White Company Manufactures A Single Product

White Company manufactures a single product. Unite variable production costs are P20 and fixed production costs are P150,000. White uses a normal activity of 10,000 units. White began the year with no inventory, produced 12,000 units and sold 7,500 units. What is the unit product cost under variable costing? * 2/2 P20

  P32.50 P35 40

  In cost analysis using the line equation y=a+bx, total fixed cost (a) is regarded as the * 0/1 independent variable

  dependent variable slope of the line y-axis intercept Correct answer y-axis intercept

  What cost segregation technique gives the most mathematically precise cost estimate? * 0/1 Scatter-diagram method Least-squares method High-low method Calendar method

  Correct answer Least-squares method

  An increase in the income tax rate * 0/1 Raises the break-even point

Lowers the break-even point Increases sales required to earn a particular after-tax profit Decreases sales required to earn a particular after-tax profit

  Correct answer Increases sales required to earn a particular after-tax profit

  If the coefficient of variable (r) between two variables is +0.99, how might a scatter diagram of these variables appear? * 0/2 Random points A regression that slopes up to the left A regression that slopes up to the right A regression that slopes down to the right

  Correct answer A regression that slopes up to the right

  A % change in pre-tax profit can be quickly computed by multiplying a % change in peso sales by the * 0/1 Sales mix

  Margin of Safety Indifference point Degree of Operating Leverage Correct answer Degree of Operating Leverage

  White Company manufactures a single product. Unite variable production costs are P20 and fixed production costs are P150,000. White uses a normal activity of 10,000 units. White began the year with no inventory, produced 12,000 units and sold 7,500 units. What is the volume (capacity) variance under absorption costing? * 0/2 P24,000 Unfavorable P24,000 Favorable

P30,000 Unfavorable

  P30,000 Favorable Correct answer P30,000 Favorable

  Variable costing is unacceptable for * 1/1 Financial reporting

  Cost-volume-profit analysis Transfer pricing Short-term decision making

  Knowledge on cost behavior is critical to profit planning, particularly in cost-volumeprofit analysis. * 1/1 True

  False

  At the break-even point, total contribution margin is * 0/1 Zero

  Equal to fixed costs Equal to total costs Equal to variable costs Correct answer Equal to fixed costs

  Violet Company had 16,000 units in its beginning inventory. The company variable production costs were P6 per unit and its fixed manufacturing overhead costs were P4 per unit. The company’s net income for the year was P24,000 lower under absorption costing than it was under variable costing.How many units does the company have in its ending inventory? *

2/2 22,000 units 10,000 units 6,000 units

  4,000 units

  Using the statistical normal relationships, the least squares methods devises which of the following equations? * 0/1 y=na+bx;Σxy=aΣx+bΣx2

  y=na+ bΣx; Σxy=ax+bΣx -y=a+ bx2; Σy=na+bΣx Σy=na+bΣx; Σxy=aΣx+bΣx2 Correct answer Σy=na+bΣx; Σxy=aΣx+bΣx2

  There is no volume or capacity variance under variable costing. * 0/1 True False

  Correct answer True

  An increase in actual sales also increases the margin of safety * 1/1 True

  False

  A company that has negative margin of safety necessarily operates at a loss. * 0/1 True

False

  Correct answer True

  Pink Co. had a net income of P85,500 using variable costing and net income of P90,000 using absorption costing. Total fixed manufacturing overhead cost was P150,000 and production was 100,000 units.How did the inventory level change during the year? * 0/2 3,000 units increase 4,500 units increase

  3,000 units decrease 4,500 units decrease Correct answer 3,000 units increase

  An increase in contribution margin ratio reduces the break-even point. * 1/1 True

  False

  If the tax rate increases, then the break-even point also increases. * 1/1 True False

    Assuming there are FFOH costs, the cost of inventory under absorption costing is higher than the cost of inventory under variable costing. * 1/1 True

 

False

  If inventories are expected to change, the type pf costing that provides the best information for break-even analysis is * 0/1 Job-order costing

  Variable costing Joint costing Absorption costing Correct answer Variable costing

  Under just-in-time (JIT) production environment, income under absorption costing tends to be equal with income under variable costing. * 0/1 True False

  Correct answer True

  Under variable costing, all product costs are variable. * 1/1 True

  False

  The operating leverage factor is equal to * 0/1 Gross margin ÷ profit after tax

  Gross margin ÷ profit before tax Contribution margin ÷ profit after tax Contribution margin ÷ profit before tax

Correct answer Contribution margin ÷ profit before tax

  Which of the following costs is treated differently under absorption and variable costing? * 0/1 Direct Labor Raw Materials Fixed Manufacturing Overhead Variable Manufacturing Overhead

  Correct answer Fixed Manufacturing Overhead

  If production is higher is higher than sales, then absorption costing income is expected to be * 1/1 Lower than variable costing income Higher than variable costing income

  Equal to the variable costing income Incomparable with variable costing income

  What is the appropriate range for the coefficient of determination (r2)? * 1/1 0 to +1

  -1 to +1 -1 to 0 0 to infinity

  Under variable costing, fixed manufacturing overhead costs are best described as * 0/1 Direct period costs

  Indirect period costs Direct product costs

Indirect product costs Correct answer Indirect period costs

  Green company has an operating income of P50,000 under direct costing. Beginning and ending inventories were 13,000 and 18,000 units, respectively.If fixed factory overhead application rate is P2 per unit, then what is the operating income under the absorption costing? * 2/2 P70,000 P60,000

  P50,000 P40,000

  A company has developed a production cost equation for its lone product: y=50+2x, where x is based on the number of labor hours. Assuming a relevant range of 10 to 20 hours, what is the estimated production cost at zero (0) labor hour? * 0/2 P2 P50

  P52 An amount that cannot be determined from the given information. Correct answer An amount that cannot be determined from the given information.

  Variable costing income fluctuates with production and does not react to changes in sales. * 0/1 True

  False Correct answer False

  If inventories are expected to change, the type pf costing that provides the best information for break-even analysis is * 1/1 Job-order costing Variable costing

  Joint costing Absorption costing

  Unit variable costs are costs that change in direct proportion to changes in the activity level. * 1/1 True False

    Under variable costing, all variable costs are treated as product costs. * 0/1 True

  False Correct answer False

  White Company manufactures a single product. Unite variable production costs are P20 and fixed production costs are P150,000. White uses a normal activity of 10,000 units. White began the year with no inventory, produced 12,000 units and sold 7,500 units. What is the unit product cost under absorption costing? * 0/2 P20 P32.50 P35 40

  Correct answer

P35

  Ana company is interested in the relationship between sales (dependent variable) and occurrence of rain (independent variable). Using the proper formula, the coefficient of correlation (r) is computed as -0.99. What is the conclusion about the sales and rain occurrence could one make? * 2/2 An increase in sales causes an increase in rain occurrence. An increase in sales causes a decrease in rain occurrence. An increase in rain occurrence causes a decrease in sales.

  An increase in rain occurrence causes an increase in sales.

  Under absorption costing, fixed manufacturing overhead costs are best described as * 1/1 Direct period costs Indirect period costs Direct product costs Indirect product costs

    Black Company produced 10,000 units and sold 9,000 units. Fixed manufacturing overhead costs were P20,000, and variable manufacturing overhead costs were P3 per unit. Which of the following best describes the net income under the absorption costing method? * 0/2 P2,000 more than net income under variable costing method P5,000 more than net income under variable costing method

  P2,000 less than net income under variable costing method P5,000 less than net income under variable costing method Correct answer P2,000 more than net income under variable costing method