650,000
P 670,000
P 667,500
P 800,000
Dhabi Company's regular selling price for its product is P 10 per unit. Vaniable costs are P 6 per unit. Fixed costs total P 1 per unit based on 100,000 units and remain constant within the relevant range of 50,000 units to a total capacity of 200,000 units. After sales of 80,000 units were projected for 2019, a special order was received for an additional 10,000 units. To increase its operating income by a total of P 10,000, what price per unit should Dhabi charge for this special order?
P 7.00
P10.00
P 8.00
P 11.00
San Jose Company is considering the acquisition of a personal computer that costs P 120,000 with an economic life of 12 years and a terminal salvage value of P 12,000. It is estimated that the increase in net income before taxes as a result from this investment will amount to P 7,000 annually. Income taxes are 35%. The company uses the straight-line method of depreciation. What is the accounting rate of return on the average cost of investment?
3.79%
5.83%
6.89%
6.94%
Which of the following is a basic difference between IRR and ARR criteria for evaluating investments?
IRR emphasizes expenses; ARR emphasizes expenditures
IRR emphasizes revenues; ARR emphasizes receipts
IRR is used for internal investments; ARR is used for external investment.
IRR concentrates on receipts & payments; ARR concentrates on revenues & expenses.
What is the average cost per unit at a production level of 8,000 units for product X?
P 7.90
P 5.98
P 5.85
P 4.83
A firm has an average age in inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. What is the number of days in the cash flow?
135 days
105 days
90 days
75 days
When managing cash and short-term investments, a corporate treasurer is primarily concerned with
Maximizing rate of return
Minimizing taxes
Investing in treasury bonds since they have no default risk
Liquidity and safety
Jackfruit Company has computed its EOQ as 500 units. However, management would rather order in quantities of 600 units. How will Jackfruit’s total purchase order cost and total annual carrying cost for an order quantity of 600 units compared to the respective amounts for an EOQ of 500 units?
Higher purchase order cost and higher carrying cost.
Lower purchase order cost and lower carrying cost.
Higher purchase order cost and lower carrying cost.
Lower purchase order cost and higher carrying cost.
Which statement best summarizes the factor that affects the level of safety stock that a firm will carry?
The amount of idle cash that management believes it has to invest in safety stock
The rapidity with which the inventory position will turn over
The level of production the firm’s bank is willing to finance
The level of uncertainty with respect to a stock-out condition that management is willing to accept
Guyabano Company wishes to determine the amount of safety stock they should maintain for Product No. 333 to result in the lowest cost. Each stock-out costs P 75 and the carrying costs of each unit of safety stock is P 1. Product No. 333 will be ordered five times a year. Which of the following will produce the lowest cost?
A safety stock of 10 units that is associated with a 40% probability of running out of stock
A safety stock of 20 units that is associated with a 20% probability of running out of stock
A safety stock of 40 units that is associated with a 10% probability of running out of stock
A safety stock of 80 units that is associated with a 5% probability of running out of stock
The annual demand for a single product is 4,000 units. The cost to carry one unit is P 0.50 while cost per order amounts to P 10.00. The average inventory being carried is computed for 225 units. How many units of safety stock are being maintained?
25 units
50 units
200 units
None
