Question 

1
Correct
Mark 1.00 out of 1.00

Flag question

Question text
A company may set predetermined overhead rates based on normal, expected annual, or theoretical
capacity. At the end of a period, the fixed overhead spending variance would

a.
be the largest if theoretical capacity had been selected.
b.
not occur if actual capacity were the same as the capacity level selected.
c.
be the smallest if theoretical capacity had been selected.
d.
be the same regardless of the capacity level selected.
Feedback
The correct answer is: be the same regardless of the capacity level selected.

Question 2
Correct
Mark 1.00 out of 1.00

Flag question

Question text
A cost that is included as part of product costs under both absorption costing and direct costing is:

a.
taxes on factory building
b.
managerial staff costs
c.
insurance
d.
variable materials handling labor
 e.
variable marketing expenses.
Feedback
The correct answer is: variable materials handling labor

Question 3
Correct
Mark 1.00 out of 1.00

Flag question

Question text
A manager is attempting to determine whether a segment of the business should be eliminated. The
focus of attention for this decision should be on

a.
the net income shown on the segment's income statement.
b.
sales minus total expenses of the segment.
c.
sales minus total direct expenses of the segment.
d.
sales minus total variable expenses and avoidable fixed expenses of the segment
Feedback
The correct answer is: sales minus total variable expenses and avoidable fixed expenses of the
segment

Question 4
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Assume a company produces three products: A, B, and C. It can only sell up to 3,000 units of each
product. Production capacity is unlimited. The company should produce the product (or products)
that has (have) the highest

a.
sales price per unit
 b.
contribution margin per hour of machine time.
c.
gross margin per unit.
d.
contribution margin per unit.
Feedback
The correct answer is: contribution margin per unit.

Question 5
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Calculating income under variable costing does NOT require knowing

a.
selling price.
b.
unit variable manufacturing costs.
c.
unit sales.
d.
unit production
Feedback
The correct answer is: unit production

Question 6
Incorrect
Mark 0.00 out of 1.00

Flag question

Question text
How does a company determine whether to sell a product “as is” or process it further?
 a.
If the costs to process further exceed the costs of current production, the product should be sold ‘as
is.”

b.
If the costs to process further exceed the costs of current production, the product should be processed
further.
c.
If the increase in revenue from selling the product after further processing is greater than the
additional costs incurred in further processing, the company should opt for further processing.
d.
If the revenues generated by processing the product further exceed the revenues from selling the
product “as is,” the company should process further.

Feedback
The correct answer is: If the increase in revenue from selling the product after further processing is
greater than the additional costs incurred in further processing, the company should opt for further
processing.

Question 7
Correct
Mark 1.00 out of 1.00

Flag question

Question text
If a company follows a practice of isolating variances at the earliest time, the appropriate time to
isolate and recognize a direct materials price variance would be when:

a.
the purchase order is originated
b.
materials are purchased
c.
the materials requisition is prepared
d.
materials are issued
e.
materials are used in production
Feedback
The correct answer is: materials are purchased

Question 8
Correct
Mark 1.00 out of 1.00

Flag question

Question text
If a firm is at full capacity, the minimum special order price must cover

a.
variable costs and incremental fixed costs associated with the special order plus foregone
contribution margin on regular units not produced
b.
variable costs associated with the special order
c.
variable and incremental fixed costs associated with the special order
d.
both c and d.
Feedback
The correct answer is: variable costs and incremental fixed costs associated with the special order
plus foregone contribution margin on regular units not produced

Question 9
Correct
Mark 1.00 out of 1.00

Flag question

Question text
In a make-or-buy decision, an opportunity cost that should be considered is the:

a.
variable costs to produce the item
b.
total costs to produce the item
c.
income that could be generated from idle production space.
d.
fixed costs to produce the item
Feedback
The correct answer is: income that could be generated from idle production space.

Question 10
Correct
Mark 1.00 out of 1.00

Flag question

Question text
In equipment-replacement decisions, which one of the following does not affect the decision-making
process? 

a.
Operating costs of the old equipment.
b.
Current disposal price of the old equipment.
c.
Original fair market value of the old equipment.
d.
Cost of the new equipment.
Feedback
The correct answer is: Original fair market value of the old equipment.

