ReSUh ~The Review School of Oacounitaney ‘§@ 7359807 / 7343989 # 09104391320 / 09239124121 / 09164383834 i~! [email protected] MANAGEMENT ADVISORY SERVICES ‘A. Lee +E. Arafias D c MAS Module No. 2 MAS - 04, 05, 06 Multiple-Choice Questions (MCQs) Sources CMA/CIARPCPAJAICPA/Various test banks IAS — 04: COSTING (48 M 1. Which of the following «s NOT part ofthe decsion making process? 2. _Identiying the problem D. Quantfying the factors assonated with the aternatives Reaching a deason 4. Reversing the decison if not economically sound 2. In the development of the accounting data for deczzon-making purposes, a relevant costs defined as: ‘Changes in vanable cost under each atematve course of action Future costs which wil differ under each alterative course of acon. Histonca costs which are the best avaable basis fr estimating future costs Standard costs which are developed by time-and-motion-study techniques because of their relevance to managerial control. 3. The relevance of a particular cost to a decision is determined by the 2. Size of the cost ‘c_Potential effects on the decision b. Risk level of the decsion d. Accuracy and vertiabilty of the cost 4. Ina decision analysis situation, which one of the folowing costs 1s generally NOT relevant to the decision? a. Incremental cost Avoidable cost b. Differential cost dd. Histoncal cost 5. The kind of cost that can be ignored in short-term decsion making Is a(n): ‘a. ferential cost Sunk cost b. Incremental cost d._ Relevant cost 6. An tem whose entire amount is usually a differential casts a. Factory overhead © Conversion cost b. Direct cost 4d. Penod cost 7. In determining whether to manufacture a part or buy it from an outside vendor, a cost that is wrelevant to the short-run decision is a. Prime costs b. Variable overhead ‘c_ Fixed overhead that will be avoided ifthe partis bought from an outside vendor 4. Fixed overhead that will continue even ifthe part is bought from an outside vendor 8. Ina make-or-buy decision, the relevant costs include variable manufacturing costs as well as '2. Factory management costs c Avoidable fixed costs. b. General office costs 4. Depreaation costs 9. Turkey Technology manufactures a particular computer component. Currently, the costs per unit are as follows: Drrect matenals, P 50; direct labor, P $00; variable overhead, P 250; fixed overhead, P 400. Pakistan Inc. has obtained Turkey with an offer to sell 10,000 unts of the component for P 1,100 per unit. If ‘Turkey accepts the proposal, P 2,500,000 of the fixed overhead will be eliminated. Should Turkey make or buy the ‘component? ‘2. Make due to savings of P 3,000,000 & Buy due to savings of P 1,000,000 . Buy due to savings of P 2,500,000 d. Make due to savings of P'500,000 10. Saudi Arabia Company is operating at 70% capacty. The plant manager 's considering making Part AS now being purchased from outside supplies for P 110 each, a price that is projected to increase inthe near future. The plant has the equipment and labor force required to manufacture Part AS6. The design engineer estimates that each part ‘requires P 40 of direct materials and P 30 of direct labor. The slant overhead is 200% of direct labor peso cost, and 40% of the overhead is fixed cost. A decision to manufacture Part ASE will result in a gain or (loss) for each ‘component of: a P26 (P20) b P16 a pa 11. Qatar Company produces Part G. The costs per unt for 10,000 units for Part G are as follows Direct materials Pa Direct labor 15 Variable overhead 6 Fixed overtiead 8 Total eR Bahrain Company has offered to sell Qatar 10,000 units of Part G for P 30 per unt. If Qatar accepts Bahrain's Offer, the released facilities could be used to save P 45,000 in relevant costs in the manufacture of Part H. In addition, P 5 per unit of fied overhead applied to Part G would be totaly eliminated. What altemative is more ‘desirable and by what amount is it more desirabie? ‘a. Manufacture, P 10,000 <.Buy, P 35,000 'b. Manufacture, P 15,000 4. Buy, P65,000 Page 1 of 20 pagesRS. the Review School of Heconetoncy MAS Module 2 MCQs: MAS ~ 04, 05, 06 12. Yemen Company manufactures 20,000 unts of 8 certain component per year. This component is used in the production of a main product. The following are the costs to make the component per unit: Dect matenals pat Direct labor “4 Vanable overnead 8 Fred overhead ° If Yemen buys the component from outside supplier the company can rent out the released facities for P 20,000 8 year. The cost of the component per unit as quoted by Uxe supplies Is P 36. 