PART 1

1.)Which of the following benefits could an organization reasonably expect from

an effective budget program?

A. Better coordination of an organization's activities.

B. Better control of the organization's costs.
C. None of the above
D. Better communication of the organization's objectives.
E. All of these

2.). Ben Company has a higher degree of operating leverage than Lewis
Company. Which of the following is true?

A. Ben has higher variable expense.

B. Ben is more profitable than Lewis Company’s.
C. Ben is more risky than Lewis is.
D. None of these
E. Ben' profits are less sensitive to percentage changes in sales.

3.) Overtime conditions and pay were recently set by the personnel department.
The production department has just received a request for a rush order from the
sales department. The production department protests that additional overtime
costs would be incurred as a result of the order. The sales department argues
the order is from an important customer. The production department processes
the order. In order to control costs, which department should be charged with
the overtime costs generated as a result of the rush order?

A. Personnel department
B. Sales department
C. Production department
D. Shared by production department and sales department
E. None of the above

4.) How much would be the increase in profit if the appropriate products will be
processed further?

UNITS Selling Price at Split off Cost to process further

SP to process further
A 10,000 35 70,000
40
B 20,000 40 30,000
45
C 30,000 20 90,000
25

A. 330 000
 B. 150 000
C. 250 000
D. 120 000
E. None of these

5.) The type of company most likely to run short of cash during the year is one
with

A. high seasonality and rapid sales growth.

B. high contribution margin percentage.
C. relatively low fixed costs.
D. little seasonality.
E. None of these

6.) Net operating income under absorption costing may differ from net operating
income determined under variable costing. How is this difference calculated?

A. change in the quantity of units in inventory times the variable manufacturing cost
per unit.
B. change in the quantity of units in inventory times the fixed manufacturing
overhead rate per unit.
C. number of units produced during the period times the fixed manufacturing
overhead rate per unit.
D. number of units produced during the period times the variable manufacturing cost
per unit.
E. None of these

7.) Which of the following statement(s) is (are) true? I. MAS relates to the future II.
MAS covers a wider area than the usual audit and tax work III. Because of the
broad scope covered by MAS, a wider variety of assignment are usually
encountered IV. MAS engagements require highly qualified staff

A. I, II, III, IV
B. I, III and IV only
C. I, IV only
D. None of these
E. I, II and IV only

8.) Which of the following is true for a make-or-buy decision?

A. None of these
B. The company should make the component if the purchase price is less than the
per-unit variable cost to make the component.
C. Opportunity costs are irrelevant.
D. Depreciation on equipment used in making the component and having no other
use is the critical factor in the decision.
E. The reliability of the outside supplier of the component is important to the
decision.
9.) What were the actual hours worked in this department during the quarter?

A. 153 000
B. 121 000
C. 137 000
D. None of these
E. 110 000

10.) Echo, is an engineer who has designed a telecommunications device. He is

convinced that there is a big potential market for the device. Accordingly, he has
decided to quit his present job and start a company to manufacture and market
the device. Echo purchased a machine two years ago to make experimental
boards. The machine will be used to manufacture the new board. The cost of this
machine is:

A. Sunk Cost
B. Opportunity Cost
C. Differential Cost
D. None of these
E. Period Cost
11.) How much is the estimated credit to Accounts Receivable as a result of
collections expected during November?

A. P1,730,200
B. None of these
C. P1,802,000
D. P1,762,000
E. P1,757,200

Solution:
 A. P600 F; P 1,100 U
B. None of these
C. P700 U; P 1,200 F
D. P700 F P1,200 U
E. P600 U; 1,100 F

12.) All of the following costs are inventoried under absorption costing, except:

A. variable manufacturing overhead.

B. fixed manufacturing overhead.
C. direct materials.
D. fixed administrative salaries.
E. None of these

13.) Depreciation on a personal computer used in the marketing department of

Charlie Manufacturing would be classified as:

A. A period cost that is variable with respect to the company's output.

B. A product cost that is fixed with respect to the company's output.
C. A product cost that is variable with respect to the company's output.
D. None of these
E. A period cost that is fixed with respect to the company's output.