Question 11
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Of the following variances, the one that is most useful in assessing the performance of the Purchasing
Department is the:

a.
materials price usage variance
b.
labor rate variance
c.
materials purchase price variance
d.
idle capacity variance
e.
overhead price variance
Feedback
The correct answer is: materials purchase price variance

Question 12
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Opportunity costs are

a.
Costs that were incurred prior to making a decision
b.
Costs that a company must incur to perform an activity at a given level, but will not be incurred if a
company reduces or discontinues the activity
c.
The profits that a company forgoes by following a particular course of action
d.
Costs that increase due to a higher volume of activity or the performance of an additional activity
Feedback
The correct answer is: The profits that a company forgoes by following a particular course of action

Question 13
Correct
Mark 1.00 out of 1.00

Flag question
 Question text
The inventory control supervisor at Wilson Manufacturing Corporation reported that a large quantity
of a part purchased for a special order that was never completed remains in stock.  The order was not
completed because the customer defaulted on the order.  The part is not used in any of Wilson’s
regular products.  After consulting with Wilson’s engineers, the vice president of production
approved the substitution of the purchased part for a regular part in a new product.  Wilson’s
engineers indicated that the purchased part could be substituted providing it was modified.  The units
manufactured using the substituted part required additional direct labor hours resulting in an
unfavorable direct labor efficiency variance in the Production Department.  The unfavorable direct
labor efficiency variance resulting from the substitution of the purchased part in inventory would best
be assigned to the

a.
Vice-president of production
b.
Inventory supervisor.
c.
Sales manager.
d.
Production supervisor.
Feedback
The correct answer is: Vice-president of production

Question 14
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to
economize on price and in response to the demands of the production manager due to a mistake in
production scheduling. The materials were shipped by airfreight at a rate higher than ordinarily
charged for shipment by truck, resulting in an unfavorable materials price variance. The lower
quality material proved to be unsuitable on the production line and resulted in excessive waste. In
this situation, who should be held responsible for the materials price and quantity variances? (1)
Materials Price Variance, (2) Materials Quantity Variance

a.
(1) Purchasing Agent, (2) Production Manager
b.
(1) Purchasing Agent, (2) Purchasing Agent
c.
(1) Production Manager, (2) Production Manager
d.
(1) Production Manager, (2) Purchasing Agent
Feedback
The correct answer is: (1) Production Manager, (2) Purchasing Agent

Question 15
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The variable cost of a unit of product made yesterday is

a.
A differential cost.
b.
A sunk cost
c.
An incremental cost.
d.
An opportunity cost.
Feedback
The correct answer is: A sunk cost

Question 16
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The variance resulting from obtaining an output different from the one expected on the basis of input
is the:

a.
mix variance
 b.
efficiency variance
c.
usage variance
d.
output variance
e.
yield variance
Feedback
The correct answer is: yield variance

Question 17
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The variances that should be investigated by management include

a.
only unfavorable variances.
b.
both favorable and unfavorable variances considered significant in amount for the company.
c.
all variances, both favorable and unfavorable.
d.
only favorable variances.
Feedback
The correct answer is: both favorable and unfavorable variances considered significant in amount for
the company.

Question 18
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Under the variable-costing concept, unit product cost would most likely be increased by 

a.
An increase in the remaining useful life of factory machinery depreciated on the sum-of-the-year’s
digits method.

b.
A decrease in the remaining useful life of factory machinery depreciated on the units-of-production
method.
c.
A decrease in the number of units produced.
d.
An increase in the commission paid to salesman for each unit sold.
Feedback
The correct answer is: A decrease in the remaining useful life of factory machinery depreciated on
the units-of-production method.

Question 19
Incorrect
Mark 0.00 out of 1.00

Flag question

Question text
Under variable costing,

a.
all product costs are fixed
b.
all period costs are variable.
c.
product costs are both fixed and variable.
d.
all product costs are variable.
Feedback
The correct answer is: all product costs are variable.

Question 20
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following is least likely to be a relevant item in deciding whether to replace an old
machine?

a.
outlay to be made for the new machine
b.
acquisition cost of the old machine
c.
annual savings to be enjoyed on the new machine
d.
life of the new machine
Feedback
The correct answer is: acquisition cost of the old machine

Question 21
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following is not associated with absorption costing?

a.
Period costs
b.
functional format
c.
gross margin
d.
contribution margin
Feedback
The correct answer is: contribution margin
Question 22
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following is not correct?

a.
If the denominator level of activity is greater than the standard hours allowed for the output of the
period, then the volume variance is favorable.
b.
If the denominator level of activity is greater than the standard hours allowed for the output of the
period, then the volume variance is unfavorable.
c.
If the denominator level of activity and the standard hours allowed for the output of the period are the
same, then there is no volume variance.
d.
The volume variance is the most appropriate measure of the utilization of plant facilities.
Feedback
The correct answer is: If the denominator level of activity is greater than the standard hours allowed
for the output of the period, then the volume variance is favorable.