60% of the fixed overhead applied in the manufacture of the component will continu regardless of what deasion is made. For ALL purchases made by the company, freight and handing costs are applied at 1% of the purchase price. The direct materials cost is ‘exclusive of the freight and handling cost What is the economic advantage or disadvantage of buying the component? (NOTE: the relevant cost to buy must include 1% handling cost based on the purchase price) B 2. P-24,800 advantage

‘a. Capital budget ‘e. Cash management budget b. Operating budget 4. Strategic budget 35, Which one of the folowing best describes the role of top management in the budgeting process? Top management c '._ Should be involved only inthe approval process Lacks the detailed knowledge ofthe daily involvement Needs to be invoived, including using the budget process to communicate goals Needs to separate the budgeting process and business planning process into two separate processes 36. The budgeting process should be one that motivates. managers and employees to work toward organizational ‘goals. Which one of the following is LEAST likely to motivate managers? 8 '2._ Participation by subordinates in the budgetary process . Having top management set budget evels ©. Use of management by exception <4. Holding subordinates accountable forthe items they control 37. Comparing actuel resuits with a budget based on acheved (actual) volume is possible with the use of @ ° Monthy budget. Rolling budget b. Master budget d. Flexible budget 38, Which one of the folowing budgeting methodologies would be most appropriate for a firm facing a significant level of uncertainty in unit sales volumes next year? 8 a. Static budgeting Top-down budgeting b. exible budgeting d._Lfe-cycle budgeting 39. A flexible budget is) 8 'a. One that can be changed whenever a manager so desires. b. Adjusted to reffect expected costs at the actual level of activity One that uses the formula ‘total cost ~ cost per unit x units produced” 4. The same as a continuous budget. Page 9 of 20 pages ©KSA. The Review School of Acconatoncy MAS Module 2 MEQs: MAS ~ 04, 05, 06 40. Which of the following 1s a difference between a stat: budyet and a flesible budget? c a. A flexible budget includes only vanabie costs, 2 siz" budget includes only foced costs. b. A flexible budget includes all costs; a static Liciget includes only fixed costs. A flexible budget gives allowances for efferent levels of activity while a static budget does not. 4. None of the above. 41. A company has developed the budget formula below for estimating its shipping expenses. Shipments have historically averaged 12 pounds per shipment. Shipping costs = P 18,000 + (P 0.60 x pounds shipped) ‘The planned and actual activity regarding orders and shipments for the month are given in the following schedule: Pan Actual ‘Sales orders 800 780 ‘Shipments 300 820 Units shipped 8900 9,000 Sales ? 120,000 P-144,000 Total pounds shuppedt 900 12,500 The actual shipping costs for the month amounted to ° 21,000. What should be the appropnate monthly flexible bbudget allowance for shipping costs for the purpose of performance evaluation? ° a. P 18,000 c P23,760 b. P 18,492 d. 25,500 NOTE: Flexible budget allowance is usually adjusted based on actue/ data 42. The difference between the actual amounts and the fleible budget amounts for the actual output achieved is the 8 Production volume variance Sales volume variance b. Flexible budget variance d. Standard cost vanance 43. ‘Kaizen’ budgeting refers to the budgeting process where c ‘a. The budget is based on only one level of activity b. The budget is based on many levels of actwity so that the budget may be adjusted based on actual activity cc. The budget is based not on the existing system, but on changes or improvements that are to be made d. A product's revenues and expenses are estimated over its entire life cycle (Le., from R&D phase to ‘customer support phase) NOTE: Choke ‘a’ refers to fixed budget. Choice '’ refers to Nenble budget. Chorce refers to life-cycle budget. 