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Group Quiz 2

The document contains a group quiz focused on strategic cost management, featuring multiple-choice questions and answers related to target costing, contribution margins, and budgeting concepts. It includes calculations for target costs, variable costs, and other financial metrics relevant to cost management. Each question is followed by the correct answer, providing a comprehensive overview of key principles in strategic cost management.

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Jenalyn Guzman
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3 views57 pages

Group Quiz 2

The document contains a group quiz focused on strategic cost management, featuring multiple-choice questions and answers related to target costing, contribution margins, and budgeting concepts. It includes calculations for target costs, variable costs, and other financial metrics relevant to cost management. Each question is followed by the correct answer, providing a comprehensive overview of key principles in strategic cost management.

Uploaded by

Jenalyn Guzman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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GROUP QUIZ -2 STRATEGIC COST

MANAGEMENT
QUESTION 1
BELOW ARE THE STEPS IN IMPLEMENTING A
TARGET COST APPROACH EXCEPT
a. Determine the desired profit
b. Use kaizen costing and operational control
to further reduce cost
c. Determine the selling price
d. Calculate the target cost at market price
less desired profit
ANSWER IS - C
Determine the selling price
QUESTION 2
Moto Breed manufactures a wide variety of parts for
recreational boating, including part A and part B
component for high-powered outboard boat engines. The
component is purchased by original equipment
manufactures such as mercury and honda, for use in large,
more powerful outboards. The units sells for P650 and sales
volume average 25,000 units per year.
Recently, Moto Breed major competitor reduced the price
of its equivalent part to P500. the market is very
competitive, and Moto Breed realizes it must meet the new
price of lose significant market share. The controller’s data
shows Actual Cost is P11,500,000 and production of 25,000
units. Cash on hand is 250,000. Compute the Target Cost
ANSWER IS - A
310
QUESTION 3
When a firm determines the desired cost for a
product or service, given a competitive market
price, in order to earn a desired profit, the firm
is exercising
a. Target costing
b. Life cycle costing
c. Variable costing
d. Absorption costing
ANSWER IS - A
Target costing
QUESTION 4
Which of the following is not a critical success
factor at the design stage?
a. Improved ease-of-manufacture
b. Reduce time-to-market
c. Reduced expected service costs
d. Enhanced quality
ANSWER IS - D
Enhanced quality
QUESTION 5
Dote & Co has two service areas, Audit and Tax services.
During last year, the contribution margin in tax services was
P75,000 or 40% of Professional fees. The segment margin in
Audit services was P50,000 or 10% of fees. The traceable
fixed expenses are P40,000 in Audit and P30,000 in Tax. The
company ROS is 5%. Total Asset amounting to P250,000,
accounts payable 23,500, accounts receivable of 50,000 and
office supplies expense of 5,500
Compute the Variable Cost of Tax Services
a. 115,200 c. 410,000
b. 112,500 d. 522,000
ANSWER IS - B
112,500
QUESTION 6
Dote & Co has two service areas, Audit and Tax services. During
last year, the contribution margin in tax services was P75,000 or
40% of Professional fees. The segment margin in Audit services
was P50,000 or 10% of fees. The traceable fixed expenses are
P40,000 in Audit and P30,000 in Tax. The company ROS is 5%.
Total Asset amounting to P250,000, accounts payable 23,500,
accounts receivable of 50,000 and office supplies expense of
5,500
What is the contribution margin ratio of Audit services
a. 10%
b. 24%
c. 40%
d. 18%
ANSWER IS - D
18%
QUESTION 7
Dote & Co has two service areas, Audit and Tax services.
During last year, the contribution margin in tax services
was P75,000 or 40% of Professional fees. The segment
margin in Audit services was P50,000 or 10% of fees. The
traceable fixed expenses are P40,000 in Audit and
P30,000 in Tax. The company ROS is 5%. Total Asset
amounting to P250,000, accounts payable 23,500,
accounts receivable of 50,000 and office supplies expense
of 5,500
Compute the Beginning Partner’s Equity
a. 226,500 c. 192,125
ANSWER IS - C
192,125
QUESTION 8
The relevance of a particular cost to a decision
is determined by the
a. size of the cost
b. riskiness of the decision
c. potential effect(s) on the decision
d. accuracy and verifiability of the cost
(cma)
ANSWER IS - C
potential effect(s) on the decision
QUESTION 9
Which of the following is not included in the
four stages of the product life cycle
a. Growth stage
b. Maturity Stage
c. Production Stage
d. Decline Stage
ANSWER IS - C
Production Stage
QUESTION 10
Is the practice of accounting to which the
accountant develops and uses cost
management information
a. Strategy
b. Cost management
c. Strategic cost management
d. Business management
ANSWER IS - B
Cost management
QUESTION 11
________ includes strategic, tactical and
operating aspects
a. Controlling
b. Communication
c. Planning
d. Evaluating
ANSWER IS - C
Planning
QUESTION 12
The competitive strategy in which the firm
succeeds by developing and maintaining a
unique value for the product, as perceived by
the customers is termed
a. Price strategy
b. Cost advantage
c. Differentiation
d. Cost leadership
ANSWER IS - C
Differentiation
QUESTION 13
The basic difference between a master budget and a flexible budget
is
a. Flexible budget considers only variable costs but a master
budget considers all costs
b. Flexible budget allows management latitude in meeting goals
whereas a master budget is based on a fixed standard
c. Master budget is based on one specific level of production and
a flexible budget can be prepared for any production level within
a relevant range
d. Master budget is for an entire production facility but a flexible
budget is applicable to a single department only
ANSWER IS - C
Master budget is based on one specific level of production and a
flexible budget can be prepared for any production level within a
relevant range
QUESTION 14
David Corporation expects the following transactions in 20x5. Their first year of operations:
Sales (90% collectible in 20x5) P 1,500,000
Bad debt write-offs 60,000
Disbursement of costs and expenses 1,200,000
Disbursement for income taxes 90,000
Purchases of fixed assets 400,000
Proceeds from issuance of ordinary shares 580,000
Proceeds from short-term borrowings 100,000
Payments on short-term borrowings 50,000
Depreciation on fixed assets 80,000