Question 23
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following qualitative factors favors the buy choice in a make or buy decision for a part?

a.
quality control is critical
b.
utilization of idle capacity
c.
part is critical to product
 d.
maintaining a long-term relationship with suppliers
Feedback
The correct answer is: maintaining a long-term relationship with suppliers

Question 24
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following standard costing variances would be least controllable by a production
supervisor?

a.
Labor efficiency.
b.
Overhead efficiency.
c.
Materials usage.
d.
Overhead volume.
Feedback
The correct answer is: Overhead volume.

Question 25
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Which of the following would least likely cause an unfavorable materials quantity (usage) variance?

a.
scheduling of substantial overtime
b.
materials that do not meet specifications
 c.
a mix of direct materials that does not conform to plan
d.
labor that possesses skills equal to those required by the standards
e.
machinery that has not been maintained properly
Feedback
The correct
answer is: labor that possesses skills equal to those required by the standards

Question 1
Correct
Mark 1.00 out of 1.00
 Flag question

Question text
The standard usage for raw materials is 5 pounds at P4 per pound.  ABC Company spent P13,940 in
purchasing 3,400 pounds.  ABC used 3,150 pounds to produce 600 units of finished product.  The
material price variance is

a.
P400 unfavorable.
b.
P1,340 unfavorable

c.
P600 unfavorable.

d.
P340 unfavorable.
Feedback
Your answer is correct.
The correct answer is:
P340 unfavorable.

Question 2
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The following materials standards have been established for a particular product: 

Standard quantity per unit of output 4.6grams

Standard price P15.05 per gram
The following data pertain to operations concerning the product for the last month:

Actual materials purchased 3,100 grams

Actual cost of materials purchased P44,020
Actual materials used in production 2,400 grams
Actual output 300 units
 
What is the materials quantity variance for the month?

a.
P9,940 U

b.
P15,351 U           

c.
P14,484 U

d.
P10,535 U 
Feedback
Your answer is correct.
The correct answer is:
P15,351 U           

Question 3
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The following information is available from the Tyro Company:

Actual factory overhead P15,000

Fixed overhead expenses, actual P 7,200
Fixed overhead expenses, budgeted P 7,000
Actual hours 3,500
Standard hours 3,800
Variable overhead rate per DLH      P  2.50
 
Assuming that Tyro uses a three-way analysis of overhead variances, what is the spending variance?

a.
P1,500 U

b.
P   750 F

c.
P   750 U

d.
P   950 F
Feedback
Your answer is correct.
The correct answer is:
P   750 F

Question 4
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Acme has a standard price of P6 per pound for materials.  July’s results showed an unfavorable
materials price variance of P44 and a favorable quantity variance of P228.  If 1,066 pounds were
used in production, what was the standard quantity allowed for materials?

a.
1,294

b.
1,104

c.
1,066

d.
Some other number.
Feedback
Your answer is correct.
The correct answer is:
1,104

Question 5
Correct
Mark 2.00 out of 2.00

Flag question

Question text
The information was presented as part of Question 5 on Part 4 of the June 1992 CMA examination.
A company produces a gasoline additive.  The standard costs and input for a 500-liter batch of the
additive are presented below.
  Standard Input- Standard Total
Cost
Chemica Quantity in Liters Cost
l per Liter
Echol 200 P0.200 P  40.00
Protex 100   0.425 42.50
Benz 250   0.150 37.50
CT-40   50   0.300 15.00
600 P135.00
The quantities purchased and used during the current period are shown below.  A total of 140 batches
were made during the current period.
  Quantity Pur- Total Quantity Used
Chemica chased (Liters)Purchase Price (Liters)
l
Echol 25,000 P  5,365 26,600
Protex 13,000     6,240 12,880
Benz 40,000     5,840 37,800
CT-40   7,500     2,220   7,140
85,500 P 19,665 84,420

P388.50 favorable.
What is the materials mix variance for this operation? Answer
 P94.50 unfavorable.
 What is the materials yield variance for this operation? Answer

