Reference no: EM133139025
Questions -
Q1. Skousen buys tennis balls at P 25 per dozen from its wholesaler. Skousen will sell 35,000 dozens of tennis balls evenly throughout the year. Skousen desires a 12% percent return on investment (cost of capital) on its inventory investment. In addition, rent, insurance and related taxes for each dozen tennis balls in inventory amounts to P 0.50. The cost per order is P 8. Skousen uses a 350-day year.
How often shall Skousen place the orders within a year?
a. Every 5 days
b. Every week
c. Every 6 days
d. Every 4 days
Q2. Ebi Company began business at the start of the current year. The company planned to produce 25,000 units, and actual production conformed to expectations. Sales totaled 22,000 units at P 30 each. Costs incurred were:
Fixed manufacturing overhead P 150,000
Fixed selling and administrative cost 100,000
Variable manufacturing cost per unit 8
Variable selling and administrative cost per unit 2
If there were no variances, how much was the company's absorption costing income?
a. P 208,000
b. P 190,000
c. P 220,000
d. P 202,000
Q3. Snacku Company sells optical equipment, orders 5,200 lens per year, 100 lens per week at P 20 per lens. Snacku Company earns 30% on its cash investments. The purchase-order lead time is 2.5 weeks. Snacku Company sells 125 lens per week. The following data is available:
Ordering costs per purchase order P 21.25
Insurance, materials handling, breakage, per year P 2.50
What is the economic-order quantity (rounded to nearest whole lens)?
a. 210 lens
b. 297 lens
c. 325 lens
d. 161 lens
Q4. La Lisa uses FIFO for inventory costing:
Beginning Inventory 300 units
Units Produced 600
Units Sold 600
Prior year Budgeted Fixed Overhead Rate P 50/unit
Current year Budgeted Fixed Overhead Rate P 44/unit
Which of the following statements is true about the difference between absorption-costing and variable-costing operating income?
a. Absorption-costing is P 15,000 more than variable-costing operating income.
b. Absorption-costing is P 15,000 less than variable-costing operating income.
c. Absorption-costing is P 1,800 more than variable-costing operating income.
d. Absorption-costing is P 1,800 less than variable-costing operating income.
Q5. Kikkoman Corporation operates two stores: A1 and B2. The following information relates to store B2:
Sales revenue P 100,000
Variable operating expenses 45,000
Fixed expenses:
Traceable to B2 and controllable by B2 17,500
Traceable to B2 and controllable by others 12,500
If the common costs of P 10,000 are divided equally between the two stores, Store B2's segment margin is:
a. P 55,000
b. P 20,000
c. P 42,500
d. P 25,000
Q6. Ningning Company makes a white liquid substance that is used to cover errors made on printed documents. Ningning expects to use 4 ounces of a chemical known as Fatal per bottle of correction fluid. Fatal expected to cost P 0.40 per ounce. Actual materials cost amounted to P 0.46 per ounce. Ningning expected to make and sell 1,000,000 bottles of correction fluid during the period. Actual production amounted to 900,000 bottles and 4,095,000 ounces.
The materials usage variance for Fatal is:
a. P 245,700 favorable
b. P 198,000 unfavorable
c. P 198,000 favorable
d. P 245,700 unfavorable
Q7. Chips, Inc. has developed a new production process to manufacture its product. The new process is complex and requires a high degree of technical skill. However, management believes there is a good opportunity for the employees to improve as they become more familiar with the production process. The production of the first unit requires 100 direct labor hours. If a 70% learning curve is used, using the cumulative average time model, the cumulative direct labor hours required to produce a total eight units would be:
a. 560 hours
b. 392 hours
c. 274 hours
d. 196 hours
Q8. The following information regarding a capital project was given for consideration:
Estimated life 10 years
Cost of capital 20%
Initial investment P 6,500
Cash inflows per year P 1,000
Straight-line depreciation P 325
What is the unadjusted accounting rate of return (ARR) of the capital project?
a. 20.77%
b. 30.77%
c. 15.38%
d. Cannot be determined from the given information
Q9. Skousen buys tennis balls at P 25 per dozen from its wholesaler. Skousen will sell 35,000 dozens of tennis balls evenly throughout the year. Skousen desires a 12% percent return on investment (cost of capital) on its inventory investment. In addition, rent, insurance and related taxes for each dozen tennis balls in inventory amounts to P 0.50. The cost per order is P 8. Skousen uses a 350-day year.
What is the average number of tennis balls does Skousen maintain?
a. 4,800 tennis balls
b. 200 tennis balls
c. 2,400 tennis balls
d. 400 tennis balls
Q10. Jisoo Company uses a standard costing system. At a normal level of activity of 15,000 units and 45,000 standard direct labor hours, the standard direct labor cost would be P 270,000. During June, 42,800 hours were worked to produce 14,000 units at an actual direct labor cost of P 352,000. The direct labor efficiency variance in June was:
a. P 4,800 F
b. P 12,800 U
c. P 4,800 U
d. P 7,800 U