444, The budget method that maintains a constant tweive month planning honzon by adding a new month on the end as the current month is completed 1s called c ‘a. An operating budget c. Acontinuous budget b. Acapital budget &-Amacear budget 45. A company that uses zero-based budgeting has 8 ‘a. An expense budget of zero. 1b. Zero as the starting point of budgeting the coming year’s expenses. . zero variance between budgeted and actual perforrisnce. d. An assumed sales level of zero. MAS — 06: STANDARD COSTING (75 MCt 1, Which of the following is a purpose of standard costing? 8 ‘2. Torreplace budgets and budgeting, b. To simplify costing procedures and expedite cost reports c.Toeliminate under/over applied factory overhead at the end of penad dd. Touse them as a basis for product costing for external porting purposes 2. A primary purpose of using a standard cost system 1s 8 ‘a. To minimize the cost per unit of production b. Toprovide a distinct measure of cost controt c._ Tomake things easier for managers in the production facility d. To minimize recording of certain recurnng business transactions 3. Standard costs are LEAST useful for D ‘a. Measuring production efficiency Estimating future costs 'b. Simplifying costing procedures 4. Determining minimum inventory levels 4. Which of the following is true conceming standard costs? A ‘2. If properly used, standards can help motivate employees b. Standard costs are difficult to use with a process-costing systera Standard costs are estimates of costs attainable only under the most ideal conctions, but rarely practicable. 4. Unfavorable variances, when material in amaunt, chould be investigated, but favorable vanances need not be invesbgated. 5. Accompany using very tight standards in standard cost system should expect that 8 2. Noincentive bonus will be paid b. Most variances wall be unfavorable c. Employees wil be strongly motwated to attan the standards G. Costs will be controlled better that if ower standar Js were used page 103420 paps ©RSA The Review School of Accountancy MAS Module 2 MCQs: MAS — 04, 05, 06 A 6, The matenals cost vanance is composed of 2. Quantity and efficency variances © Pnce and mix variances b. Quantity and price variances ._ Mux and yield variances 7. What is the variation in the use of materials at actual prices and use of materials at standard prices? a Materials price variance Materials mix vaniance b. Materials usage variance 4, _ Matenals yield variance 8. 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 panets on 20 Type-C hhouses, using 22,000 units of materials at a cost of F 1.20 per unit, and a total cost of P 26,400. What is Ant Company's materials spending (price) variance? a. P-1,000 favorable P1,400 unfavorable b. 1,100 favorable 4. P2,500 unfavorable 9. Information on Beatle Company's direct materials cost is as follows: ‘Actual units of direct materials used 20,000 ‘Actual direct materals costs 40,000 ‘Standard price per unit of direct materials P2.10 Direct material quantity vaniance, favorable 3,000 ‘What was Beatle's materials price variance? '& 1,000 favorable cP 2,000 favorable bP 1,000 unfavorable 4. P-2,000 unfavorable 10. Information on Termites Company's direct-material costs is as follows: ‘Standard unit price P 3.60 ‘Actual quantity purchased 1,600 Standard quantity alowed for actual production 1,450 Materials purchase price variance, favorable P'240 ‘What was the actual purchase price per unit, rounded to the nearest centavo? a P3.06 P35, bo P3AL a P375 11. If a company follows the practice of isolating variance at the earhest point in time, what would be the appropriate ‘time to isolate and recognize a direct material price variance? ‘2. When material is issued to the requesting department or division b. When material is purchased c. When material is used in production d. When purchase order is onginated 12. Acredit balance in the materials price variance indicates that a. Actual price exceeds standard price Actual quantity exceeds standard quantity b. Standard price exceeds actual price d._ Standard quantity exceeds actual quantity 13. Roach Company manufactures tables with glass tops. The standard matenal cost for the glass used per table is P 7.80 based on