Question 6
Correct
Mark 1.00 out of 1.00

Flag question

Question text
STA Company uses a standard cost system.  The following information pertains to direct labor costs
for the month of June:

Standard direct labor rate per hour P10.00

Actual direct labor rate per hour P  9.00
Labor rate variance P12,000 F
Actual output 2,000 units
Standard hours allowed for actual production 10,000 hours
 
How many actual labor hours were worked during March for STA Company?

a.
10,000

b.
10.500

c.
8,000

d.
12,000
Feedback
Your answer is correct.
The correct answer is:
12,000
Question 7
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The Reedy Company uses a standard costing system. The following data are available for November:
Actual direct labor hours worked ...  5,800 hours
Standard direct labor rate .........       P9 per hour
Labor rate variance ................          P1,160 favorable
The actual direct labor rate for November is:

a.
P9.20.

b.
P8.80.

c.
P9.00.

d.
P8.90.
Feedback
Your answer is correct.
The correct answer is:
P8.80.

Question 8
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The direct labor standards for producing a unit of a product are two hours at $10 per hour. Budgeted
production was 1,000 units. Actual production was 900 units, and direct labor cost was $19,000 for
2,000 direct labor hours. The direct labor efficiency variance was
 a.
P1,000 favorable

b.
P2,000 favorable

c.
P1,000 unfavorable

d.
P2,000 unfavorable
Feedback
Your answer is correct.
The correct answer is:
P2,000 unfavorable

Question 9
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Pane Company's direct labor costs for April are as follows:

Standard direct labor hours 42,000

Actual direct labor hours  41,200
Total direct labor payroll  P247,200
Direct labor efficiency variance – favorable P3,840
What is Pane's direct labor rate variance?

a.
P44,496 unfavorable.

b.
P49,440 unfavorable.

c.
P50,400 favorable.
 d.
P49,440 favorable.
Feedback
Your answer is correct.
The correct answer is:
P49,440 unfavorable.

Question 10
Correct
Mark 2.00 out of 2.00

Flag question

Question text
The information was presented as part of Question 4 on Part 4 of June 1978 CMA exam.  A
company’s standard direct labor rates in effect for the fiscal year ending June 30 and standard hours
allowed for the output in April are
Standard DL Standard DLH
Rate per HourAllowed for Output
Labor class P8.00 500
III
Labor class II   7.00 500
Labor class I   5.00 500
The wage rates for each labor class increased on January 1, under the terms of a new union contract. 
The standard wage rates were not revised.
The actual direct labor hours (DLH) and the actual direct labor rates for April were as follows:
Actual RateActual DLH
Labor class P8.50 550
III
Labor class II   7.50 650
Labor class I   5.40 375

P500
What is the labor yield variance (rounded)? Answer
P500
Mark 1.00 out of 1.00   
P320.00
What is the labor mix variance (rounded)?  Answer

Question 11
Correct
Mark 1.00 out of 1.00

Flag question

Question text
River Company uses a standard-cost accounting system. It applies overhead based on direct labor
hours. The following overhead costs and production data are available for March:
Standard fixed overhead rate per DLH  P1.50
Standard variable overhead rate per DLH  P5.00
Budgeted monthly DLH  30,000
Actual DLH worked  28,000
Standard DLH allowed for actual 27,500
production
Overall overhead variance -- favorable  P2,500
What is the applied factory overhead for March?

a.
P178,750

b.
P176,250

c.
P182,000

d.
P137,500
Feedback
Your answer is correct.
The correct answer is:
P178,750

Question 12
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The Pinatubo Company makes and sells a single product and uses standard costing.  During January,
the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product. 
The standard cost card for one unit of product includes the following:
Variable factory overhead:  3.0 DLHs @ P4.00 per DLH
Fixed factory overhead:  3.0 DLHs @ P3.50 per DLH
For January, the company incurred P22,000 of actual fixed overhead costs and recorded a P875
favorable volume variance.
The budgeted fixed overhead cost for January is:

a.
P32,375

b.
P31,500

c.
P30,625

d.
P33,250
Feedback
Your answer is correct.
The correct answer is:
P30,625

Question 13
Correct
Mark 1.00 out of 1.00
 Flag question

Question text
Calma Company uses a standard cost system.  The following budget, at normal capacity, and the
actual results are summarized for the month of December:

Direct labor hours             24,000

Direct labor hours             P  48,000
Fixed factory OH  P108,000
Total factory OH per DLH P      6.50
 