14.) Jupiter Company produces a single product. Last year, Jupiter's net
operating income under absorption costing was P3,600 lower than under variable
costing. The company sold 10,000 units during the year, and its variable costs
were P9 per unit, of which P1 was variable selling expense. If production cost was
P11 per unit under absorption costing, then how many units did the company
produce during the year?
 A. 11,200 units
B. None of these
C. 8,200 units
D. 11,800 units
E. 8,800 units

15.) Rhett Company produces a single product. Last year, the company had
25,000 units in its ending inventory. Rhett's variable production costs were P10
per unit and fixed manufacturing overhead costs were P5 per unit. The company's
net operating income last year was P10,000 higher under variable costing than it
was under absorption costing. Given these facts, the number of units of product
in beginning inventory last year must have been:

A. 23,000 units
B. 24,333 units
C. 24,000 units
D. 27,000 units
E. None of these

16.) During the month of February, Moira’s direct labor cost totaled P13,000 and
direct labor cost was 40% of prime cost. If total manufacturing costs during
February were P80,000, the manufacturing overhead was:

A. P19,500
B. P67,000
C. P47,500
D. P32,500
E. None of these

17.) The Hayley Company makes and sells a single product. Each Unit requires
the use of 1.1 hours of direct labor time. The planned cost of direct labor time is
P8.20 per hour. The direct labor workforce is fully adjusted each month to the
required workload. The company wishes to prepare a Direct Labor Budget for the
first quarter of the year. If the company has budgeted to produce 20,000 Units in
January, then the budgeted direct labor cost is:

A. P172,200
B. None of these
C. P164,000
D. P180,400
E. P195,600

18.) In a period, the labor efficiency variance was P54,000 favorable. The standard
direct labor wage rate is P12.00 per hour and 30 direct labor-hours are allowed for
each unit of output. Given that 43,500 direct labor-hours were worked, how many
units of output were actually produced?

A. 1,500
 B. 1,300
C. 1,600
D. None of these
E. 1,450

19.) H.E.R. General Hospital contains 450 beds. The average occupancy rate is 80
percent per month. In other words, on average, 80 percent of the hospital’s beds
are occupied by patients. At this level of occupancy, the hospital’s operating
costs are P 32 per occupied bed per day, assuming a 30-day month. The P 32
contains both variable and fixed cost components. During the month of June, the
hospital’s occupancy rate was only 60 percent. A total of P 326 700 in operating
cost was incurred during the month. The total fixed cost amounted to

A. P 229 500
B. P 270 000
C. P 205 200
D. P 253 800
E. None of these

20.) Which of the following statements is false regarding the breakeven for TS
company?

A. The average contribution margin ratio is approximately 15.33%

B. The average contribution margin per unit is P 23.
C. None of these
D. The sales ratio for product Troye is 31.11%, and 68.89% for product Sivan
E. The breakeven point in sales is P 6 516.

21.) In the Graham Industries, at an activity level of 160 000 machine hours, total
overhead costs were P 446 000. Of this amount, utilities were P 96 000 (all
variable) and depreciation was P 120 000 (all fixed). The balance of the overhead
cost consisted of maintenance cost (mixed). At 200 000 machine hours,
maintenance costs were P 260 000. Assume that all of the activity levels
mentioned in this problem are within the relevant range. Total Overhead Cost at
220 000 machine hours

A. P 491 000
B. P 527 000
C. P 275 000
D. None of these
E. P 572 000

22.) To distinguish between management accounting and financial accounting,

the following statements are correct, except

A. Financial accounting can be regarded as the process while management

accounting can be regarded as the product of the process.
B. Management accounting output must be released on time so as not to erode its
usefulness; Financial accounting output can still be useful even when delayed.
C. Financial accounting is bound by GAAP, and management accounting need not
be in conformity with GAAP.
D. Management accounting, in view of its various integrated recipients should have
a separate data recording and retrieval systems from financial accounting.

23.) Ben, A CPA in public practice was engaged by a client who has little
accounting and management experience to perform MAS. After presenting
several alternative solutions and the probable outcome each, the CPA decided to
implement the best alternative solution and assumed full responsibility for which
the client agreed.

A. The CPA was correct in implementing the solution, but full responsibility should
have been assumed by the client.
B. The CPA did just the right thing
C. The CPA should have asked the client first if he (the client) is capable to
implement the solution before doing it himself.
D. None of these
E. The CPA should not have implemented the best alternative solution and should
not have assumed full responsibility even if the client agreed, for these should
have been done by the client.

24.) A relatively low margin of safety ratio for a product is usually an indication
that the product:

A. None of these
B. is riskier than higher margin of safety products
C. has a high contribution margin
D. is losing money
 E. is less risky than higher margin of safety products

25.) What were the standard hours allowed for good output in this department

A. 110 000
B. 105 000
C. None of these
D. 106 667
E. 115 000
26.) What is the total the total Cost of Goods Sold under absorption costing
approach, and Net Income under Variable Costing?

