SET B

MULTIPLE CHOICES: Click the circle of your chosen answer. Two (2) points each
For a manufacturing company, which of the following is a period, but not a product cost? *
a. Salary of accounts executive

b. Salary of factory supervisors

c. Rental cost of factory building

d. Depreciation on factory machineries

Budgeted costs that are expected to be incurred in a future period. *

a. Relevant costs

b. Opportunity costs

c. Incremental costs

d. Future costs

Planning can be viewed as the process by which management focuses on influences that can
impact a company. The following are three categories that can influences business planning.
Which is not? *
a. Management

b. External

c. Internal

d. Business plan

Used to represent the expected/planned cost for a given period. *

a. Budgeted costs

b. Normal costs

c. Standard costs

d. Actual costs

The third element of manufacturing cost, includes all costs of manufacturing except direct
materials and direct labor. *
a. Direct Material Cost

b. Manufacturing Overhead

c. Direct Labor Cost

d. Nonmanufacturing Costs
The following are reasons why business planning is important to an entrepreneurial firm,
except *
a. Smaller businesses can absorb big mistakes with readily available resources.

b. Planning helps smaller businesses to identify and allocate scare resources to move the company in the
desired direction.

c. The flexibility common to many small firms enables easier implementation of plans.

d. Planning helps small businesses to identify these potential hazards earlier and to prepare a contingency
plan.

_____ enables a quick appraisal of the proposal by the interested parties who are reading the
document. *
a. Executive Summary

b. Operations Plan

c. Marketing Plan

d. Business Profile

In variable costing system, product cost includes *

a. Direct materials, direct labor, variable overhead

b. Direct materials, direct labor, fixed overhead

c. Direct labor, variable overhead, fixed overhead

d. Direct materials, variable overhead, fixed overhead

Which of the following statements is true for a firm that uses variable (direct costing)? *
a. The cost of a unit of product changes because of changes in the number of units manufactured.

b. Profits fluctuate with sales.

c. An idle facility variation is calculated

d. Product costs include “direct” (variable) administrative costs

Which of the following in not a segments of a business plan? *

a. Financial plan

b. Strategic plan

c. Marketing plan

d. Description of the company

Marketing plan in a business plan includes the following, except *

a. Credit and collection policies
b. Distribution

c. The physical facility

d. Products / services

The specific aspirations of a company, the major goals it will try to reach. *
a. Vision Statement

b. Company Description

c. Mission Statement

d. Executive Summary

Using a _____ system, accountants accumulate cost for each department for a time period
and allocate them among all the products manufactured during the period. *
a. Process costing

b. Job order costing

c. Operation costing

d. Absorption costing

_____ are estimates of what unit costs should be, based on past costs and engineering
estimates. *
a. Standard costs

b. Normal costs

c. Historical costs

d. Opportunity costs

Which of the following in not a manufacturing overhead? *

a. Direct materials

b. Factory supervisor

c. Indirect materials

d. Factory rental

A description that provides an outline of a business *

a. Executive Summary

b. Company Description

c. Contingency Plan

d. Mission Statement
A(an) ____ system represents a hybrid method, having some of the characteristics of both
process and job order costing. *
a. Process costing

b. Job order costing

c. Operation costing

d. Absorption costing

____ include all the costs that are involved in acquiring or making a product. *
a. Product cost

b. Cost

c. Period cost

d. Expense

The cost of materials still on hand in either account at period end will appear as an asset in
their respective accounts on the _____. *
a. Income statement

b. Statement of financial position

c. Statement of owner’s equity

d. Statement of cash flows

An analysis of the business advantage over its competitors *

a. Growth Plan

b. Competitive Analysis

c. Contingency Plan

d. Market Analysis

The primary difference between variable and absorption costing is the inclusion of *
a. Fixed selling expenses in product costs.

b. Of variable factory overhead in period costs

c. Variable selling expenses in product costs

d. Fixed factory overhead in product costs

Not a component belong to a business plan *

a. Legal considerations

b. Financial plan
c. Sustainability plan

d. Introduction

The Context of the Business in a business plan. This statement provides a perspective in view
of the trend, provide a statement (in pesos) of the future growth potential of the industry in
which the company is competing. *
a. Economic trend

b. Industry outlook and trends

c. Growth potential

d. New product development

Financial plan in a business plan includes the following, except *

a. Benefits program

b. Economic and business assumption

c. Working capital requirement

d. Equipment and facility financing

Why is being an entrepreneur risky? *

a. Because there are no more creative enterprises to create a business out of.

b. Because entrepreneurs always fail.

c. Because you often risk your own personal wealth.

d. Because people don’t trust entrepreneurs.