six square-feet of vinyl at a Cost of P 1.30 per square-foot. A production run of 1,000 tables in 2015 resulted to usage of 6,400 square-feet of vinyl at a cost of P 1.20 per square-foot, a total of P 7,680. What was the ‘materials usage variance resulting from the above production run? a. P'120 favorable © P'520 unfavorable b._ P480 unfavorable d.P-640 favorable 14, The Centipede Company uses standard costing. The following date are available for October: ‘Actual quantity of direct materials used 23,500 pounds Standard price of direct materials P 2 per pound Material quantity variance P 1,000 unfavorable ‘What is the standard quantity of materials allowed for October production? ‘a. 23,000 pounds ‘24,500 pounds 24,000 pounds 25,000 pounds 15, A company uses @ standard costs system to account for its only product. The materials standard per unit was 4 ‘pounds at P'5.10 per pound. Operating data for April were as follows: Materials used 7,800 bos. Cost of materials used P 40,950 Number of finished unt 2,000 What was the materials usage variance for Apri? a. P 1,020 favorable 1,176 unfavorable bP 1,050 favorable d. 1,200 unfavorable following information ‘A manufacturer of radios purchases components from subcontractors for assembly into complete radios. Each radio requires three units each of Part X, which has a standard cost of P 2.90 per unit. During June, the company hhad the following experience with respect to Part X. Purchases (P 36,000) 12,000 units Consumed in manufacturing 19,000 units Radios manufactured 3,000 units 16. During June, the company incurred a materials purchase-pvice variance of 2. P-900 unfavorable © P 1,200 unfavorable b. P-900 favorable 4. P 1,200 favorable Page 11 of 20 pages ®ReSlh. The Review School of Accountancy MAS Module 2 MCQs: MAS — 04, 05, 06 17. Duning June, the company incurred a materials efficiency vanance of a ‘a. P 2,900 unfavorable © P8,700 unfavorable D. P-2,900 favorable 4. P 8,700 favorable 18 What isthe amount that will be shown on a flexible budget for Part X usage during the month of June? A a. 26,100 © P-29,000 b. P27,000 GP 36,000 18. The following data relate to direct labor costs for the current period Standard costs 10,000 ours at P 20 ‘Actual costs 9,800 hours at P 1950 What was the direct labor efficiency variance? c a. P 3,600 favorable P4000 favorable . P 3,600 unfavorable 4 P 4,000 unfavorable 20, Amoeba Corporation's direct labor information for product C for the month of October is as follows: Standard rate P 6.10 per hour ‘Actual rate paid 6.00 per hour Standard hours allowed for actyal production 1,500 hours Labor efficiency variance 600 unfavorable ‘What is the actual hours worked? c a 1,400 b. 1,402 21, Worm Corporation's direct labor costs for the month, Standard direct labor hours 42,000 ‘Actual direct labor tours 40,000 Direct labor rate variance, faverable — P.8,400 ‘Standard direct labor rate per hour P6.50 What was Worm’s direct labor payroll for the month of March? ¢ 2. P 243,000, cc. P.251,600 bP 244,000 6. 260,000 22. Leech Company's operations for April disclosed the following data relabng to direct labor: ‘Actual cost P 10,000 Rate variance (favorable) 1,000 Efficiency variance (unfavorable) 1,500 Standard cost 29500 ‘Actual direct labor hours for Apri amourted to 2.000. What was the standard direct labor houry rate? A a. P5.50 c Par b. P5.00 d. 9450 23. The following is a standard cost variance analysis report on wirect labor for a manufacturing company: ‘Actual Hours at Actual Hours at Standard Hours at Job ActualWages ‘Standard. Wages Standard Wages 2 $98, 213 P3248 2,700 P 3,100 25 P1545 P 15,000, Protex P6756 6,500 Bene P 19,788 19.250, cT-40 an 22.650 Total P6090 ‘What is the total (flexible woah irect labor variance for the division? B a. P 100 favorable cP 1,900 favorable b. P 1,900 unfavorable d. P 2.000 unfavorable 24. In determining the standard factory overhead rate, which level of capacity is used? c ’2. Maximum capacity © Normal capacity , Practical capacty 4. _Fpected actual capacity 25. Which level of capacity if used would result nto tie lowest fixed overbead application rate? A ‘2. Theoretical capacty ‘Neral eapacty Expected actual capacty 26. The flexible budget of Spider Company is summarize ‘Percent of normal operating capacty 90% 100% 110% Variable overhead Pac00 P2000 27.000 Fixed overhead aa _-30,000.