Module 2 Quiz

BA 314 MODULE 2 QUIZ
1. Product costs or inventoriable costs:

a. Are treated as assets before the products are sold
b. Are charged to expense when products become part of the finished goods
inventory
c. Include only the prime costs of producing a product
d. Include only the conversions costs of producing the product
Answer: A
2. The salaries of the factory janitorial and maintenance staff should be classified as
a. Factory overhead cost
b. Direct labor cost
c. Period cost
d. Standard cost
Answer: A
3. Income or benefit that is given up when one alternative is selected over another is called
a. Opportunity cost
b. Loss
c. Relevant cost
d. Differential cost
Answer: A
4. Mixed costs are costs that have

a. Variable and fixed costs components
b. Manufacturing and administrative costs components
c. Selling and administrative costs components
d. Direct and indirect costs components
Answer: A
5. Variable costs
a. Increase in total when the actual level of activity increases
b. Are always indirect costs
c. Include most personnel costs and depreciation on machinery
d. Can always be traced directly to the cost object
Answer: A
6. This is used to improve the accuracy of cost analysis by improving the tracing of costs to
products
a. Activity based costing
b. Lean accounting
c. Standard costing
d. Marginal costing
Answer: A
7. An unfavorable price variance occurs because of

a. Price increases on raw materials
b. Price decreases on raw materials
c. Less than anticipated levels of waste in the manufacturing process
d. More than anticipated levels of waste in the manufacturing process
Answer: A
8. Sunk costs
a. Are irrelevant to decision making purposes
b. Are relevant costs
c. Can be changed by a decision made now or to be made in the future
d. Are decreases in costs from one alternative to another
Answer: A
Following are costs incurred by Abtina Manufacturing Company during the month of September
2021:
Direct materials 5,000
Indirect materials 2,000
Direct labor 6,000
Indirect labor 1,000
Factory utilities 4,000
Advertising costs 8,000
Sales commissions 12,000
Depreciation on administration building 3,000
Salaries of administrative personnel 20,000
Depreciation - delivery equipment 2,000
Overtime pay - factory workers 1,500
9. Total manufacturing costs

a. 19,500
b. 18,000
c. 38,000
d. 39,500
Answer: A
Solution:
Direct materials 5,000
Indirect materials 2,000
Direct labor 6,000
Indirect labor 1,000
Factory utilities 4,000
Overtime pay - factory workers 1,500
Total manufacturing costs 19,500
10. Total non-manufacturing costs

a. 45,000
b. 25,000
c. 26,500
d. 46,500
Answer: A
Solution:
Advertising costs 8,000
Sales commissions 12,000
Depreciation on administration building 3,000
Salaries of administrative personnel 20,000
Depreciation - delivery equipment 2,000
Total non-manufacturing costs 45,000

As part of a cost study, the cost accountant of Shinly Corporation has recorded the cost of
operations at seven different levels of materials usage. The records show the following:
Kilos of Materials Costs of Operations (PhP)
80 800
60 480
20 320
120 1,200
140 1,280
40 480
100 1,040
11. Using the high-low method, the variable cost of operations per kilo of materials used is
a. P8.00
b. P9.14
c. P16.00
d. P10.00
Answer: A
Solution:
= 1,280 - 320 / 140 - 20
= 960/120
=8
12. Using the high-low method, the fixed cost of operations is

a. P160
b. P320
c. P103
d. P206
Answer: A
Solution:
Using high point:
= 1,280 - (8 * 140)
= 1,280 - 1,120
= 160
Bella Company produces and sells rattan baskets. The number of units produced and the
corresponding total production costs for six months, which are representatives for the year, are
as follows:
Month Units Produced Production Costs (PhP)
April 500 4,000
May 700 8,000
June 900 6,000
July 600 7,500
August 800 8,500
September 550 7,250
13. Using the least squares method, the variable production cost per unit is approximately
a. P3.74
b. P5.00
c. P10.00
d. P0.27
Answer: A
Solution:
x y xy x²
April 500.00 4,000.00 2,000,000.00 250,000.00
May 700.00 8,000.00 5,600,000.00 490,000.00
June 900.00 6,000.00 5,400,000.00 810,000.00
July 600.00 7,500.00 4,500,000.00 360,000.00
August 800 8,500 6,800,000.00 640,000.00
September 550 7,250 3,987,500.00 302,500.00
4,050.00 41,250.00 28,287,500.00 2,852,500.00
= (6 * 28,287,500) - (4,050 * 41,250) / (6 * 2,852,500) - (4,050)²

= 169,725,000 - 167,062,500 / 17,115,000 - 16,402,500
= 2,662,500 / 712,500
= 3.74
14. Using the least squares method, the monthly fixed production cost is approximately
a. P4,350
b. P1,500
c. P18,000
d. P52,200
Answer: A
Solution:
= 41,250 - (3.74 * 4,050) / 6
= 41,250 - 15,147 / 6
= 26,103 / 6
= 4,350
The management of a hotel is interested in the relationship between room cleaning costs
and guest days in its hotel.Data on room cleaning costs and guest days collected over
12 months are shown graphically as follows:
15. The estimated monthly fixed room cleaning cost is

a. P25,000
b. P30,000
c. P10,000
d. P0
Answer: A

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BA 314 MODULE 2 QUIZ

1. Product costs or inventoriable costs:

4. Mixed costs are costs that have

7. An unfavorable price variance occurs because of

Direct materials 5,000

Indirect materials 2,000

Direct labor 6,000

Indirect labor 1,000

Factory utilities 4,000

Advertising costs 8,000

Sales commissions 12,000

Depreciation on administration building 3,000

Salaries of administrative personnel 20,000

Depreciation - delivery equipment 2,000

Overtime pay - factory workers 1,500

9. Total manufacturing costs

Direct materials 5,000

Indirect materials 2,000

Direct labor 6,000

Indirect labor 1,000

Factory utilities 4,000

Overtime pay - factory workers 1,500

Total manufacturing costs 19,500

10. Total non-manufacturing costs

Advertising costs 8,000

Sales commissions 12,000

Depreciation on administration building 3,000

Salaries of administrative personnel 20,000

Depreciation - delivery equipment 2,000

Total non-manufacturing costs 45,000

Kilos of Materials Costs of Operations (PhP)

12. Using the high-low method, the fixed cost of operations is

Month Units Produced Production Costs (PhP)

April 500 4,000

May 700 8,000

June 900 6,000

July 600 7,500

August 800 8,500

September 550 7,250

= (6 * 28,287,500) - (4,050 * 41,250) / (6 * 2,852,500) - (4,050)²

15. The estimated monthly fixed room cleaning cost is

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