Actual data for December were as follows:

Direct labor hours worked 22,000

Total factory OH   P147,000
Standard DLHs allowed for capacity attained 21,000
 
Using the two-way analysis of overhead variance, what is the controllable variance for December?

a.
P10,500 Unfavorable

b.
P  9,000 Favorable

c.
P  3,000 Favorable

d.
P  5,000 Favorable
Feedback
Your answer is correct.
The correct answer is:
P  3,000 Favorable

Question 14
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Bulusan Company normally produces and sells 30,000 units of E14 each month.  E14 is a small
electrical relay used in the automotive industry as a component part in various products.  The selling
price is P22 per unit, variable costs are P14 per unit, fixed manufacturing overhead costs total
P150,000 per month, and fixed selling costs total P30,000 per month.
Employment-contract strikes in the companies that purchase the bulk of the E14 have caused
Bulusan Company’s sales to temporarily drop to only 9,000 units per month.  Bulusan Company
estimates that the strikes will last for about two months, after which time sales of E14 should return
to normal.  Due to the current low level of sales, however, Bulusan Company is thinking about
closing down its own plant during the two months that the strikes are on.  If Bulusan Company does
close down its plant, it is estimated that fixed manufacturing overhead costs can be reduced to
P105,000 per month and that fixed selling costs can be reduced by 10%.  Start-up costs at the end of
the shutdown period would total P8,000.  Since Bulusan Company uses just-in-time production
method, no inventories are on hand.
 At what level of unit sales for the two-month period should Bulusan Company be indifferent
between temporarily closing the plant or keeping it open?

a.
24,125

b.
10,000

c.
8,000

d.
11,000
Feedback
Your answer is correct.
The correct answer is:
11,000

Question 15
Correct
Mark 1.00 out of 1.00
 Flag question

Question text
MNL Company has an opportunity to acquire a new machine to replace one of its present machines. 
The new machine would cost P90,000, have a 5-year life and no estimated salvage value.  Variable
operating costs would be P100,000 per year.  The present machine has a book value of P50,000 and a
remaining life of 5 years.  Its disposal value now is P5,000, but it would be zero after 5 years. 
Variable operating costs would be P125,000 per year.  Ignore income taxes.  Considering the 5 years
in total, what would be the difference in profit before income taxes by acquiring the new machine as
opposed to retaining the present one?

a.
P10,000 decrease

b.
P40,000 increase

c.
P15,000 decrease

d.
P35,000 increase
Feedback
Your answer is correct.
The correct answer is:
P40,000 increase

Question 16
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Food Co. has a limited number of machine hours that it can use for manufacturing two products, X
and Y. Each product has a selling price of P160 per unit by product X has 40% contribution margin
and product Y has 70% contribution margin. One unit of Y takes twice as many machine-hours to
make as a unit of X. Assuming unlimited demand, which product(s) should the limited machine
hours be used for?
 a.
Both X and Y

b.
Either X and Y

c.
X

d.
Y
Feedback
Your answer is correct.
The correct answer is:
X

Question 17
Correct
Mark 2.00 out of 2.00

Flag question

Question text
Sudan Company has three products: A, B and C. Three machines are used to produce the products.
The contribution margins, sales demands, and time on each machine (in minutes) are as follows:
  Demand CM Time on M1 Time on M2 Time on M3
A 100 P30 10 mins 15 mins 12 mins
B 80 P20 10 mins 5 mins 8 mins
C 60 P30 5 mins 10 mins 5 mins

Assuming that there are 2,400 minutes available in each machine, which machine is the bottleneck?
NOTE: Bottleneck is a constraint in a facility or resource whose capacity is less than the demand
Machine 2
placed upon it. Answer

Machine 2
Mark 1.00 out of 1.00
Assuming the same data in No. 45, how many units of A, B, C should be produced during the
93 of A, 80 of B, and 60 of C
week? Answer

93 of A, 80 of B, and 60 of C
Mark 1.00 out of 1.00

Question 18
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Lebanon Co. plans to discontinue a division with a P20,000 contribution margin. Overhead allocation
to the division is P50,000, of which P5,000 cannot be eliminated. What is the effect on Lebanon’s
pretax income by this plan?