A. P180,000; P 66 000
B. P165,600; P 46 400
C. None of these
D. P266,800; P400
E. P290,000; (P44 000)

27.) The Celeste Inc. has budgeted sales for the year as follows: Quarter 1,
10,000; Quarter 2, 12,000; Quarter 3, 14,000; Quarter 4, 16,000. Sales in units. The
ending inventory of finished goods for each quarter should equal 25% of the next
quarter's budgeted sales in units. The finished goods inventory at the start of the
year is 2,500 units. Four pounds of raw materials are required for each unit
produced. Raw materials on hand at the start of the year total 4,200 pounds. The
raw materials inventory at the end of each quarter should equal 10% of the next
quarter's production needs in material. Scheduled purchases of raw materials for
the second quarter should be:

A. None of these
B. 50,800 pounds
C. 55,800 pounds
D. 50,200 pounds
E. 50,000 pounds
28.) If the machine hours available is only 1 600the number of units to be
produced for products A, B, and C respectively is

A. 4 200; 4 000; 3 800

B. None of these
C. 4 200; 3 800; 0
D. 3 800; 4 000; 4 200
E. 3 800; 3 050; 0

29.) The following information pertains to Hunt Corporation for the year ending
December 31, 2021: Budgeted sales, P1,000,000; Breakeven sales,
700,000; Budgeted contribution margin, 600,000;
Cashflow breakeven, 200,000. The margin of safety for the Hunt Corporation is:

A. P400,000
B. None of these
C. P800,000
D. P300,000
E. P500,000

30.) Bryan and John, are partners in a MAS firm. One of the firm’s client is BETA
corporation, where Bryan is a board member. BETA Corporation is not an audit
client. BETA is negotiating an MS engagement with the MAS firm.
 A. It is not unethical for the MAS firm to accept the engagement, as long as there is
full disclosure of the relationship to all parties at the outset of the engagement
and in any written final report.
B. It is not unethical for the MAS firm to accept the engagement since BETA
Corporation may not be considered as a sister company of the MAS firm.
C. It is unethical for the MAS firm to accept the engagement because Bryan has
financial interest in BETA Corporation, hence he loses his independence as
practitioner.
D. None of these
E. It is unethical for the MAS firm to accept the engagement because it is a violation
of the standards on independence.

31.) What is the overall or net overhead variance?

a. 1 200 favorable
b. 1 200 unfavorable
c. 1 400 unfavorable
d. None of these
e. 1 400 favorable

32.) The Overhead Capacity and Efficiency variance are:

 a. None of these
b. 2 400 UF; 2 400 F
c. 2 400 F; 2 400 UF
d. 1 800 F; 3000 F
e. 1 800 UF; 3000 F

33.) Which of the following is an incorrect statement?

a. None of these
b. In an economic recession, the highly automated company with high fixed costs
will be less able to adapt to lower consumer demand than will a firm with a more
labor-intensive production process.
c. The greater the proportion of fixed costs in a firm's cost structure, the smaller will
be the impact on profit from a given percentage change in sales revenue.
d. The contribution income statement that is prepared for internal users is better
than the traditional income statement as a management tool to predict the results
of increases or decreases in sales volume, variable costs, and fixed costs.
e. A major difference between income statements prepared under the traditional
format and those prepared under the contribution format is that expenses under
the traditional format are shown by function, while the expenses shown under the
contribution format are shown by function and cost behavior.

34.) The Company’s board of directors believes that the company’s problem lies
in adequate promotion. By how much can advertising be increased and still allow
the company to earn a target return of 4.5% on sales of 60 000 units.

