BSA 3102 Management Accounting PRELIMS PDF
BSA 3102 Management Accounting PRELIMS PDF
1. Which of the following statements are true regarding financial and managerial accounting?
I. Both are mandatory.
II. Both rely on the same underlying financial data.
III. Both emphasize the segments of an organization, rather than just looking at the
organization as a whole.
IV. Both are geared to the future, rather than to the past.
2. Obtaining feedback is generally identified most directly with which of the functions of
management?
a. Planning c. Controlling
b. Directing and motivating d. Decision making
a. The company must rely upon a large number of suppliers to ensure frequent deliveries of
small lots.
b. The company should always choose those suppliers offering the lowest prices.
c. The company should avoid long-term contracts with suppliers so as to exert pressure on
suppliers to make prompt and frequent deliveries.
d. A small number of suppliers make frequent deliveries of specific quantities thus avoiding
the buildup of large inventories of materials on hand.
9. Which of the following best describes the role of a staff position in an organization?
a. It relates directly to the carrying out of the basic objectives of the organization.
b. It is supportive in nature, providing service and assistance to other parts of the
organization.
c. It is superior in authority to a line position.
d. It receives assistance from other parts of organization It relates directly to achieve the
basic objectives of organization embedded in them and it is superior in authority to a line
position.
10. As volume increases,
a. Total fixed costs remain constant and per-unit fixed costs remain constant.
b. Total fixed costs increase and per-unit fixed costs increase.
c. Total fixed costs remain constant and per-unit costs increase
d. Total fixed costs remain constant and per-unit costs decrease
14. The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial
Management states that significant ethical issues should be discussed first with an immediate
superior unless the superior is involved. If satisfactory resolution cannot be achieved when
the problem is initially presented, then the issues should be:
a. submitted to the next higher managerial level.
b. submitted to the chief executive officer of the firm.
c. submitted to the audit committee, executive committee, board of directors, or owners.
d. submitted to outside legal counsel
15. Within the relevant range, the difference between variable costs and fixed costs is:
a. variable costs per unit fluctuate and fixed costs per unit remain constant.
b. variable costs per unit are constant and fixed costs per unit fluctuate.
c. both total variable costs and total fixed costs are constant.
d. both total variable costs and total fixed costs fluctuate.
16. Which one of the following costs should NOT be considered a direct cost of serving a particular
customer who orders a customized personal computer by phone directly from the
manufacturer?
17. The cost of fire insurance for a manufacturing plant is generally considered to be a:
18. Which of the following would be considered a product cost for external financial reporting
purposes?
20. Which of the graphs in Figure 20-1 illustrates the behavior of a total fixed cost?
a. Graph 2
b. Graph 3
c. Graph 4
d. Graph 1
21. Which of the following costs is a mixed cost?
22. Which of the following is NOT an example of a cost that varies in total as the number of units
produced changes?
a. Labor specialization
b. Overtime wages
c. Total variable costs are constant within the relevant range
d. Availability of quantity discounts
26. Montgomery Company has a variable selling cost. If sales volume increases, how will the total
variable cost and the variable cost per unit behave?
Total Variable Cost Variable Cost Per Unit
a. Increase Increase.
b. Increase Remain constant
c. Increase Decrease.
d. Remain Constant Decrease
27. Which of the following statements is true regarding fixed and variable costs?
a. increase
b. decrease
c. remain the same
d. increase, decrease, or remain the same, depending upon the amounts of increase in fixed
cost and decrease in variable cost.
29. The point where the total costs line intersects the left-hand vertical axis on the cost-volume-
profit chart represents:
30. All of the following costs are included in inventory under absorption costing except:
a. usually, but not always, higher than manufacturing cost per unit for variable costing.
b. usually, but not always, lower than manufacturing cost per unit for variable costing.
c. always higher than manufacturing cost per unit for variable costing.
d. always lower than manufacturing cost per unit for variable costing.
32. The one primary difference between variable and absorption costing is that under
34. Some fixed manufacturing overhead costs of the current period are deferred to future periods
under
a. absorption costing.
b. variable costing.
c. both absorption and variable costing.
d. neither absorption nor variable costing.