a.
P30,000 increase

b.
P5,000 decrease

c.
P20,000 decrease

d.
P25,000 increase

Feedback
Your answer is correct.
The correct answer is:
P25,000 increase

Question 19
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Baghdad Company produces and sells 8,000 units of Product X each year. Each unit of Product X
sells for P10 and has a contribution margin of P6. It is estimated that if Product X is discontinued,
P50,000 of the 60,000 in fixed costs charged to Product X could be eliminated. These data indicate
that if Product X is discontinued, overall company operating income should

a.
Decrease by P2,000 per year

b.
Increase by P2,000 per year

c.
Decrease by P38,000 per year

d.
Increase by P38,000 per year

Feedback
Your answer is correct.
The correct answer is:
Increase by P2,000 per year

Question 20
Correct
Mark 1.00 out of 1.00
 Flag question

Question text
Aba Company sells Product B at a selling price of P21 per unit. Abu’s cost per unit based on the full
capacity of 200,000 units is as follows:
Direct materials P4.00
Direct labor 5.00
Overhead (2/3 fixed) 6.00
  P15.00
A special order offering to buy 20,000 units was received from a foreign distributor. The only selling
cost that would be incurred for this order would be P3 per unit for shipping. Abu has sufficient
existing capacity to manufacture the additional units. In negotiating the price for the special order,
Abu should consider that the minimum selling price per unit should be:

a.
P15

b.
P14

c.
P18

d.
P16

Feedback
Your answer is correct.
The correct answer is:

P14
Question 21
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Pixie Co. produces Component 6417 for use in one of its electronic gadgets.  Normal annual
production for the item is 100,000 units.  The cost per unit lot of the part are as follows:
Direct material P520
Direct labor 200
Manufacturing overhead
Variable 240
Fixed 320
Total manufacturing costs per 100 unitsP1,280
Bobbie Inc. has offered to sell Pixie all 100,000 units it will need during the coming year for P1,200
per 100 units.  If Pixie accepts the offer from Bobbie, the facilities used to manufacture Component
6417 could be used in the production of Component 8275.  This change would save Pixie P180,000
in relevant costs.  In addition, a P200,000 cost item included in fixed overhead is specifically related
to Part 6417 and would be eliminated.  Pixie should 

a.
Continue producing Component 6417 because of P40,000 savings.

b.
Continue producing Component 6417 because of P60,000 savings.

c.
Buy Component 6417 because of P140,000 savings.

d.
Buy Component 6417 because of P300,000 savings.
Feedback
Your answer is correct.
The correct answer is:
Buy Component 6417 because of P140,000 savings.
Question 22
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Tyler Company currently sells 1,000 units of product M for $1 each.  Variable costs are $0.40 and
avoidable fixed costs are $400.  A discount store has offered $0.80 per unit for 400 units of product
M.  The managers believe that if they accept the special order, they will lose some sales at the regular
price.  Determine the number of units they could lose before the order become unprofitable. 

a.
600 units.

b.
500 units.

c.
267 units.

d.
750 units.
Feedback
Your answer is correct.
The correct answer is:
267 units.

Question 23
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Julius International produces weekly 15,000 units of Product JI and 30,000 units of JII for which
P800,000 common variable costs are incurred. These two products can be sold as is or processed
further.  Further processing of either product does not delay the production of subsequent batches of
the joint products.  Below are some information:
  JI
Unit selling price without further processing P24
Unit selling price with further processing P30
Total separate weekly variable costs of further processing P100,000
 
To maximize Julius’ manufacturing contribution margin, the total separate variable costs of further
processing that should be incurred each week are

a.
P100,000

b.
P90,000

c.
P190,000

d.
P95,000
Feedback
Your answer is correct.
The correct answer is:
P90,000

Question 24
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Listed below are a company’s monthly unit costs to manufacture and market a particular product. 
Unit Costs Variable CostFixed Costs
Direct materials P2.00
Direct labor   2.40
Indirect   1.60 P1.00
Manufacturing
Marketing   2.50   1.50
The company must decide to continue making the product or buy it from an outside supplier.  The
supplier has offered to make the product at the same level of quality that the company can make it. 
Fixed marketing costs would be unaffected, but variable marketing costs would be reduced by 30% if
the company were to accept the proposal.  What is the maximum amount per unit that the company
can pay the supplier without decreasing its operating income? 

a.
P5.25

b.
P6.75

c.
P8.50

d.
P7.75
Feedback
Your answer is correct.
The correct answer is:
P6.75

Question 25
Correct
Mark 1.00 out of 1.00

Flag question

Question text
The income statement of product Pabigat, one of the products being sold by Palugi Company is
reproduced below:
Sales P80,000
Cost and expenses 92,000
Net loss (P12,000)
P37,600 of the costs and expenses above are fixed, of which P21,600 is unavoidable regardless
whether the product will be dropped or not. What is the product elimination point?

