ACC 115| Management Science

Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

Quiz Materials:
Pen and non-scientific
calculator

GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT

This is a 7 paged test and is composed of 1 section and has a total score of 30 points. You have sixty
(60) Minutes to finish this examination. The breakdown of the exam is as follows:

(1) Multiple-choice questions - The questions in this LEARNING OBJECTIVE:

section is with four answer choices. The test is
composed of 30 questions and is rated as 1 point each. This assessment measures the
competence of the student in terms of
All things unnecessary for the test must be put in front of the his/her application of knowledge and skills
testing area. Use BLACK or BLUE ink ballpen only. Write all your in the following topic:
answers on the designated answer sheet. Further, erasures are 1. Relevant Costing
strictly NOT allowed and will invalidate your answers.

You may NOT use smart phones or reference materials during the testing session. Only the allowed
calculators should be used.

Try to answer all questions. In general, if you have some knowledge about a question, it is better to try
to answer it. You will not be penalized for guessing.

Be sure to allocate your time carefully so you can complete the entire test within the exam session. You
may go back and review your answers at any time during the exam session.

Those who are caught cheating or doing acts not allowed during the exam shall be instructed to
surrender their test papers and shall leave the testing room immediately. Subsequently, their papers
shall be rated as ZERO.

This concludes the instruction page.

You may now begin answering.

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
1

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

Write your final answer on the box provided before the number. Use CAPITAL letters only. Answers
written outside the box will not be considered. Erasures, changing of final answer, and the like will be
considered wrong.

1. Genco Company produces three products from a joint process costing ₱100,000. The following
information is available:
Selling Price Costs to Selling Price After
Units at Split-off Process Further Further Processing
A 10,000 ₱35 ₱70,000 ₱40
B 20,000 ₱40 ₱30,000 ₱45
C 30,000 ₱20 ₱90,000 ₱25
Which products should be sold without further processing?
a. A only. b. A and B. c. B and C. d. C only.

2. Which of the following costs is relevant in deciding whether to sell joint products at split-off or
process them further?
a. The unavoidable costs of further processing.
b. The avoidable costs of further processing.
c. The variable cost of operating the joint process.
d. The cost of materials used to make the joint products.

3. A manufacturing process that invariably produces two or more products

a. is a complementary process. c. normally has only fixed costs.
b. is a joint process. d. usually has primarily variable costs.

4. Which of the following is true?

I. The costs of operating a joint process can be fixed or variable.
II. Incremental costs can be either fixed or variable.

a. I only b. II only c. Both I and II d. Neither I nor II

5. A common cost
a. relates to a process that produces more than one product.
b. should be allocated to the segments of a company.
c. can usually be avoided in its entirety by dropping a segment.
d. none of the above.

6. Which of the following is NOT relevant in deciding whether to process a joint product beyond its
split-off point?
a. The split-off value. c. The cost of further processing.
b. The price after additional processing. d. The cost of operating the joint process.

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
2

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

7. Lido manufactures A and B from a joint process (cost = ₱80,000). Five thousand pounds of A
can be sold at split-off for ₱20 per pound or processed further at an additional cost of ₱20,000
and then sold for ₱25. Ten thousand pounds of B can be sold at split-off for ₱15 per pound or
processed further at an additional cost of ₱20,000 and later sold for ₱16. If Lido decides to
process B beyond the split-off point, operating income will:
a. increase by ₱10,000. c. decrease by ₱10,000.
b. increase by ₱20,000. d. decrease by ₱20,000.

8. Information about three joint products follows:

A B C
Anticipated production 5,000 lbs. 1,000 lbs. 2,000 lbs.
Selling price/lb. at split-off ₱10 ₱30 ₱16
Additional processing costs/lb. after split-off (all variable) ₱6 ₱12 ₱24
Selling price/lb. after further processing ₱20 ₱40 ₱50
The cost of the joint process is ₱60,000. Which of the joint products should be sold at split-off?
a. A b. B c. C d. both A and B

9. When a scarce resource, such as space, exists in an organization, the criterion that should be
used to determine production is
a. contribution margin per unit. c. contribution margin per unit of scarce resource.
b. selling price per unit. d. total variable costs of production.