36. Gleason sells a single product at P14 per unit. The firm´s most recent income statement
revealed unit sales of 80,000 variable costs of P800,000, and fixed costs of P560,000.
Management believes that a P3 drop in selling price will boost unit sales volume by 20%.
Which of the following correctly depicts how these to changes will affect the company´s break-
even point?
Drop in Sales Price Increase in Sales Volume
a. Increase Increase.
b. Increase Remain constant
c. Increase Decrease.
d. Remain Constant Decrease
a. the difference between the selling price and the variable cost per unit.
b. fixed cost per unit divided by variable cost per unit.
c. variable cost per unit divided by the selling price.
d. unit contribution margin divided by the selling price
38. Which combination of object of cost and classification of cost is most reasonable?
OBJECT OF COST CLASSIFICATION OF COST
a. Materials used to make products Discretionary fixed cost
b. Advertising cost Discretionary fixed cost
c. Straight-line Depreciation Variable cost
d. President’s salary Avoidable fixed cost
The sales staff are paid monthly salaries plus commission. Advertising expenses are charged
subject to the discretion of management. The increase in sales salaries in April is due to the
increase in the sales staff, from five to six persons.
41. In relation to the appropriate cost drivers, how should the company’s selling costs be
classified?
Sales salaries Commissions Shipping costs Advertising
a. Variable Variable Variable Variable
b. Fixed Variable Variable Fixed
c. Fixed Variable Mixed Fixed
d. Mixed Variable Mixed Fixed
42. Using the high-low method an d the algebraic equation y= a + bx (where y= total shipping
costs; a= total fixed costs; b=variable shipping cost per unit; and x= number of units sold), the
cost formula for the shipping costs may be expressed as:
43. If the company plans to sell 36,000 units in May and fixed costs will remain at the April level,
the total selling costs for May would be:
a. P122,600 c. P127,800
b. P125,800 d. P 81,000
44. Using the least-squares method, the variable production cost per unit is approximately
a. P 5 c. P0.27
b. P10 d. P3.74
45. Using the least-squares method, the monthly fixed production cost is approximately
a. P 1,500 c. P 4,350
b. P18,000 d. P52,200
46. If the high-low points method is used, the results when compared with those under the method
of least-squares, are
Variable Cost Per Unit Total Fixed Costs
a. Equal Equal
b. Higher by P1.26 Lower by P2,850
c. Lower by P1.26 Higher by P2,850
d. Higher by P5 Lower by P1,500
47. Graham Corp sells two products. Product A sells for P200 per unit, and has unit variable costs
of P150. Product B sells for P50 per unit, and has unit variable costs of P20. Currently,
Graham sells three units of product B for every two units of product A sold. Graham has fixed
costs of P760,000. What is Graham's break-even point in units?
48. Scorpio Company's activity for the first three months of 2020 are as follows:
Machine Hours Electrical Cost
January 2,100 P2,400
February 2,600 P2,900
March 2,900 P3,200
Using the high-low method, how much is the cost per machine hour?
a. P1.00 c. P1.13
b. P1.50 d. P0.89
49. Harry’s Seafood used high-low data from June and July to determine its variable cost of P15
per unit. Additional information follows:
Month Units produced Total costs
June 2,000 P40,000
July 1,000 25,000
If Harry’s produces 2,300 units in August, how much is its total cost expected to be?
a. P10,000 c. P34,500
b. P49,500 d. P44,500
Use the following information for questions 50-52.
51. In applying the high-low method, what is the unit variable cost?
a. P1.44
b. P1.25
c. P1.60
d. Cannot be determined from the information given.
a. P17,500 c. P14,000
b. P36,000 d. P50,000
53. What is the value of the ending inventory using the absorption costing method?
a. P240,000 c. P600,000
b. P360,000 d. P420,000
54. Absorption costing income would be ____ variable costing income
55. What is the value of the ending inventory using the variable costing method?
a. P240,000 c. P350,000
b. P360,000 d. P420,000
56. Clarizza Company produces two products X and Y, which account for 60% and 40%,
respectively, of total sales. Contribution margin ratios are 50% for X and 25% for Y. Total fixed
costs are P120,000. What is Patricia´s break-even point in sales.
a. P300,000 c. P342,856
b. P328,767 d. P375,000
57. FLYHIGH Corporation produces a single product. The company manufactured 700 units last
year. The ending inventory consisted of 100 units. There was no beginning inventory. Variable
manufacturing costs were Php6.00 per unit and manufacturing costs were Php2.00 per unit.