a. 39 200
b. None of these
c. 59 000
d. 14 000
e. 32 000

35.) The Crescent Company, a merchandising firm, has budgeted its activity for
December according to the following information: Sales at P550,000, all for cash;
Merchandise inventory on November 30 was P300,000; Budgeted depreciation
for December is P35,000; The cash balance at December 1 was P25,000; Selling
and administrative expenses are budgeted at P60,000 for December and are paid
in cash; The planned merchandise inventory on December 31 is P270,000; The
invoice cost for merchandise purchases represents 75% of the sales price. All
purchases are paid for in cash.The budgeted cash disbursements for December
are:

a. P382,500
b. None of these
 c. P477,500
d. P472,500
e. P442,500

36.) The Crescent Company, a merchandising firm, has budgeted its activity for
December according to the following information: Sales at P550,000, all for cash;
Merchandise inventory on November 30 was P300,000; Budgeted depreciation
for December is P35,000; The cash balance at December 1 was P25,000; Selling
and administrative expenses are budgeted at P60,000 for December and are paid
in cash; The planned merchandise inventory on December 31 is P270,000; The
invoice cost for merchandise purchases represents 75% of the sales price. All
purchases are paid for in cash. The budgeted net income for December is:

a. P137,500
b. P42,500
c. P77,500
d. None of these
e. P107,500

37.) Net operating income was:

 a. None of these
b. $46,000
c. $14,000
d. $10,000
e. $18,000

39.) For the next year, the sales manager would like to increase the unit selling
price of 20%, increase the sales commission to 9% of sales, and increase
advertising by P 100 000. Based on marketing studies, he is confident this would
increase sales by one-third. What would be the profit under this plan?

a. 79 000
b. 50 200
c. 52 530
d. 108 000
e. None of these

40.) Which of the following will not impair the independence of a CPA in the
rendition of Management Services?

a. The CPA does not extend his services beyond the presentation of
recommendations or giving of advice.
b. None of these
c. The CPA performs services wherein he is in effect, acting as an employee of the
client.
d. The CPA performs decision-making services for his client.
e. The CPA loses his objectivity and acts in a manner as if he is advocating for the
interest of his client.

41.) Under absorption costing, fixed manufacturing overhead costs:

a. are excluded in the computation of product cost.

b. are released from inventory when production exceeds sales.
c. are deferred in inventory when production exceeds sales.
d. are always treated as period costs.
e. None of these

42.) In the development of accounting data for decision-making, relevant costs

are Standard costs developed by time and motion experts.

a. Historical costs which are the best available basis for estimating future costs.
b. None of these
 c. Budgetary costs authorized for the administrative year.
d. Future costs which will differ under each alternative course of action.

43.) A major factor in evaluating a special order is

a. the expected contribution margin on the order.

b. the possible effects on sales at regular prices.
c. the availability of capacity to produce the additional units.
d. all of the above.
e. None of these

44.) Controllership has attained special recognition in corporate management as

business expands in complexity and reach, and as the controller exerts influence
for management to take organization’s goals. Controllership and treasurership
constitute corporate finance. These are among the controller’s traditional
functions: 1. Tax management. 2. Financial reporting and
interpretation. 3. Credit management. 4. Sourcing and investing of funds. 5.
Reporting to government regulatory agencies. 6. Risk management. 7. Economic
appraisal. 8. Planning for control.

a. Items 2, 3, 5, and 7, and 8 only.

b. Items 1, 2, 5, 7, and 8 only
c. Items 1, 2, 3, 4, 5, 7, and 8 only.
d. All eight items.
e. None of these

45.) Compute for the fixed costs using the High Low, and Least Squares Method

a. P 600 ; P 613.57
b. None of these
c. P 120 ; P 600
d. 100 ; P 93.57
e. 700 ; P 707.14

46.) Which of the following is the most probable reason with a company would
experience an unfavorable labor rate variance and a favorable labor efficiency
variance?

a. The mix of workers assigned to the particular job was heavily weighted toward
the use of highly paid, experienced individuals.
b. The mix of workers assigned to the particular job was heavily weighted toward
the use of new, relatively low paid, unskilled workers.
c. Because of the productive schedule, workers from other production areas were
assigned to assist in this particular process.
 d. None of these
e. Defective materials caused more labor to be used in order to produce a standard
unit.

47.) The primary purpose of management advisory services is

a. To help the client identify its problems

b. To help the client maximize its resources
c. To improve the client’s use of its capabilities and resources to achieve the
objectives of such client’s organization
d. To achieve the objectives of the MAS firm
e. None of these

48.) Given these data, the elimination of the B Division would result in an overall
company net operating income of:

a. None of these
b. P100,000
c. P80,000
d. P50,000
e. P120,000

49.) How would the (A) Cost of purchasing clothing, and (B) Sales Commissions
be classified under variable costing at a retail clothing store?

a. (A) Product; (B) Period

b. None of these
c. (A) Product; (B) Product
d. (A) Period; (B) Product
e. (A) Period; (B) Period