__50, Total factory overhead 7.0075, 100,000 of units of product are produced when the company operates at its normal capacity. ‘The standard labor time per unit is 15 minutes. Actual production for the year was 90,000 units of product in 44,000 hours. What is the standard variable factory overhead rate per hour” a a 1.00 c 4.00 b, 1.25 4.5.00 NOTE: Gased on 100% operating capacity, the vanable rate ss: P 25,000 + 25,000 hours = P 1 Flexible budget formula: FOH = 50,000 + 1X, where 'X'ts based on the number of hours. 27. Using data in No. 26, what is the budgetary factory overhead adjusted to standard hours? € 2. 22,500 cc. 72,500 b. $0,000 4. 75,000 pape 22050 ©RSW. the Revrew School of lecomectorrey MAS Module 2 MCQs: MAS — 04, 05, 06 28. Information oe Caterpillar Company's overhoad costs 1s a follows. Standard applied overtiead 30,000 Budgeted! overnead based on standard direct-labor hours allowed P 83,000 Budgeted overtiead based an actual direct labor hours allowed 84,000 Actual overtwoad 86,000 What was the total overhead variance? . a. P 2,000 unfavorable: © P-4,000 favorable 1b. _P3,000 favorable 4. 6,000 unfavorable nd flexible budgeting system and uses a two-way analysis for overhead Hon activity 1s 8 follows: 29, Yeast Company has vanances. Selected data standard absorption for the February pr Actual factory overhead incurred 230,000 Budgeted fixed factory overhead costs P 64,000 Variable factory overhead rate per direct-abor hour P5.00 Standard directlabor hours 32,000 ‘Actual directtabor hours 33,000 What is the budget (controllable) variance for Febcuary? ° 2. 1,000 favorable 6,000 favorable D. 1,000 unfavorable 4. 6,000 unfavorable 30. Information on Mold Company's overhead costs for the January production activity {s as follows: Budgeted fixed overhead 75,000 ‘Standard fixed overhead rate per direc-labor hour 3.00 ‘Standard vanable overtvead rate per diet labor hour 6.00 ‘Standard direct-labor hours allowed for actual production 24,000 ‘Actual total overhead incurred 220,000 Mold has a standard absorption and flexible budget system ane! uses the two-variance method (two-way analysis) for overhead variances. What s the volume (denominatar) variance for January? a 2. P 3,000 unfavorable © P-4,000 unfavorable b._ P 3,000 favorable d. P4000 favorable tems 31 and 32 are based.on the follwing information ‘Ant Company's budgeted fixed factory overtvead cost is P 50,000 per month plus a vanable 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. 31, What is the actual factory overhead measured in October? > ‘a. P'121,000 cP 122,300 b. P122,000 J.P 123/000 32, What is the applied (standard) factory ovethead in October? A a. P121,500 c. P122,500 b.P 122,000 dP 123,000 33. The following information is available from the Honey Company. ‘Actual factory overhead P 15,000, Fixed overhead expenses, actual 7,200 Faxed overhead expenses, budgeted P 7,000 ‘Actual hours 3,500 Standard hours 3,800 Variable overhead rate per direct labor hour 2.50 ‘Assuming that Honey uses a three-way analysis of overhead variance, what is the spending variance? A '2. P750 favorable &P'S50 favorable b. _P750 unfavorable 4. P'1,500 unfavorable 34. Queen Company has standard variable costs as follows: Materials, 3 pounds at P4.00 rer pound P 12.00 Labor, 2 hours at P 10.00 per hour 20.00 Variable overhead, P 7.50 per labor hour 15.00 During September, Queen produced 6,000 units using 11,560 labor hours at a total wage of P 113,870 and incurring P 88,600 in variable overhead. What is vanable overhead efficency variance? 8 a. P4400U P,900U. b. P3,300F a. PAA00F 35. Bee Company uses a standard cost system in which i applies manufacturing overhead to units of product on the basis of direct labor hours. The information below pertains to a recent month's activa: ‘Denominator (normal) activity 300 hours, ‘Actual activity 350 hours Standard hours allowed for output 360 hours Predetermined overhead rate (P 2 variable + P 3fixed) P'S per hour What would be the volume variance? 