A cleaner who work in a factory, may best be classified as ____. *

a. Indirect labor

b. Direct labor

c. Indirect expenses

d. Direct expenses

Which of the following is not true of variable costing? *

a. Profits may increase though sales decrease

b. Profits fluctuate with sales

c. The cost of the product consists of all variable production costs

d. The income statement under variable costing does not include overhead volume variance.

A ____ company has only one class of inventory called merchandise inventory. *
a. Manufacturing

b. Merchandising

c. Service

d. Not for profit

Costs that change directly in proportion to changes in activity (volume). *

a. Semivariable costs

b. Fixed costs

c. Variable cost

d. Product cost

Costs that add value to the product. These costs result from activities that are necessary to
satisfy the requirements of the consumer. *
a. Value-added costs

b. Marginal costs

c. Future costs

d. Sunk cost

Which of the following must be known about production process in order to institute a direct
costing system? *
a. The variable and fixed components of all costs related to production.

b. The controllable and noncontrollable components of all costs related to production.

c. Standard production rates and times for an elements of production.

d. Contribution margin and breakeven point for all goods in production.

_____ are costs collected into meaningful groups. *

a. Cost Pools

b. Cost Objects

c. Cost Drivers

d. Cost

It details how the proposed business will sell its product to the target consumer. *
a. Marketing Plan

b. Financial Plan

c. Organizational Plan
d. Introduction

All raw material costs that become an integral part of the finished product and that can be
conveniently and economically assigned to specific units manufactured. *
a. Indirect Cost

b. Direct Cost

c. Direct Materials Cost

d. Prime Cost

A business plan would normally be updated: *

a. Every so often

b. A month after the business starts

c. Once a business adjusts its aims/objectives

d. Never – it stays the same in its original form

The _____ is the ratio of total estimated manufacturing overhead costs for the year to the
expected manufacturing activity for the year, measured according to some cost driver, such as
direct labor costs. *
a. Fixed overhead ratio

b. Predetermined overhead rate

c. Variable overhead ratio

d. Manufacturing overhead ratio

This portion of the business plan must be designed to capture and hold the interest of the
party to whom the plan is being presented. *
a. Executive Summary

b. Cover Sheet

c. Profile of the Business

d. Table of Contents

_____ is the process of assigning costs to cost pools or from cost pools cost objects. *
a. Allocation bases

b. Cost classification

c. Cost assignment

d. Cost allocation

The cost of all raw material and production supplies that have been purchased but not used at
the end of the period. *
a. Raw Materials Inventory

b. Finished goods inventory

c. Merchandise inventory

d. Work in process inventory

Direct materials and direct labor are often to as _____. *

a. Conversion costs

b. Prime costs

c. Manufacturing costs

d. Controllable cost

MULTIPLE CHOICES : Computational. Click the circle of your chosen answer. No solutions
needed. Four (4) points each.
Pinugu Corporation is preparing its factory overhead cost budget for the third quarter of 200B.
The management plans to produce 200,000 units for the said quarter. Past experience has
shown that the company’s product is produced at the rate of 4 units per hour. Variable rates
per direct labor hour are as follows: Indirect materials and supplies P0.76 Power 1.36 Repairs
and maintenance 2.80 Other variable overhead 0.96 Total P5.88Total fixed overhead cost is
budgeted at P147,200. For product costing purposes, a fixed factory overhead rate of P3.20
per direct labor hour has been established.The total factory overhead cost per unit of product
is *

a. P 1.47
b. P11.35

c. P36.32

d. P 2.27

Walden Company has a process cost system. All materials are introduced at the beginning of
the process in Department One. The following information is available for the month of
January 2011: Work-in-process, 1/1/2011 (40% complete as to conversion costs) 500 Started
in January 2,000 Transferred to Department Two during January 2,100 Work-in-process,
1/31/2011 400What are the equivalent units of production for the month of January 2011? *

