Reference no: EM133132441
Questions -
Q1. At the end of last year, Han Company had 30,000 units in its ending inventory. Han's variable production costs are P10 per unit and its fixed manufacturing overhead costs are P5 per unit every year. The company's net income for the year was P12,000 higher under variable costing than under absorption costing. Given these facts, the number of units of product in inventory at the beginning of the year must have been:
a. 32,400 units.
b. 28,800 units.
c. 27,600 units.
d. 42,000 units.
Q2. 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 fixed over the relevant range and fixed costs per unit are variable.
c. Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change.
d. Variable costs per unit change in varying increments, while fixed costs per unit change in equal increments.
Q3. Which one of the following statements is true regarding absorption costing and variable costing?
a. Overhead costs are treated in the same manner under both costing methods.
b. If finished goods inventory increases, absorption costing results in higher income.
c. Variable manufacturing costs are lower under variable costing.
d. Gross margins are the same under both costing methods
Q4. A fixed cost that would be considered a direct cost is
a. A cost accountant's salary when the cost objective is a unit of product.
b. The rental cost of a warehouse to store inventory when the cost objective is the Purchasing Department.
c. A production supervisor's salary when the cost objective is the Production Department.
d. Board of directors' fees when the cost objective is the Marketing Department.
Q5. Assume a traditional costing system applies the P60,000 of overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the Gabriel model?
a. P24,800
b. P35,200
c. P37,500
d. P22,500
Q6. An advantage of incremental budgeting when compared with zero-based budgeting is that incremental budgeting
a. Encourages adopting new projects quickly.
b. Accepts the existing base as being satisfactory.
c. Eliminates functions and duties that have outlived their usefulness.
d. Eliminates the need to review all functions periodically to obtain optimum use of resources.
Q7. Which one of the following is correct regarding a relevant range?
a. Total variable costs will not change.
b. Total fixed costs will not change.
c. Actual fixed costs usually fall outside the relevant range.
d. The relevant range cannot be changed after being established.
Q8. The budget that describes the long-term position, goals and objectives of an entity within its environment is the:
a. Capital budget
b. Operating budget
c. Cash management budget
d. Strategic budget
Q9. Simone Company's master budget shows straight-line depreciation on factory equipment of P258,000. The master budget was prepared at an annual production volume of 103,200 units of product. This production volume is expected to occur uniformly throughout the year. During September, Simone produced 8,170 units of product, and the accounts reflected actual depreciation on factory machinery of P20,500. Simone controls manufacturing costs with a flexible budget. The flexible budget amount for depreciation on factory machinery for September would be
a. P19,475
b. P21,500
c. P20,425
d. P20,500
Q10. The budgeting process should be one that motivates managers and employees to work toward organizational goals. Which one of the following is least likely to motivate managers?
a. Participation by subordinates in the budgetary process.
b. Having top management set budget levels.
c. Use of management by exception.
d. Holding subordinates accountable for the items they control.
Q11. In an organization that plans by using comprehensive budgeting, the master budget is
a. A compilation of all the separate operational and financial budget schedules of the organization.
b. The booklet containing budget guidelines, policies, and forms to use in the budgeting process.
c. The current budget updated for operations for part of the current year.
d. A budget of a not-for-profit organization after it is approved by the appropriate authoritative body.
Q12. The correlation coefficient that indicates the weakest linear association between two variables is
a. -0.73
b. -0.11
c. 0.12
d. 0.35
Q13. Which of the following would be the starting point in preparing a master budget?
a. production budget
b. sales forecast
c. purchases forecast
d. sales budget
Q14. Which one of the following items would have to be included for a company preparing a schedule of cash receipts and disbursements for calendar Year 1?
a. A purchase order issued in December Year 1 for items to be delivered in February Year 2.
b. Dividends declared in November Year 1 to be paid in January Year 2 to shareholders of record as of December Year 1.
c. The amount of uncollectible customer accounts for Year 1.
d. The borrowing of funds from a bank on a note payable taken out in June Year 1 with an agreement to pay the principal and interest in June Year 2.