Ateneo de Zamboanga University

School of Management and Accountancy

Accountancy Department
COSMAN 1
1st Long Quiz

Name: _________________________________________________ Date: ___________________

Section: ______________________

I. Multiple Choice (Theory)

Instructions: Choose the letter of your answer and write it on the table provided below. (1 point each)

1. C 6. C
2. A 7. D
3. C 8. A
4. C 9. D
5. D 10. B

1. The day-to-day work of management teams will typically comprise all of the following activities except:
a. Decision-making
b. Planning
c. Cost minimizing
d. Directing operational activities
e. Controlling

2. Which of the following descriptors are most closely associated with financial accounting?
I. Is heavily involved with the recordkeeping and reporting of assets, liabilities, and stockholders’ equity.
II. Much of the field is based on costs and benefits.
III. Is involved almost exclusively with past transactions and events.
IV. Is heavily regulated.

a. I,III, and IV c. II, III and IV

b. I,II, and III d. I, II, and IV

3. Which of the following statements is/are true?

Statement 1: Managerial accounting is most concerned with addressing the needs of individual departments of the
firm.
Statement 2: Cost accounting serves as a bridge between financial and managerial accounting.

a. I only c. Both
b. II only d. Neither

4. Within a relevant range, the amount of variable cost per unit:

a. moves in the same direction as fixed cost per unit
b. differs at each production level
c. remains constant at each production level
d. increases as production increases
e. decreases as production increases

5. The professional certification developed by the IMA indicating professional competence in the management
accounting field is the:
a. CIA c. U.S. CPA
b. CPA d. CMA

6. Management accountants must satisfy their users; therefore, they should all do the following, except
a. Provide them with high quality information
b. Provide specialized information that specific managers can use
c. Focus on preparing information for external financial reporting
d. Continuously strive to provide better quality information faster and at a lower cost
 7. Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the
following costs would be represented by a line that is parallel to the horizontal axis?
a. Total direct materials costs
b. A consultant paid P75 per hour with a maximum fee of P1,200
c. Employees who are paid P10 per hour and guaranteed a minimum weekly wage of P200
d. Rent on exhibit space at a convention

8. The nursing station on the fourth floor of Central Hospital is responsible for the care of patients who have undergone
orthopedic surgery. The costs of drugs administered by the nursing station to patients would be classified as:
a. Direct costs of the patients
b. indirect costs of the patients.
c. overhead costs of the nursing station.
d. period costs of the hospital.

9. A manufacturing company has fixed costs of $100,000 per month and variable costs of $50 per unit produced. The
company is currently operating at a level of 2,000 units per month. If the company increases production to 4,000
units per month, which of the following statements is true regarding the total cost and the cost per unit?
a. The total cost will increase by 50%, and the cost per unit will remain the same. 100k / 2k units = 50
b. The total cost will increase by 100%, and the cost per unit will decrease.
c. The total cost will increase by 75%, and the cost per unit will decrease by 25%.
d. The total cost will increase by 50%, and the cost per unit will decrease.

10. A company's total fixed costs are $250,000, and its variable cost per unit is $15. The company operates within a
relevant range of 5,000 to 20,000 units. The selling price per unit is $40. If the company plans to produce and sell
25,000 units next year, which of the following statements is correct?
a. The total fixed costs will increase proportionally, and the variable cost per unit will decrease.
b. The total cost behavior is no longer predictable because the activity level exceeds the relevant range.
c. The fixed cost per unit will decrease, and the variable cost per unit will remain constant.
d. The company will incur a loss because the production level is beyond the relevant range.

II. Identification

Instructions: Identify each cost as either product cost or a period cost. If it is a product cost, indicate whether each is a
direct materials cost, a direct labor cost, or a factory overhead cost. If it is a period cost, indicate whether each is a selling
expense or an administrative expense. Indicate by putting an “X” mark on the column of choice. See sample below: (1
point each)

Product Cost Period Cost

Direct Direct Labor Factory Selling Expense Administrative
Materials Cost Cost Overhead Cost Expense
a. Leather to make
X
baseball gloves

The following is a list of costs that were incurred in the production of books:

Product Cost Period Cost

DM DL FOH Selling Administrative
Cost Cost Cost Expense Expense
a. Insurance on the factory building and equipment X
b. Salary of the vice president of finance X
c. Hourly wages of printing press operators during production X
d. Straight-line depreciation on the printing presses used to X
manufacture the text
e. Electricity used to run the presses during the printing of the X
text
f. Sales commissions paid to textbook representatives for each X
text sold
g. Paper on which the text is printed X
h. Book covers used to bind the pages X
i. Straight-line depreciation on an office building X
j. Salaries of staff used to develop artwork for the text X
III. Problem Solving
Instructions: Read and solve each problem carefully. Write your final answer on the table provided below. Solutions must
be shown on a separate sheet of paper.

Problem 1 Problem 2 Problem 3 Problem 4

a. P80,000 a. P23.33/unit a. P2,360 a. Y = 562.50 + 6.25x

b. P80,000 b. Y = 26,010 + 23.33x b. Y = 2,360 + 251x b. P4,312.50

c. P8/unit c. P89,001 c. P17,169

Problem 1: Fluffy Manufacturing Company produces tissues. The following costs were incurred during the month of July:

Direct materials used……………………… P50,000

Direct labor…………………………………… 30,000
Factory rent………………………………….. 15,000
Factory utilities……………………………… 5,000
Depreciation on factory equipment…… 10,000
Indirect materials…………………………… 8,000
Indirect labor…………………………………. 12,000

Answer the following questions:

a. How much is the prime cost for the month of July? (5 points)
b. How much is the conversion cost for the company for the same period? (5 points)
c. If the company produced 10,000 units in July, how much is the Prime Cost per unit? (5 points)

Problem 2: Sterilized Manufacturing Company produces and sells a single product. The company's total production costs
have both fixed and variable components. Over the last six months, the company has produced different levels of output,
and the total costs associated with each level are as follows:
Month Units Produced Total Costs
January 1,200 P54,000
February 1,800 P72,000
March 2,400 P84,000
April 3,000 P96,000
May 2,100 P78,000
June 1,500 P63,000

Answer the following questions:

a. Using high-low method, what is the variable cost per unit? (5 points)
b. Following letter a requirement, formulate the cost function for Sterilized Manufacturing Company. (5 points)
c. If the company expects to produce 2,700 units in July, estimate the total cost using the cost equation derived from the
high-low method. (5 points)

Problem 3: Action Trainers provides a personalized training program that is popular with many companies. The number of
programs offered over the last five months, and the costs of offering these programs are as follows:
Month Programs Offered Costs
Jan 55 P15,400
Feb 45 14,050
March 60 18,000
April 50 14,700
May 90 24,000

Answer the following questions:

a. Under the least square regressions method, how much is the fixed cost of the maintenance? (5 points)
b. Compute the cost formula using the least square regressions method (5 points).
c. Using the cost formula computed from letter b, compute the total cost for May if the number of programs offered for
May is 59 (5 points).
Problem 4: The manager of Pier Manufacturing Company reported the following costs for its maintenance cost and plotted
it into a scatter graph.

Hours Costs
150 P1,500
250 2,500
350 2,750
450 3,450
550 3,750

Answer the following questions: (Round off to two decimal places)

a. Assuming the manager wants to select points 1 and 3 for its basis, determine the cost equation. (5 points)
b. The budgeted hours for the next period is estimated to be at 600 hours. Using the cost equation from letter a, how much
is the estimated total cost for the next period? (5 points)

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