50.) The total labor variance is:

a. P4500 F
b. P4125 U
c. P4000 F
d. None of these
e. P4625 U

51.) A management advisory services engagement involves the following

activities in what order? I. Post-engagement follow-up. II. Implementing the
recommendation. III. Conducting the engagement. IV. Negotiating the
engagement. Preparing for and starting the engagement. VI. Evaluating the
engagement. VII. Preparing and presenting report and recommendations.

a. VII, VI, V, IV, III, II and I.

b. III, IV, V, VI, VII, I and II.
c. IV, V, III, VII, II, VI, and I.
 d. IV, III, V, VI, II, VII, and I.
e. None of these

52.) Cost-volume-profit analysis allows management to determine the relative

profitability of a product by

A. None of these
B. Assigning costs to a product in a manner that maximizes the contribution margin.
C. Keeping fixed costs to an absolute minimum.
D. Determining the contribution margin per unit and projected profits at various
levels of production.
E. Highlighting potential bottlenecks in the production process.

53.) A primary purpose of using a standard cost system is

A. to provide a distinct measure of cost control.

B. b and c are correct
C. None of these
D. to minimize the cost per unit of production.
E. to make things easier for managers in the production facility.

54.) A product should be dropped if

A. dropping it will increase the total profit of the company.

B. it has a negative incremental profit.
C. None of these
D. it has a negative contribution margin.
E. it is not essential to the company's product line.

55.). The unfavorable volume variance may be due to all but which of the
following factors?

A. unexpected increases in the cost of utilities

B. failure to maintain an even flow of work
C. None of these
D. machine breakdowns
E. failure to obtain enough sales orders

Pdf-answer-key-quiz-chapter-12-mc-all-variances compress - CHAPTER 12CHAPTER

12 – – STANDARD - Studocu

56.) Delta Company's direct labor is 40 percent of its conversion cost. If the
manufacturing overhead cost for the last period was P60,000 and the direct
materials cost was P30,000, the direct labor cost was:

A. P90,000
 B. None of these
C. P60,000
D. P40,000
E. P20,000

AC Flashcards | Quizlet

57.) Tori Inc. manufactures a variety of products. Variable costing net operating
income was P96,300 last year and ending inventory decreased by 2,600 units.
Fixed manufacturing overhead cost was P1 per unit. What was the absorption
costing net operating income last year?

A. P96,300
B. P98,900
C. P2,600
D. None of these
E. P93,700

Solved Bellue Inc. manufactures a variety of | Chegg.com

58.) The materials quantity variance should be computed:

A. based upon the amount of materials used in production.

B. None of these
C. based upon the difference between the actual and standard prices per unit times
the actual quantity used.
D. only when there is a difference between standard and actual cost per unit for the
materials.
E. when materials are purchased.

managerial accounting exam 3 Flashcards | Quizlet

59.) Favorable fixed overhead volume variance occurs if:

A. there is a favorable labor rate variance

B. production is greater than planned
C. production is less than planned
D. there is a favorable labor efficiency variance
E. None of these

60.) What is the proper preparation sequencing of the following budgets?

1.Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget
4. Budgeted Income Statement

A. 2, 3, 1, 4
B. 2, 3, 4, 1
C. 2, 4, 1, 3
D. 1, 2, 3, 4
PART 2

MAS Company, which has only one product, has provided the following data concerning
its most recent month of operations:

Selling price-81

Finished Goods

Units in beginning inventory- 0

Units produced-7,300

Units sold- 7.000

Units in ending inventory-300

Variable costs per unit:

Direct materials- P20

Direct labor,-P30

Variable manufacturing overhead- P7

Variable selling and administrative-P11

Fixed costs
Fixed manufacturing overhead-P 65,700

Fixed selling and administrative- P21,000

61.) The capacity of MAS company is at 8 000 units of production. A client offered MAS
to buy 1 200 units at P75. By how much will MAS company's income increase or
decrease of the special order is accepted?

A. P 19 000 increase

B. P 1 200 decrease
C. P 16 000 increase
D. P 23 300 increase
E. None of these

62.) What is the net operating income for the month under absorption costing?

A. P4,300

B. P7,000

C. P(12,800)

D. P2.700

63.) The total contribution margin for the month under the variable costing approach is

A. Ρ 462 000

B. P 416 100

C. P 481 800

D. P 496 400

E. None of these

64.) The total gross margin for the month under the absorption costing approach is:

A. P7,000
B. P124,800

C. P91.000

D. P105.000

E. None of these