What is the cash balance at December 31, 20x5?


a. P150,000 c. P 210,000
ANSWER IS - C
210,000
QUESTION 15
Examples of the quality cost of prevention
include all of the following except
a. Tuition for external training
b. Additional tolerance controls for machinery
c. Depreciation of a training room
d. An annual award for lowest rework rate.
ANSWER IS - D
An annual award for lowest rework rate
QUESTION 16
Which of the following represents valued-
added time in the manufacturing cycle?
a. Inspection time
b. Process time
c. Queue time
d. Move time
ANSWER IS - B
Process time
QUESTION 17
XYZ Mfg Corp has the following information
Moving time 8 days
Inspection time 2 days
Processing time 10 days
Storage time 30 days
What is the total amount of value-added time?
a. 10 days c. 30 days
b. 50 days d. 40 days
ANSWER IS - A
10 days
QUESTION 18
Which of the following statements is correct?
a. The best-designed strategies are valuable whether or not
they are effectively implemented
b. To take advantage of changing market opportunities, the
annual budget should be strictly enforced
c. Linking rewards to performance is a major deterrent to good
management
d. An important strategic decision is making the correct
investments in productive assets.
ANSWER IS - D
An important strategic decision is making the correct investments in
productive assets.
QUESTION 19
Leis Retail Company has two Stores, M and N.
Store N had sales of P180,000 during March, a
segment margin of 30% and traceable fixed
expenses of P26,000. The company as a
whole had a contribution margin ratio of 25%
and P120,000 in the total contribution margin.
Based on this information, total variable
expenses in Store M for the month must have
been
a. 140,000 c. 260,000
ANSWER IS - C
260,000
QUESTION 20
Denner Company has two divisions, A and B, that
reported the following results for October
Division Division
A B
Sales 90,000 150,000
Variable expenses as a percentage 70% 60%
of sales
Segment margin 2,000 23,000
If common fixed expenses were 31,000, total fixed
expenses must have been:
a. 31,000 c. 93,000
b. 62,000 d. 52,000
ANSWER IS - C
93,000
QUESTION 21
Johnson Company operates two plants, A and
B. Johnson Company reported for the year
ended a contribution margin of 50,000 for
Plant A. Plant B had sales of 200,000 and a
contribution margin of 30%. Net income for
the company was P20,000 and traceable fixed
costs for the two plants totaled P50,000.
Johnson Company’s common fixed costs for
last year were:
a. 50,000 c. 40,000
ANSWER IS - C
. 40,000
QUESTION 22
Hatch Company has two divisions, O and E.
During the year just ended, Division O had a
segment margin of 9,000 and variable costs
equal to 70% of sales. Traceable fixed costs
for Division E were P19,000. Hatch Company
as a whole had a contribution margin of 40%
a segment margin of P25,000 and sales of
P200,000. Given this data, the sales for
Division E for last year were:
a. P50,000 c. P87,500
ANSWER IS - A
P50,000
QUESTION 23
Net operating income is defined as
a. Sales minus variable expenses
b. Sales minus variable expenses and
traceable fixed expenses
c. Contribution margin minus traceable and
common fixed expenses
d. Net income plus interest and taxes
ANSWER IS - D
Net income plus interest and taxes
QUESTION 24
Which of the following is not included in the
advantages of Decentralization
a. Leads to gains from quicker decision making
b. Aids managements development and
learning
c. Cost to gather information is increased
d. Better and faster performance evaluation
ANSWER IS - C
Cost to gather information is increased
QUESTION 25
This is the most profitable stage, as the
production volume increasing the costs of
producing and marketing decline
a. Growth
b. Maturity
c. Decline
d. Introduction
ANSWER IS - B
Maturity
QUESTION 26
A good example of a common cost which
normally could not be assigned to products on a
segmented income statement except on an
arbitrary basis would be:
a. Product advertising outlays
b. Salary of a corporation president
c. Direct materials
d. The product manager’s salary
ANSWER IS - B
Salary of a corporation president
QUESTION 27
All other things being equal, if a division’s
traceable fixed expenses increase:
a. The division’s contribution margin ratio will
decrease
b. The division’s segment margin ratio will remain
the same
c. The division segment margin will decrease
d. The overall company profit will remain the same
ANSWER IS - C
The division segment margin will decrease
QUESTION 28
Below are the available data of XTZ Corp
Estimate sales 6,400 units
Price Unit P800
Desired ending inventory 1,000 units
Beginning inventory 900 units
Purchase order 6,000 units
Sales Order 5,500 units
How many units to be produced
a. 5,600 c. 6,500
b. 6,100 d. 5,500
ANSWER IS - C
6,500

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