a. FIFO M - 2,500 C - 2,200 Average M - 2,000 C - 2,000

b. FIFO M - 2,500 C - 1,900 Average M - 2,500 C - 1,900

c. FIFO M - 2,000 C - 2,200 Average M - 2,000 C - 2,200

d. FIFO M - 2,000 C - 2,000 Average M - 2,500 C - 2,200

The Avenida Company has the following historical pattern on its credit sales. 70 percent
collected in month of sale 15 percent collected in the first month after sale 10 percent
collected in the second month after sales 4 percent collected in the third month after sale 2
percent uncollectibleThe sales on open account have been budgeted for the last six months of
2010 are shown below: July P 60,000 August 70,000 September 80,000 October 90,000
November 100,000 December 85,000The estimated total cash collections during the fourth
calendar quarter from sales made on open account during the fourth calendar quarter would
be *
a. P172,500

b. P230,000

c. P265,400

d. P251,400

Banana Corporation has a job order cost system. The following debits (credits) appeared in
the ledger account work-in-process for the month of March, 2008: March 1, Balance P12,000
31, Direct Materials 40,000 31, Direct Labor 30,000 31, Factory Overhead 27,000 31, Finished
Goods (100,000)Banana applied overhead to production at a predetermined rate at 90%
based on the direct labor cost. Job No. 232, the only job still in process at the end of March
2008, has been charged with factory overhead of P2,250. What was the amount of direct
materials charged to Job No. 232? *
a. P2,250

b. P2,500

c. P4,250

d. P9,000

Tasyo Company has budgeted sales of 90,000 units in January; 120,000 units in February;
and 180,000 in March. The company has 20,000 units of finished goods and 35,000 pieces of
materials on hand on January 1. Each unit of product requires 5 pieces of materials. The
desired inventory of finished goods and materials at the end of each month is as follows:
Finished goods - 20% of next month’s sales Materials - 25% of next month’s production
needsHow many pieces of materials should the company plan to purchase in January? *

a. 600,000

b. 567,000

c. 468,000
d. 552,500

Top of Form

Set A - MidT Management Accounting Part

1
Midterm Examination

Chapter 7 – Business Planning

Chapter 8 – Basic Cost Management Concepts
Chapter 9 – System Design: Job Order Costing and Process Costing

Textbook: MANAGEMENT ACCOUNTING 2017 Ed. By Ma. Elenita Balatbat Cabrera, BBA, MBA, CPA, CMA

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Complete Name: Surname, Given Name, Middle Initial *

Your answer

Day / Time: *
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Wednesday 10:30 am – 01:30 pm

Wednesday 02:00 pm – 05:00 pm

Section Code: *
PCBET – 01 – 602A

PCBET – 01 – 601E

PCBET – 01 – 601A

MULTIPLE CHOICES: Click the circle of your chosen answer. Two (2) points each
A predetermined cost estimate that should be attained, usually expressed in terms of costs
per unit. *
a. Budgeted costs

b. Normal costs
c. Standard costs

d. Actual costs

They are frequently classified as direct materials costs, direct labor costs, factory overhead
costs. *
a. Manufacturing costs

b. Product costs

c. Absorption costs

d. Direct costs

As materials are used, their cost is removed from the Raw Materials account and placed in the
_____ account. *
a. Finished Goods

b. Purchases

c. Accounts Payable

d. Work in Process

The following are the desires of the owner and management that influence business planning,
except *
a. Desire to raise the quality of products and services

b. Desire to increase the profitability of competitors

c. Desire to diversify or to shift dependence from a product with uncertain demand

d. Desire to increase profitability of money invested

Variable costing can be used for *

a. External reporting

b. Internal reporting

c. Either external reporting or internal reporting

d. Neither external reporting nor internal reporting

Description of the company in a business plan includes the following, except *

a. Mission statement

b. Pricing

c. Background /history of the company

d. Capital and ownership structure

Direct labor and overhead cost are often called _____ since they are the costs of “converting
or transforming” raw material into finished products. *
a. Conversion costs

b. Prime costs

c. Manufacturing costs

d. Controllable cost

Which of the following is an argument against the use of direct (variable) costing? *
a. Absorption costing overstates the balance sheet value of inventories

b. Variable factory overhead is a period cost

c. Fixed factory overhead is difficult to allocate property

d. Fixed factory overhead is necessary for the production of a product.