a.
P70,400

b.
P54,400

c.
P16,000

d.
P50,000
Feedback
Your answer is correct.
The correct answer is:
P50,000

Question 26
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Arabia Company produces and sell three products as follows:
  Products
  R I P
Sales P200,000 P150,000 P125,000
Separable (product) fixed costs 60,000 35,000 40,000
Allocated fixed costs 35,000 40,000 25,000
Variable costs 95,000 75,000 50,000
The company lost its lease and must move to a smaller facility. As a result, total allocated fixed costs
will be reduced by 40%. However, one of its products must be discontinued in order for the company
to fit in the new facility. Since the company’s objective is to maximize profits, what is the expected
net profit after the appropriate product has been discontinued?

a.
P10,000

b.
P25,000
 c.
P20,000

d.
P15,000
Feedback
Your answer is correct.
The correct answer is:
P25,000

Question 27
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Istanbul Company budgets sales of 400,000 calculators at P40 per unit for 2015. Variable
manufacturing costs were budgeted at P16 per unit and fixed manufacturing costs at P10 per unit. A
special order offering to buy 40,000 calculators for P23 each was received by Istanbul in March
2017. Istanbul has sufficient plant capacity to manufacture the additional quantity; however, the
production shall be done on an overtime basis at an additional cost of P3 per calculator. Acceptance
of the special order would not affect Istanbul’s normal sales and no selling expense would be
incurred. What would be the effect on operating profit if the special order were accepted?

a.
P160,000 increase

b.
P120,000 decrease

c.
P40,000 decrease

d.
P280,000 increase
Feedback
Your answer is correct.
The correct answer is:
P160,000 increase

Question 28
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Norton, which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 37,000 units at P15 per unit
Production costs:
Variable: P4 per unit
Fixed: P260,000
Selling and administrative costs:
Variable: P1 per unit
Fixed: P32,000
The contribution margin that the company would disclose on a variable-costing income statement is:

a.
P370,000

b.
some other amount.

c.
P166,500

d.
P97,500

e.
P147,000
Feedback
Your answer is correct.
The correct answer is:
P370,000

Question 29
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Madison began business at the start of the current year. The company planned to produce30,000
units, and actual production conformed to expectations. Sales totaled 28,000 units atP32 each. Costs
incurred were:

Fixed manufacturing overhead P150,000

Fixed selling and administrative cost 90,000
Variable manufacturing cost per unit 11
Variable selling and administrative cost per unit 2
If there were no variances, the company's variable-costing net income would be:

a.
P270,000.

b.
P292,000.

c.
some other amount.

d.
P532,000.

e.
P308,000.
Feedback
Your answer is correct.
The correct answer is:
P270,000.

Question 30
Correct
Mark 1.00 out of 1.00

Flag question

Question text
Heston Company has the following information for the current year:

Beginning fixed manufacturing overhead in inventory P190,000

Fixed manufacturing overhead in production 750,000
Ending fixed manufacturing overhead in inventory 50,000
Beginning variable manufacturing overhead in inventory $20,000
Variable manufacturing overhead in production 100,000
Ending variable manufacturing overhead in inventory 30,000
 
What is the difference between operating incomes under absorption costing and variable costing?

a.
P10,000

b.
P100,000

c.
P140,000

d.
P80,000
Feedback
Your answer is correct.
The correct answer is:
P140,000

Question 31
Correct
Mark 2.00 out of 2.00
 Flag question

Question text
 The books of Mariposa Company pertaining to the year ended December 31, 2020 operations,
showed the following figures relating to product A:

Beginning inventory-FG and WIP   none

No. of units produced   40,000
No. of units sold at 15   32,500
Direct materials used   P 177,500
Direct labor used   P 85,000
Fixed     P 110,000  
Variable 61,500 P171,500
Fixed admin expenses   P 30,000
 
Under variable costing, what would be the finished goods inventory as at December 31,
P 60,750.00
2020? Answer

P 60,750.00
Mark 1.00 out of 1.00
Which costing method, variable or absorption costing, would show a higher operating income for
absorption by P 20,625
2013 and by how much? Answer
Correct
The correct answer is:
absorption by P 20,625
Mark 1.00 out of 1.00