8 2. P 300 favorable P50 favorable b. P10 favorable d. P'120 favorable 36. One way of analyzing the variable factory overhead variance is breaking &t down into a ‘2. Spending and efficiency variances ‘c._Effidency and volume variances b. Spending and rate variances 4. Spering and capacty variances Page 13 of 20 pagesReSUh. The Remsew School of lcconectamey MAS Module 2 MCQs: MAS - 04, 05, 06 37. One way of analyzing the fixed factory overhead vaniance is breaking tt down into A ‘Spending and volume vanances Efficiency and volume variances b. Spending and budget variances d__ Efficiency and capacity variances 38. What is the factory overhead variance that serves as a measure of capacty utilization? D a. The overhead spending vanance ‘2. Actual and standard material purchases . Actual material purchases and standard material use . Standard material purchases and standard raterial use d. Actual cost of materal use and standard cost of matenals allowed for production 71. Which of the following is NOT a quantity variance? ¢ ‘a. Material use variance Fixed overhead budget variance b. Labor efficiency variance d__ Variable overhead efficiency variance 72. Which variance CANNOT arise under a standard variable costing system? D ‘2. Variable overhead budget variance b. Variable overhead efficiency variance c. Fixed overhead budget variance 4d. Fixed overhead volume variance 73. Which item is NOT used to compute the fixed overhead volume variance? c a. Standard fixed cost per unit c. Actual fixed overhead . Budgeted fixed overhead 4d. Actual quantity produced 74, Which variance is LEAST likely affected by hiring workers with less sk than those already working? c 2. Labor rate variance Material pice variance b. Material use variance d. Variable overhead efficiency variance 75. Which arances MOST they affected by bunng 2 more expense materal that produces les waste ands easter to! D ‘a. Labor rate vanance Fixed overhead budget variance Direct labor efficiency variance 16. _Vanable overhead spending variance Page 16 of 20 pages ©RSQ. The Review School of Oecowmtoney MAS Module 2 MCQs: MAS ~ 04, 05, 06 PRAC ce 1. The Moon Company manufactures Part 498 for use in Rs production cycle. The cost per unit for 20,000 unis of Part 498 are as follows Direct materials P6 Variable overhead Piz Direct labor 30 Fired overhead applied 16 The Sun Company has offered to sell 20,000 units of Part 498 to Moon for P 60 per unt. Moon will make | the decision to buy the part from Sun if there 1s a savings of P 25,000 for Moon. If Moon accepts Sun's offer, P 9 per ‘unit of the fixed overhead applied would totally be chminated. Furthermore, Moon has determined that the released facities could be used to save relevant costs in the manufacture of another Part 575. In order to have 8 savings of P 25,000, the amount of relevant co:ts that would be saved by using the released fackbes to manufacture Part 575 would have to be: a. P-80,000 cP125,000 b. 85,000 dP 140,000 2. Top Company has 2,000 hours available to manufacture product M and R. Pertinent data are gwen below: PreductM Product R Selling price per unit P50 PIS Vanable cost per unit Direct matenal P26 P38 Direct labor 10 18 Factory overhead 8 rr Units produced per hour 3 2 How much is the maximum contribution margin possible given the scarce resources? a. P 36,000 < P8,000 b. 32,000 d. 4,000 3. Rock Company currently sells 10,000 units of product M for P 18.00 each. Vanable costs are P 8.00 and traceable (avordable) fixed costs are P 4,000. A discount store has offered P 16,00 for 4,000 units of product M. The ‘managers believe that if they accept the special order, they will lose some sales at the regular price. Oetermine the number of units Rock could lose before the order became unprofitable a. 2,000 unts 3,200 unts b. 2.667 unts d. 5,060 unts 4. Bunny Company manufactures fast-bonding glues in its Bicol plant. The company normally produces and sells 40,000 gallons of the give each month. The glue, which 1s known as JNR-103, is used in the wood sndustry in the manufacture of plywood. The seling price of JNR-103 1s P 35 per gallon; vanable expenses are P 21 per gallon, fixed manufacturing overhead costs in the plant total P 230,000 per month, and the fixed selling costs total P 310,000 per month.Stnkes in the mills that purchase the bulk of JNR-103 glue have caused Bunny Compary’s sales to temporarty drop to only 11,000 gallons per month. Bunny Company's management