10. Fixed costs are ignored in allocating scarce resources because

a. they are sunk.
b. they are unaffected by the allocation of scarce resources.
c. there are no fixed costs associated with scarce resources.
d. fixed costs only apply to long-run decisions.

11. The most profitable use of a resource that has limited capacity and is needed in the production
of more than one product is a function of which of the following?
a. The number of units of each product the company can sell.
b. The contribution margin of each product.
c. The amount of resource-use required for each unit of each product.
d. All of the above.

12. Bear Valley produces three products: A, B, and C. One machine is used to produce the
products. The contribution margins, sales demands, and time on the machine (in minutes) are
as follows:
Demand CM time on machine
A 100 ₱25 10
B 80 18 5
C 150 30 10

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
3

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

There are 2400 minutes available on the machine during the week. How many units should be
produced and sold to maximize the weekly contribution?
A B C
a. 100 80 150
b. 50 80 150
c. 90 0 150
d. 100 80 100

13. Smith Manufacturing has 27,000 labor hours available for producing X and Y. Consider the
following information:
Product X Product Y
Required labor time per unit (hours) 2 3
Maximum demand (units) 6,000 8,000
Contribution margin per unit ₱5.00 ₱6.00
Contribution margin per labor hour ₱2.50 ₱2.00

If Smith follows proper managerial accounting practices, which of the following production
schedules should the company set?
Product X Product Y
a. 0 units 8,000 units
b. 1,500 units 8,000 units
c. 6,000 units 0 units
d. 6,000 units 5,000 units

Use the following information for the next two questions:

Johnson Company makes two products: Carpet Kleen and Floor Deodorizer. Operating information
from the previous year follows.
Carpet Kleen Floor Deodorizer
Units produced and sold 5,000 4,000
Machine hours used 5,000 2,000
Sales price per unit ₱7 ₱10
Variable cost per unit ₱4 ₱8
Fixed costs of ₱20,000 per year are presently allocated equally between both products. If the product
mix were to change, total fixed costs would remain the same.

14. The contribution margin per machine hour for Floor Deodorizer is:
a. ₱0.25. b. ₱2.00. c. ₱4.00. d. ₱5.00.

15. Assuming there is unlimited demand for both products and Johnson has 10,000 machine hours
available, how many units of each product should be produced and sold?
Carpet Kleen Floor Deodorizer
a. 0 units 20,000 units
b. 5,000 units 10,000 units

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
4

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

c. 8,000 units 4,000 units

d. 10,000 units 0 units

16. Which of the following is true?

I. A given fixed cost might be separable and relevant for the purpose of one decision and
common and irrelevant for the purpose of another decision in the same company.
II. Fixed costs that are allocated to several segments are normally irrelevant to decisions for one
of those segments.
a. I only b. II only c. Both I and II d. Neither I nor II

17. Coastal Airlines has a significant presence at the San Jose International Airport and therefore
operates the Emerald Club, which is across from gate 36 in terminal 1. The Emerald Club
provides food and business services (e.g., data ports) for the company's frequent flyers.
Consider the following selected costs of Club operation:
1. Receptionist and supervisory salaries
2. Catering
3. Terminal depreciation (based on square footage)
4. Airport fees (computed as a percentage of club revenue)
5. Allocated Coastal administrative overhead

Management is exploring whether to close the club and expand the seating area for gate 36.
Which of the preceding expenses would the airline classify as unavoidable?
a. 1, 3. b. 2, 4. c. 3, 5. d. 1, 3, 5.

18. A manager is attempting to determine whether a segment of the business should be eliminated.
The focus of attention for this decision should be on
a. the net income shown on the segment's income statement.
b. sales minus total expenses of the segment.
c. sales minus total direct expenses of the segment.
d. sales minus total variable expenses and avoidable fixed expenses of the segment.

19. The Shoe Department at the Baton Rouge Department Store is being considered for closure.
The following information relates to shoe activity:

Sales revenue ₱350,000

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. Yes, Baton Rouge would be better off by ₱23,000.
b. Yes, Baton Rouge would be better off by ₱50,000.

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
5

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

c. No, Baton Rouge would be worse off by ₱13,000.

d. No, Baton Rouge would be worse off by ₱40,000.