What would be the change in the dollar amount of ending inventory if variable costing was
used instead of absorption costing?
a. Php800 decrease c. Php 0
b. Php200 decrease d. Php200 increase
Questions 61-62:
The following information has been provided by the Evans Retail Stores, Inc., for the first quarter
of the year:
Sales............................. P350,000
Variable selling expense......... . 35,000
Fixed selling expenses............ 25,000
Cost of goods sold................ 160,000
Fixed administrative expenses... 55,000
Variable administrative expenses 15,000
58. The gross margin of Evans Retail Stores, Inc. for the first quarter is:
a. P210,000. c. P220,000.
b. P140,000. d. P190,000.
59. The contribution margin of Evans Retail Stores, Inc. for the first quarter is:
a. P300,000. c. P210,000.
b. P140,000. d. P190,000.
60. For the most recent year, Atlantic Company's net income computed by the absorption costing
method was P7,400, and its net income computed by the variable costing method was
P10,100. The company's unit product cost was P17 under variable costing and P22 under
absorption costing. If the ending inventory consisted of 1,460 units, the beginning inventory
must have been:
a. 920 units. c. 2,000 units.
b. 1,460 units. d. 12,700 units.
61. Last year, Silver Company's variable production costs totaled P7,500 and its fixed
manufacturing overhead costs totaled P4,500. The company produced 3,000 units during
the year and sold 2,400 units. There were no units in the beginning inventory. Which of the
following statements is true?
a. Under variable costing, the units in the ending inventory will be costed at $4 each.
b. The net income under absorption costing for the year will be $900 lower than the net
income under variable costing.
c. The ending inventory under variable costing will be $900 lower than the ending inventory
under absorption costing.
d. Under absorption costing, the units in ending inventory will be costed at $2.50 each.
62. Indiana Corporation produces a single product that it sells for P9 per unit. During the first year
of operations, 100,000 units were produced and 90,000 units were sold. Manufacturing costs
and selling and administrative expenses for the year were as follows:
What was Indiana Corporation's net income for the year using variable costing?
a. P181,000. c. P281,000.
b. P271,000. d. P371,000.
63. Cay Company's fixed manufacturing overhead costs totaled P100,000, and variable selling
costs totaled P80,000. Under variable costing, how should these costs be classified?
Period costs Product costs
a. P0 P180,000
b. P80,000 P100,000
c. P100,000 P 80,000
d. P180,000 P 0
Jarvix Company, which has only one product, has provided the following data concerning its
most recent month of operations:
Fixed costs:
Fixed manufacturing overhead ........... P 61,600
Fixed selling and administrative ....... 169,100
The company produces the same number of units every month, although the sales in units vary
from month to month. The company's variable costs per unit and total fixed costs have been
constant from month to month.
64. What is the unit product cost for the month under variable costing?
a. P83 c. P90
b. P74 d. P81
65. What is the unit product cost for the month under absorption costing?
a. P90 c. P81
b. P74 d. P83
66. What is the net income for the month under variable costing?
a. P25,900 c. P17,800
b. P 2,100 d. P18,500
67. What is the net income for the month under absorption costing?
a. P 2,100 c. P18,500
b. P25,900 d. P17,800
a. P56,260 c. P56,160
b. P51,100 d. P56,735
69. How much should each ticket be sold to recover the total costs, assuming that all seats will
be taken and that the non-reviewee special guests and servers will be given complimentary
tickets?
a. P250 c. P300
b. P270 d. P206.25
70. What selling price should be charged for each ticket if the group wants to earn a profit of
P19,760 that will be donated to the school for the acquisition and installation of a high-end
review equipment, considering the same assumption as in item 69?
a. P345 c. P301.25
b. P395 d. P365
SUGGESTED ANSWER KEY:
THEORIES
1. D. Only II
2. C. Controlling
3. D. A small number of suppliers make frequent deliveries of specific quantities thus avoiding
the buildup of large inventories of materials on hand.