It is an outlay or expenditure of money to acquire goods and services that assist in performing
operations. *
a. Cost Pools

b. Cost Objects

c. Cost Drivers

d. Cost

The process by which management will direct the company’s growth toward objectives; the
budgeting process is the link between today’s operational capabilities and the objectives
derived from _____. *
a. Tactical planning

b. Strategic planning

c. Business planning

d. Profit planning

Cost for which the size or the time of incurrence is a matter of choice. *
a. Committed cost

b. Discretionary cost

c. Value-added costs

d. Historical costs

The Context of the Business in a business plan should include the following, except *
a. Industry outlook and trends

b. Growth potential

c. Economic trends

d. Product
_____ is appropriate for companies making different components for inventory. *
a. Process costing

b. Job order costing

c. Operation costing

d. Absorption costing

_____ are actual cost incurred in the past. *

a. Standard costs

b. Normal costs

c. Historical costs

d. Opportunity costs

Looks at likely risks to the business *

a. Contingency Plan

b. Management team Plan

c. Marketing Plan

d. Industry Overview

When absorption costing is used, all of the following costs are considered product costs
except *
a. Direct labor

b. Variable overhead

c. Variable selling and administrative costs

d. Fixed overhead

Examples of ____ include selling and administrative expenses such as sales commissions,
office rent, and transportation expenses. *
a. Controllable cost

b. Period costs

c. Variable cost

d. Actual costs

_____ should include scrap, waste, and normally anticipated defective units that occur in the
ordinary course of the production process. *
a. Manufacturing overhead

b. Indirect Materials Cost

c. Nonmanufacturing costs
d. Materials cost

In a planning engagement, a consultant can render assistance where a company may have a
planning capability, the chances are the resources will be limited. Planning staffs should be
small should not be charged with preparing the plans. The consultant may *
a. Evaluate the methods for long-range planning

b. Suggest techniques to be used in the planning process

c. Develop the methods of planning

d. Instruct members of management about planning

A brief account of the key points contained in a business plan *

a. Executive Summary

b. Company Description

c. Mission Statement

d. Vision Statement

Examples of these costs are social security taxes, materials handling, personnel services,
heat, light, and power. These cost elements must be divided into their proper elements. *
a. Semivariable costs

b. Fixed costs

c. Variable cost

d. Absorption cost

Over- or underapplied costs are usually subtracted from or added to the ____ on the income
statement. *
a. Cost of Goods Sold

b. Manufacturing Cost

c. Product Cost

d. Finished Goods

Operating history is most likely to be found in *

a. Executive Summary

b. Operations Plan

c. Marketing Plan

d. Business Profile

A cleaner who work in a factory, may best be classified as ____. *

a. Indirect labor
b. Direct labor

c. Indirect expenses

d. Direct expenses

What do you call a written document that outlines a business’s objectives and the strategy and
tactics that it will use to achieve those objectives over anywhere from a three to five year
period of time. *
a. A business plan

b. A medium term plan

c. A strategic plan

d. An SBA certified business plan

In planning engagement, a consultant can render assistance in a number of the following

different areas, except *
a. Imposed techniques to be used in production process

b. Develop the methods of planning

c. Evaluate the methods for long-range planning

d. Play the “devil’s advocate”

Conversion costs do not include *

a. Direct labor

b. Factory utilities

c. Direct materials

d. Property taxes on factory building

It shows and defines the hierarchy of the different positions in the organization. *
a. Roles and Responsibilities

b. Form of Business Organization

c. Organizational Structure

d. Salary Requirements

This index will not only will not only help the prospective lender to understand the road map
the proponent is placing before him, it will also make a statement about the proponent. *
a. Executive Summary

b. Cover Sheet

c. Profile of the Business

d. Table of Contents
A(an) ____ is defined as the cost incurred when an asset is used up on sold for the purpose of
generating revenue. *
a. Product cost

b. Cost

c. Period cost

d. Expense

A plan presenting financial forecasts for the business *

a. Loan Proposal

b. Financial Plan

c. Business Loan Plan

d. Investor Plan

Research of the potential customer’s profile *

a. Market analysis

b. Balance sheet

c. Mission statement

d. Legal considerations

Nonroutine quality assurance samples are taken due to manufacturing problems and cost of
marketing sample should be classified as *
a. Period cost

b. Variable cost

c. Material cost

d. Direct cost

A _____ is any factor that has the effect of changing the level of total cost. *
a. Cost Pools

b. Cost Objects

c. Cost Drivers

d. Cost

Costs that add value to the product. These costs result from activities that are necessary to
satisfy the requirements of the consumer. *
a. Value-added costs

b. Manufacturing costs

c. Product costs
d. Historical cost

A basic tenet of direct costing is that period costs should be currently expensed. What is the
rationale behind this procedure? *
a. Period costs are uncontrollable and should not be charged to a specific product.

b. Period costs are generally immaterial in amount and the cost of assigning the amounts to
specific products would outweigh the benefits.

c. Allocation of period costs is arbitrary at best and could lead to erroneous decisions by
management.

d. Because period costs will occur whether or not production is made, it is improper to allocate
these costs to production and defer the current costs of doing business.