estimates that the strikes will last for about two months, after whych sales of JNR-103 should return to normal. Due to the current low level Of sales, however, Bunny Company's management is thinking about dosing dowm the Bicol plant during those two ‘months the strikes are on. If Bunny Company closes down the Bicol plant, tt 1s estimated that fixed manufacturing overhead costs can be reduced to P 170,000 per month and that fixed selling costs can be reduced by 10%. Start: Up costs at the end of the shutdown period would total P 14,000. Since Bunny Company uses JIT (just-in-time) producton methods, no inventories are on hand. At wnat level of sales in (gallons) for the two-month period ‘would Bunny Company be indifferent between dosing the plant ana keeping it open? ‘a. 13,000 8590 b._ 12,000 1d. 6,000 5. Mags Company estimates that 60,000 speual zppers will be used in the manufacture of industrial bags duning the ext year. Flat Company has quoted a pnce of P 6 per zipper. Mags would prefer to purchase 5,000 units per month but Fat 1s unable to guarantee this delivery schedule. In order to ensure the availabilty of these zippers, Mags considers to purchase al 60,000 units at the start ofthe year. Assuming that Mags can invest cash at rate of 12 percent, what isthe companys opportunty cost of purchasing the 60,000 unis at the beginning of the year? a. P'19,800 < P39,600 b. 21,600 dé. P43,200 Jars Industries is @ muth-product company that currently manufactures 20,000 units of Part Q542 each month for Use in production. The facies now being used to produce Part QSA2 have feted monthly cost of P 150,000 and 2 ‘apacty to produce 84,000 units per month. If Jurs were to buy Part QSA2 from an outside supper, the faciibes ‘would De idle, but its foxed costs would continue at 40 percent of their present amount. The variable prometion Costs of Part QS42 are P11 per unit.If Jars is able to cbtain Part QS42 from an outside supplier at 2 unit purchase price of P 12.875, what 1s the monthly usage at which Jars will be indferent between purchasing and making Part 2” F s,000 ures 48,000 units b. 32,000 uns 4. 80,000 units 7. ig Company is a grocery store that is currently open only Monday through Saturday. Big Company is considering ‘opening on Sundays. The annual incremental costs of Sunday openings are P 31,200. Big's gross margin on sales 12.25% Big estimates that 75% of tts Sunday sales to customers would be made on other days # the store were ‘pot open on Sundays. What is the one-day volume of Sunday sales that would be necessary for Bi to attain the ‘Same weeldy operating as the current six-day week? a. P2400 C.F 9600. b. P3,200 a FH Page 17 of 20 pages ®RSG. The Renew School of Accoretanes MAS Module 2 MCQs: MAS ~ 04, 05, 06 8. Dairy Manufacturing has assembled the following data pertainng to two popular products. Blender Electric Mocer Direct materials 6 Pil Direct labor 4 9 Factory overhead @ P 16 per hour 16 2 Cost f purchased outside 20 38 ‘Annual demand 20,000 28,000 Past experience has shown that the fixed manufacturing overhead included in the cost per machine hour averages. P 10. Dairy has a policy of filing all sales orders, even if means purchasing units from outside suppliers. If '50,000 machine hours are available, and Dairy Manufactunng desires to follow an optimal strategy, tt should produce 25,000 electric mers, and purchase all other units as needed 'b. produce 20,000 blenders and 15,000 electric mixers, and purchase all other units as needed © produce 20,000 blenders and purchase all other units as needed 4. _ produce 28,000 electric mixers and purchase ail other units as needed 9. Scar Company has been producing two types of bervinys, Plastic and Metal, for its own use in the production of ‘main products. The data regarding these two beatings follow: Plastic Metal Machine hours required per unit 49 45 ‘Standard cost per unit Prime costs P00 9.00 Variable overhead * 300 4.00 Fixed overhead ** 450 6.25 Total Piss0 PQS + Variable manufacturing overhead ts appiied on the basis of direct labor hours. "++ Fived manufacturing overhead is applied on the basis of mache hours Scar's annual requirement for these bearings 1s 7,000 unts of Plastic and 11,000 units of Metal. Recently, Sca’s management decided to