20. Ortega Interiors provides design services to residential and commercial clients. The residential
services produce a contribution margin of ₱450,000 and have traceable fixed operating costs of
₱480,000. Management is studying whether to drop the residential operation. If closed, the
fixed operating costs will fall by ₱370,000 and Ortega's net income will:
a. increase by ₱80,000. c. decrease by ₱80,000.
b. increase by ₱340,000. d. decrease by ₱340,000.

21. Holt Industries has two sales territories – East and West. Financial information for the two
territories is presented below:
East West
Sales ₱980,000 ₱750,000
Direct costs:
Variable (343,000) (225,000)
Fixed (450,000) (325,000)
Allocated common costs (275,000) (175,000)
Net income (loss) ₱(88,000) ₱ 25,000
Because the company is in a start-up stage, corporate management feels that the East sales
territory is creating too much of a cash drain on the company and it should be eliminated. If the
East territory is discontinued, one sales manager (whose salary is ₱40,000 per year) will be
relocated to the West territory. By how much would Holt's income change if the East territory is
eliminated?
a. increase by ₱88,000 c. decrease by ₱267,000
b. increase by ₱48,000 d. decrease by ₱227,000

22. Occidental is contemplating dropping a product because of ongoing losses. Costs that would
be relevant in this situation would include variable manufacturing costs as well as:
a. factory depreciation. c. unavoidable fixed costs.
b. avoidable fixed costs. d. allocated corporate administrative costs.

23. The Accessories Department shows sales of ₱35,000. Variable costs are ₱30,000 and allocated
unavoidable fixed costs are ₱9,000, leaving a ₱4,000 loss. Based on this information and all
other things equal,
a. the department contributes ₱35,000 to total profits.
b. dropping the department will reduce total company profits by ₱5,000.
c. the department should be closed.
d. the department should be kept only if unit volume can be increased enough to increase sales
by ₱4,000.

24. Which of the following may not influence a company's pricing decisions?
a. Manufacturing costs. c. Customer demand.

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
6

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
 ACC 115| Management Science
Module #18 Student Activity Sheet

Name: _________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________ Date: ________________

b. Competitors. d. Existing loan.

25. Which of the following represents the cost-plus pricing formula?

a. Price = cost + (markup percentage x cost). c. Price = markup percentage x cost.
b. Price = cost + markup percentage. d. Price = cost + (markup percentage +
cost).

26. If a company uses a cost-plus approach to pricing, it will find:

a. there are several different definitions of cost and the higher the cost, the higher the markup
percentage.
b. there are several different definitions of cost and the higher the cost, the lower the markup
percentage.
c. there is one definition of cost, and there is no relationship between cost and the markup
percentage used.
d. there is one definition of cost, and there is no markup percentage with the cost-plus
approach.

27. The following costs relate to Riley Company: Variable manufacturing cost, ₱42; variable selling
and administrative cost, ₱10; applied fixed manufacturing overhead, ₱37; and allocated fixed
selling and administrative cost, ₱12. If Riley uses absorption manufacturing-cost pricing
formulas, the company's markup percentage would be computed on the basis of:
a. ₱42. b. ₱52. c. ₱79. d. ₱101.

28. The following data pertain to Quigley Enterprises:

Variable manufacturing cost ₱70
Variable selling and administrative cost 20
Applied fixed manufacturing cost 40
Allocated fixed selling and administrative cost 15

What price will the company charge if the firm uses cost-plus pricing based on absorption
manufacturing cost and a markup percentage of 110%?
a. ₱84. b. ₱147. c. ₱210. d. ₱231.

29. Albany uses a 140% markup on total cost and recently computed a selling price of ₱1,560 for a
particular product. On the basis of this information, the product's total cost is:
a. ₱650.00. b. ₱910.00. c. ₱1,114.29. d. ₱2,184.00.

30. If the target profit is ₱60,000 for a volume of 480 units, fixed costs are ₱168,000, and the
variable cost per unit is ₱450, then the markup percentage on variable cost would be:
a. 104.56%. b. 105.56%. c. 106.00%. d. 106.45%.

- End -

This document is the property of PHINMA EDUCATION

This study source was downloaded by 100000877814020 from CourseHero.com on 02-05-2024 20:14:10 GMT -06:00
7

https://www.coursehero.com/file/126398010/SAS18-ACC115-QUIZpdf/
Powered by TCPDF (www.tcpdf.org)