Personnel plan in a business plan includes the following, except *

a. Benefits program

b. Customer service policies

c. Management organization

d. Department organization

_____ best meets the needs of a batch of manufacturer whose products have variations of
single design and require a varying sequence of standardized operations. *
a. Process costing

b. Job order costing

c. Operation costing

d. Absorption costing

As the activity level rises and falls, a particular cost may rises and falls as well – or it may
remain constant. *
a. Cost behavior

b. Cost driver

c. Cost pools

d. Cost allocation

Unabsorbed fixed overhead costs in an absorption costing system are *

a. Fixed factory costs not allocated to units produced.

b. Variable overhead costs not allocated to units produced

c. Excess variable overhead costs

d. Costs that should be controlled

MULTIPLE CHOICES : Computational. Click the circle of your chosen answer. No solutions
needed. Four (4) points each.
Alona Company expects its June sales to be P300,000, which is 25% higher than its May
sales. Purchases were P200,000 in May and are expected to be P240,000 in June. All sales
are on credit and are collected as follows: 80% in the month of the sale and 20% in the
following month. All payments in the month of sales are given 2% discount. Sixty percent of
purchases are paid in the month of purchase to take advantage of purchase term 1/10, n/40.
The remaining amount is paid in the following month. The beginning cash balance on June 1
is P20,000. The ending cash balance on June 30 would be: *

a. P64,160

b. P73,000

c. P80,640

d. P85,440

Pinugu Corporation is preparing its factory overhead cost budget for the third quarter of 200B.
The management plans to produce 200,000 units for the said quarter. Past experience has
shown that the company’s product is produced at the rate of 4 units per hour. Variable rates
per direct labor hour are as follows: Indirect materials and supplies P0.76 Power 1.36 Repairs
and maintenance 2.80 Other variable overhead 0.96 Total P5.88Total fixed overhead cost is
budgeted at P147,200. For product costing purposes, a fixed factory overhead rate of P3.20
per direct labor hour has been established.How much is the total budgeted factory overhead
for the quarter? *
a. P417,680

b. P454,000

c. P441,200

d. P294,000

Excellent Writer produces and sell boxes of signing pens for P1,000 per box. Direct Materials
are P400 per box and direct manufacturing labor averages P75 per box. Variable overhead is
P25 per box and fixed overhead is P12,500,000 per year. Administrative expenses all fixed
run P4,500,000 per year, with sales commissions of P100 per box. Production is expected to
be 100,000 boxes, which is met every year. For the year just ended, 75,000 boxes were sold.
What is the inventoriable cost per box using variable costing? *

a. P770

b. P500
c. P475

d. P625

Precise, Inc. manufactures specialized precision electronics kits. In late March, Job orders
#0311 and #0322 were started. Estimated materials cost were P90,000 for both orders (60%
for #0311) while direct labor hours were estimated at 700 for #0311 and 400 for #0322. Labor
rate is P18 per hour while variable overhead rate is P10 per hour.By the end of April, 755 of
the required materials have been issued to production in the amount of P90,000 and both job
orders have been 50% converted with 360 hours charged to #0311 and 180 hours charged to
#0322 at the hourly rates given.The total cost charged to Job Order #0311 was: *

a. P45,800

b. P52,350

c. P64,080

d. P67,600

Bart Co. adds materials at the end of the process in Department M. The following information
pertain to Department M’s work-in-process during April: Units Work-in-process, April 1 (60%
complete as to conversion cost) 3,000 Started in April 25,000 Completed 20,000 Work-in-
process, April 30 (75% complete as to conversion cost) 8,000What are the equivalent units of
production for the month of April? *
a. FIFO M - 28,000 C - 28,000 Average M - 28,000 C - 28,000

b. FIFO M - 20,000 C - 20,000 Average M - 26,000 C - 26,000

c. FIFO M - 20,000 C - 24,200 Average M - 20,000 C 26,000

d. FIFO M - 24,200 C - 20,000 Average M - 26,000 C - 20,000