devote addtional machine hours to other product lines resutting in only 48,000 machine hours per year that can be dedicated to the proaucticn of the bearings. An outside company has offered to sell ‘Scar the annual supply of the bearings at prices of P 15.50 (Plastic) and P 17.50 (Metal). Scar wants to schedule the otherwise idle 48,000 machine hours to oreduce beanngs so that the company can minimize its costs (maximize its net benefits). Scar Company will maximize 4s net benefits by ‘a. Purchasing 7,000 units of Plastic and manufo: tung te remaining beanngs. b. Purchasing 11,000 unts of Metal and manufacturing 7,000 units of Plastic. Purchasing 6,000 unts of Plastic and manufacturing the remaining bearings. 4d. Purchasing 5,000 units of Metal and manufacturing the remaining bearings. 10. England Corporation plans to sell 200,000 unts of exotic products in October and anticipate @ growth in sales of 5 Percent per month. The target-ending inventory in units of the product 1s 80% of the next month’s estimated sales. There are 150,000 units in inventory 2s of the end of September. What would be the producton requirement in units of exotic products forthe quarter ending December 317 2. 675,925 95,720 b. 670,560 4. 656,200 Items 11 to 13 are based on the folwana information ‘The Wimby Corporation, a retailer, had soles that are alt mede on credit. Sales are biled twice monthly, on the 10° of the month for the last half of the prior month's saies, and on the 20" of the month for the frst half of the ‘current month's sales. The terms of all sales are 2/16, net 30. Based upon past experience, the collection of accounts receivable (AR) 1s as follow’ Within the discount penod 80% (On the 30 day 18% Uncollectible 2% Wimby’s average markup on its products is 20% of the sales price. All sales and purchases occur uniformly throughout the month. The sales value of shipments for May anc! forec sts forthe next four months folow: May (actual) 560,000 June 609,60 uly 700,006 August 700,000 September 400,000 Wimby purchases merchandise for resale to meet the curren month's demand and to maintain desred monthly ‘ending inventory of 25% of the next month's sales. Ail ourchases are on credt with terms of net/30. Wimby pays for 50% of a month's purchases in the month of purchase and 50% in the month following the purchase. 11, How much cash can Wimby plan to collect in Septemter from sales made mn August? ‘a. P-280,000

Two basic types of tests are performed in the lab ~ smears and blood tests. > During the past month, 2,700 smears and 900 biocd tests were performed in the tab. > Small glass plates are used in both types of tests. During the past month, the hospital purchased 16,000 plates at a cost of P 38,400. This cost is net of a 4% quantity discount. A total of 2,000 of these plates were still on hand unused at the end of the month; there were no plates on hand at the beginning of the month. > During the past month, 1,800 labor hours, costing P 18,450, were used in performing smears and biood test. ‘Variable overhead cost last month in the lab for utiles and supplies totaled P 11,700 Cottonwood Hosptal has never used standard costs. By searchng industry Herature, however, you have determined the following nationwide averages for hosptal labs > Plates: Three plates are required per lab test. These piates cost P 2.50 each and are disposed of after the test {is completed. > Labor: Each smear should require 0.3 hours to complete, and each bicod test should require 0.6 hours to ‘complete. The average cost of this lab time is P £2 per hou > Overhead: Overhead cost is based on direct labor-hours. The average hourly rate of variable overhead 1s P 6. 23. What is the materials price variance for the plates purchased last month? a. P11400U 1,600 b. P11,400F a. P1600 F 24 What the materials quantity variance for the plates use las mont? a. P7,680U P8000 1) bP 7,680F a Peco0 F 25, What i the labor rate vanance? a. P2,250U © 93,190 b. P2250F 4. P 51500 26, What i the labor efficiency variance? a. P5A00U < P4,612.50U b. P5A00F a. P461250F 227. What isthe variable overhead spending variance? 2. PSOU © P1.8cou b PSF 6 PLsonF 28. What is the variable overhead efficiency variance? 2. P2,700U © p900u b. P2,700F 4. POOF - END Page 20 of 20 pages Fe &Q