02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Started on Sunday, 26 January 2025, 9:10 PM
State Finished
Completed on Sunday, 26 January 2025, 9:52 PM
Time taken 41 mins 52 secs
Question 1
Incorrect
Marked out of 1.00
The Kalakian Company makes toys A and B, each of which needs two processes: cutting and wrapping. The contribution margin is P6 for
Product A and P5 for Product B. The table below shows the maximum number of units (constraint) of each product that may be processed in
two departments.
Maximum Capacities (In Product Units)
CUTTING WRAPPING
Product A 60 80
Product B 60 40
Considering the constraint in processing, which combination of Products Y and Z maximizes the total contribution margin?
a. 80 units of A and 0 units of B
b. 40 units of A and 20 units of B
c. 60 units of A and 0 units of B
d. 0 units of A and 60 units of B
e. 0 units of A and 40 units of B
The correct answer is: 60 units of A and 0 units of B
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 2
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Roger Corp., which has experienced excess production capacity, received a special offer for its product B at P78 per unit for 100,000 units. It
has been using the variable costing method and has been pricing its product at P96 per unit based on a mark-up of 60% as follows:
Direct materials P30
Direct labor 20
Variable overhead 6
Variable selling & administrative 4
Total variable expenses P60
60% mark up 36
Selling price P96
Assuming that this special offer will not affect the regular market for the product, should the company accept the special offer?
a. No, since it will mean a loss of P1.16 million.
b. Yes, since it will contribute P2.8 million margin.
c. Yes, since it will contribute P1.8 million margin.
d. No, since it will mean a loss of P1.8 million.
The correct answer is: Yes, since it will contribute P1.8 million margin.
Question 3
Incorrect
Marked out of 1.00
Managerial accountants:
a. often serve as a cross-functional team member, making a wide range of decisions
b. rarely become involved in an organization's decision-making activities.
c. collect data and provide information so that decisions can be made
d. make decisions that focus solely on an organization's accounting matters.
e. become involved in activities "C" and "D."
The correct answer is: become involved in activities "C" and "D."
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 4
Correct
Marked out of 1.00
Dess Technology manufactures a particular computer component. Currently, the costs per unit are as follows:
Direct materials P 50
Direct labor 500
Variable overhead 250
Fixed overhead 400
Total P 1,200
Lou, Inc. has contacted Dess with an offer to sell 10,000 units of the component for P1,100 per unit. If Dess accepts the proposal, P2,500,000 of
the fixed overhead will be eliminated. Should Dess make or buy the component and why?
a. Buy due to savings of P1,000,000.
b. Buy due to savings of P2,500,000.
c. Make due to savings of P3,000,000.
d. Make due to savings of P500,000.
The correct answer is: Make due to savings of P500,000.
Question 5
Correct
Marked out of 1.00
Sunk costs
a. are relevant to long-term decisions but not to short-term decisions.
b. are relevant to decision making.
c. in and of themselves are not relevant to decision making.
d. are substitutes for opportunity costs.
The correct answer is: in and of themselves are not relevant to decision making.
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 6
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Part XY is a component that Mike Co. uses in the assembly of motors. The cost to produce one XY is presented as follows:
Direct materials P 4,000
Materials handling (20% of direct materials) 800
Direct labor 32,000
Overhead (150% of direct labor) 48,000
Total manufacturing cost P84,800
Materials’ handling which is not included in manufacturing overhead represents the direct variable costs of the receiving department that are
applied to direct materials and purchased components on the basis of their cost.
The company’s annual overhead budget is one-third variable and two-thirds fixed. Toyona Co. offers to supply XY at a unit price of P60,000.
Should the company buy or manufacture XY?
a. Buy, due to the advantage of P12,800 per unit.
b. Manufacture, due to advantage of P7,200
c. Buy, due to advantage of P24,800 per unit
d. Manufacture, due to advantage of P19,200 per unit
The correct answer is: Manufacture, due to advantage of P19,200 per unit
Question 7
Correct
Marked out of 1.00
Snider, Inc., which has excess capacity, received a special order for 4,000 units at a price of P15 per unit. Currently, production and sales are
budgeted for 10,000 units without considering the special order. Budget information for the current year follows.
