Quiz 1 - Answer Key
Quiz 1 - Answer Key
Quiz 1 - Answer Key
3. Easy Co., developed the following equation to predict certain components of its budget for
the coming period:
Costs = PHP100,000 + (PHP5 X direct labor hours)
The PHP5 would approximate:
a. Total cost
b. Direct labor rate per hour
c. Fixed cots per direct labor hour
d. The coefficient of determination
e. Variable costs per direct labor hour
4. The term “relevant range” as used in the cost accounting means the range over which:
5. An expense that is likely to contain both fixed and variable components is:
A. security guard wages
B. supplies
C. heat, light, and power
D. small tools
E. taxes on real estate
8. When the number of units manufactured increases, the most significant change in average
unit cost will be reflected as:
A. a decrease in the variable element
B. a decrease in the nonvariable element
C. an increase in the semivariable element
D. an increase in the variable element
E. an increase in the nonvariable element
14. Prime cost and conversion cost share what common element of total cost?
A. direct labor
B. commercial expense
C. variable overhead
D. fixed overhead
E. direct materials
17. Wages of the security guard for a small plant are an example of:
Fixed Factory
Indirect Labor Overhead
A. No Yes
B. No No
C. Yes Yes
D. Yes No
E. none of the above
18. Wages paid to factory machine operators of a manufacturing plant are an element of:
19. The following relationships pertain to a year’s budgeted activity for So Easy Company:
High Low
Direct labor hours 400,000 300,000
Total costs PHP154,000 PHP129,000
High Low
Cost per month PHP39,200 PHP32,000
Machine hours 24,000 15,000
Using the high-low method of analysis, the estimated variable cost per machine hour is:
a. PHP12.50
b. PHP0.80
c. PHP0.08
d. PHP1.25
e. None of the above
21. A company allocates its variable factory overhead based on direct labor hours. During the
past three months, the actual direct labor hours and the total factory overhead allocated
were as follows:
Based upon this information, the estimated variable cost per direct labor hour was:
A. PHP0.125
B. PHP12.50
C. PHP0.08
D. PHP8.00
E. none of the above
Classification of Costs. Place a check mark in the appropriate column to indicate the proper classification
of each of the following costs.
Other
Indirect Admini-
Indirect Indirect Factory Marketing strative
Item Materials Labor Costs Expenses Expenses
1. Factory heat, light,
and power......................................... X
2. Advertising......................................... X
3. Wages of stockroom clerk................... X
4. Freight out......................................... X
5. Oil for machines................................. X
6. Salary of vice president
of human relations............................. X
7. Legal expenses................................... X
8. Salary of the factory manager............. X
9. Employer payroll taxes on
controller's salary............................... X
1.
High and Low Points Method. A controller is interested in analyzing the fixed and variable costs of
indirect labor as related to direct labor hours. The following data have been accumulated:
Required: Determine the amount of the fixed portion of indirect labor expense and the variable rate for
indirect labor expense, using the high and low points method. (Round the variable rate to three decimal
places and the fixed cost to the nearest whole peso.)
4.
Method of Least Squares. The management of Rainbow Inc. would like to separate the fixed and variable
components of electricity as measured against machine hours in one of its plants. Data collected over
the most recent six months follow:
Electricity Machine
Month Cost Hours
January..................................................................................... PHP1,100 4,500
February................................................................................... 1,110 4,700
March....................................................................................... 1,050 4,100
April.......................................................................................... 1,200 5,000
May.......................................................................................... 1,060 4,000
June......................................................................................... 1,120 4,600
Required: Using the method of least squares, compute the fixed cost and the variable cost rate for
electricity expense. (Round the variable rate to two decimal places and fixed cost to the nearest whole
peso.)