4. D. All of the above
5. D. Deciding the best level of inventory to be maintained.
6. C. An increasing number of organizations are segregating managerial accountants in separate
managerial-accounting departments.
7. D. have a longer production cycle than its JIT competitors.
8. C. setting goals and objectives for an entity.
9. B. It is supportive in nature, providing service and assistance to other parts of the organization.
10. D. Total fixed costs remain constant and per-unit costs decrease
11. B. the benefit forgone by selecting one alternative instead of another.
12. A. Prime cost (NO), Product cost (YES)
13. B. The variable costing method is usually not used for external reporting purposes.
14. A. Submitted to the next higher managerial level
15. B. variable costs per unit are constant and fixed costs per unit fluctuate.
16. C. the cost of leasing a machine on a monthly basis that automatically tests hard disk
drives before they are installed in computers.
17. A. product cost
18. D. Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
19. B. net income will increase by the unit contribution margin for each additional item sold.
20. D. Graph 1
21. C. Rental costs of P5,000 per month plus P0.30 per machine hour of use
22. C. Straight-line depreciation on factory equipment
23. C. Total variable costs are constant within the relevant range
24. C. respond to changes in the level of business activity.
25. A. changes in costs and volume on a company’s profit.
26. B. Increase, Remain constant
27. C. Fixed costs are fixed in total, and variable costs are fixed per unit.
28. D. increase, decrease, or remain the same, depending upon the amounts of increase in
fixed cost and decrease in variable cost
29. C. the total fixed costs
30. C. fixed selling expenses.
31. C. always higher than manufacturing cost per unit for variable costing.
32. A. variable costing, companies charge the fixed manufacturing overhead as an expense
in the current period.
33. A. when units produced exceed units sold.
34. A. absorption costing
35. C. absorption costing, in order to increase net income.
36. C. Increase , Decrease.
37. D. unit contribution margin divided by the selling price
38. B. Advertising cost, Discretionary fixed cost
39. D. Could earn a higher-than-expected profit even though the total number of units sold
was less than expected.
40. B. Demand is constant regardless of price
PROBLEMS
41. C. Fixed, Variable Mixed, Fixed
42. A. y= P10,000 + 0.80x
Shipping cost Sales in units
High (February) P38,000 35,000
Low (March) 32,400 28,000
Difference P5,600 7,000
Variable cost per unit = P5,600/7,000= P0.80
February March
Total cost P38,000 P32,400
Less variable cost
(Units sold x P0.80) 28,000 22,400
Fixed cost P10,000 P10,000
Cost function: y= P10,000 + 0.80x
43. C. P127,800
Sales salaries P51,000
Commissions (36,000 units x P10 x 5%) 18,000
Shipping costs (P10,000 +0.80[36,000]) 38,800
Advertising 20,000
Total selling costs in May P127,800
44. D. P3.74
Units produced (x) Total cost (y) xy 𝑥2
500 P4,000 P2,000,000 250,000
700 8,000 5,600,000 490,000
900 6,000 5,400,000 810,000
600 7,500 4,500,000 360,000
800 8,500 6,800,000 640,000
550 7,250 3,987,500 302,500
∑x= 4,050 ∑y= P41,250 ∑xy= P28,287,500 2
∑𝑥 = 2,852,500
n=6
∑y= na + b∑x ∑xy= a∑x + b∑𝑥 2
41,250= 6a + 4,050b 28,287,500= 4,050a +2,852,500b
(41,250= 6a + 4,050b) * 4050/6 - 27,843,750= 4,050a + 2,733,750b
443,750= 118,750b
b= 3.74
45. C. P4,350
∑y= na + b∑x
41,250= 6a + 4,050 (3.74)
41,250= 6a + 15,147
6a= 26,103
a= 4,350