Sales P190,000
Less: Cost of goods sold 145,000
Gross margin P 45,000
Cost of goods sold includes P30,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
a. increase by P14,000.
b. decrease by P2,000.
c. decrease by P14,000.
d. increase by P2,000.
The correct answer is: increase by P14,000.
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 8
Correct
Marked out of 1.00
The term relevant cost applies to all of the following decision situations, except the
a. replacement of equipment.
b. acceptance of a special order.
c. manufacture or purchase of a component part
d. determination of a product price.
The correct answer is: determination of a product price.
Question 9
Correct
Marked out of 1.00
The following standard costs pertain to a component part manufactured by Adel
Company: Direct material P 2.00
Direct labor 5.00
Overhead 20.00
P27.00
Factory overhead is applied at P1 per standard machine hour. Fixed capacity is 60% of applied factory overhead and is not affected by
any “make or buy decision”. It would cost P25 per unit to buy the part from an outside supplier. In the decision to “make or buy”, what is the
total relevant unit manufacturing cost to be considered?
a. P 17
b. P 19
c. P 15
d. P 2
The correct answer is: P 15
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 10
Correct
Marked out of 1.00
An opportunity cost is usually:
a. not relevant, but is part of traditional accounting records
b. relevant, and is part of traditional accounting records
c. relevant, but is not part of traditional accounting records
d. not relevant, and is not part of traditional accounting records
The correct answer is: relevant, but is not part of traditional accounting records
Question 11
Correct
Marked out of 1.00
Among the costs relevant to a make-or-buy decision include variable manufacturing costs as well as:
a. real estate taxes.
b. unavoidable costs.
c. plant depreciation.
d. avoidable fixed costs.
The correct answer is: avoidable fixed costs.
Question 12
Correct
Marked out of 1.00
Lido manufactures A and B from a joint process (cost = P80,000). Five thousand pounds of A can be sold at split-off for P20 per pound or
processed further at an additional cost of P20,000 and then sold for P25. Ten thousand pounds of B can be sold at split-off for P15 per pound
or processed further at an additional cost of P20,000 and later sold for P16. If Lido decides to process B beyond the split-off point, operating
income will:
a. increase by P10,000.
b. decrease by P10,000.
c. decrease by P58,000.
d. increase by P20,000.
e. decrease by P20,000.
The correct answer is: decrease by P10,000.
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Question 13
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Marked out of 1.00
Elda, Inc. manages five upscale townhouses in Marikina, Malabon, and Sampaloc areas. Shown below are the summary income statements for
each complex:
INTHOUSANDPESOS
One Two Three Four Five
Rental income 10,000 12,100 23,470 18,780 10,650
Expenses 8,000 13,000 26,000 24,000 13,000
Profit 2,000 ( 900) ( 2,530) ( 5,220) ( 2,350)
Included in the expenses is P12,000,000 of corporate overhead allocated to the townhouses based on rental income. The complexes that the
company should consider selling is (are):
a. Four.
b. Two, Three, Four, and Five.
c. Four and Five.
d. Three, Four, and Five.
The correct answer is: Four and Five.
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02/02/2025, 11:57 Quiz 5- Relevant Costing: Attempt review | ACTI
Question 14
Correct
Marked out of 1.00
The Shoe Department at the Baton Rouge Department Store is being considered for closure. The following information relates to shoe
activity:
Sales revenue P350,000
Variable costs:
Cost of goods sold 280,000
Sales commissions 30,000
Fixed operating costs 90,000
If 70% of the fixed operating costs are avoidable, should the Shoe Department be closed?
a. No, Baton Rouge would be worse off by P13,000
b. None of the above.
c. Yes, Baton Rouge would be better off by P23,000.
d. Yes, Baton Rouge would be better off by P50,000.
e. No, Baton Rouge would be worse off by P40,000
The correct answer is: Yes, Baton Rouge would be better off by P23,000.
Question 15
Correct
Marked out of 1.00
Elegant, Inc., has P125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as
is" for P45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of P23,000. There the goods could be
sold for P80,000. What alternative is more desirable and what is the relevant cost for that alternative?
a. Neither alternative is desirable, as both produce a loss for the firm.
b. Clean and ship to outlet center, P103,000
c. Sell "as is," P125,000.
d. Clean and ship to outlet center, P23,000.
e. Clean and ship to outlet center, P148,000.
The correct answer is: Clean and ship to outlet center, P23,000.
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