MAS-001

1. Knowledge of cost behavior is least useful in which of the following?

a. Cost estimation c. Decision making
b. Cost control d. Product costing

2. Which of the following is an example of classifying costs by their behavior?

a. Direct and indirect c. Relevant and irrelevant
b. Fixed and variable d. Controllable and non-controllable

3. Which of the following best describes a variable cost?

a. It is constant on a per unit basis irrespective of volume or activity.
b. It may change in total if related to volume.
c. It is constant on a per unit basis within the relevant range.
d. It may change in total if unrelated to a change in volume or activity.

4. Which of the following statements is true regarding fixed cost?

a. Fixed cost per unit fluctuated in the same direction as volume or activity.
b. The total amount will not change irrespective of volume or activity.
c. It may change in total if unrelated to a change in volume or activity.
d. It may change in total if related to a change in volume or activity.

5. Which of the following is not a characteristic of a semi-variable cost?

a. The total cost varies less than proportionately with volume or activity.
b. It is partly variable and partly fixed.
c. The total cost per unit varies inversely with volume or activity.
d. The cost per unit is constant within the relevant range.

6. What is a step cost?

a. A cost which fluctuates proportionately with volume or activity.
b. A cost which fluctuates less than proportionately with volume.
c. A cost which fluctuates more than proportionately with volume or activity.
d. A cost which increases abruptly outside the relevant range

7. Which of the following is most likely to be a variable cost?

a. Advertising expense c. Amortization expense
b. Spark plug of a car d. Interest expense

8. Which of the following is most likely to be a fixed cost?

a. Depreciation using the straight line method.
b. Depreciation using the sum of the years digits method.
c. Depreciation using the output method.
d. Depreciation using double declining method.

9. Which of the following would probably be classified as a semi-variable cost?

a. Total direct materials cost c. Total factory overhead cost
b. Total direct labor cost d. Total financing cost

10. Which of the following would probably be classified as step cost?

a. Advertising expense
b. Wages of the factory workers who are paid on a piece rate basis.
c. Insurance expense
d. Depreciation using the SYD method

11. Which of the following is not an example of discretionary fixed cost?

a. Research and development costs c. Repairs and maintenance costs
b. Amortization expense d. Advertising expense

12. Which of the following is an example of committed fixed cost?

a. Supplies expense c. Depreciation expense
b. Repairs and maintenance cost d. Employee training cost
13. Which of the following is the least accurate method for splitting a semi-variable expense?
a. Least squares method c. Scatter graph
b. High and Low point method d. PERT

14. Which of the following charts can be used to be split a semi-variable cost?
a. Pie chart c. Scatter chart
b. Break even chart d. Line chart

15. Which of the following cost behavior is(are) considered abnormal cost?
a. The total cost is fixed but variable on a per unit basis.
b. The cost is constant on a per unit basis but fluctuates on an aggregate basis.
c. The cost varies more than proportionately with volume or activity.
d. The cost varies inversely with volume or activity.
a. Statements A and B c. Statements C and D
b. Statements B and C d. Statements A and D

16. Which of the following assumptions is valid?

a. All direct cost are variable costs
b. All variable cost are direct costs.
c. All fixed costs are indirect costs.
d. All indirect costs are variable costs.

17. Which of the following is the most accurate method for splitting semi-variable expense?
a. High and low point c. Scatter graph
b. Least squares d. Linear programming

18. How many of the following statements is(are) correct?

a. In regression analysis, all variables are dependent on one another.
b. In regression analysis, all the variables are independent of one another.
c. In regression analysis, there must be one dependent variable and one or more independent
variables.
d. In regression analysis, there must be one independent variable and one or more dependent
variables.
a..One b..Two c..Three d..Four

19. Simple regression analysis involves the study of how many variables?
a..One b..Two c..Two ore more d..Three or more

20. Why is regression analysis superior than the other cost behavior analysis techniques?
a. Because it produces measures of probable errors.
b. Because it examines only one variable.
c. Because it proves cause and effect relationship.
d. Because it is not a sampling technique.

21. Multiple regression analysis involves the study of how many variables?
a..One b..Two c..Two ore more d..Three or more

22. Which of the following techniques can be used to determine the fixed and variable element of a company’s
cost?
a. CVP analysis c. Sensitivity analysis
b. Regression analysis d. Linear programming

23. Which of the following statements is true?

a. The higher the production within the relevant range, the higher is the fixed cost per unit.
b. The higher the production within the relevant range, the higher is the variable cost per unit.
c. The lower the production within the relevant range, the lower is the total fixed cost.
d. The lower the production within the relevant range, the lower is the total variable cost.
24. Simple linear regression is a method applied when it is believed that the underlying relationship between
two variables is linear. Which equation below properly represents the underlying true relationship between
variables?
a. y = a + x c. y = a + bx 2 + e
b. y = a + bx d. y = a + bx + e

25. Given the regression equation: y = a + bx + e, identify the following:

Dependent variable Independent variable y-axis intercept Slope of the line
a. a y b x
b. y a x b
c. A b Y x
d. Y x A b

26. JAGDO Company is preparing a flexible budget for 200F and requires a breakdown of the cost of steam used
in its factory into the fixed and variable elements. The following data on the cost of steam used and direct
labor hours worked are available for the last six months of 200f:
Month Cost of steam Direct labor hours
July P 15,850 3,000
August 13,400 2,050
September 16,370 2,900
October 19,800 3,650
November 17,600 2,670
December 18,500 2,650
The Company is using “high and low point” method for splitting a semi-variable cost.
If 40,000 hours of direct labour are budgeted for 200G, what would be the estimated annual cost of steam?
a. P156,200 c. P222,400
b. P165,200 d. P224,200

27. Maggie Corporation’s cost accountant has computed the production costs per unit at four different levels
of actual production as follows:
Production Unit Cost
January 1,000 P 4.50
February 500 6.00
March 2,000 3.75
April 2,500 3.60
Using the high and low point method for splitting a semi-variable cost, what would be the cost per unit at
a normal capacity of 1,500 units per month?
a. P3.00 c. P3.50
b. P3.25 d. P4.00

28. Malta Manufacturers provided you with the following flexible budget of factory overhead at three capacity
levels:
Capacity Factory overhead
60% P 98,000
70% 106,000
85% 118,000
What will be the flexible budget of factory overhead at 90%?
a. P112,000 c. P130,000
b. P122,00 d. P132,00

29. The salesmen of Mariwasak Trading are paid a fixed commission per month plus a fixed percentage based
on their net sales. The schedule of commission paid for the last quarter of 200C showed the following:
Net sales Commission Expense
October P 800,000 P28,000
November 1,200,000 36,000
December 1,500,000 42,000
If the net sales for the next quarter of the following year are budgeted at P3.7M, what is the estimated
commission expense?
a. P 86,00 c. P120,00
b. P110,000 d. P124,000
30. Roullette Company’s flexible budget for production costs shows a total of P21,000 for 3,000 units and
P68,000 for 12,000 units. Once production exceeds10,000 units (normal capacity), fixed costs will increase
by P2,000 but the variable costs per unit will remain the same.
What is the production cost per unit at a production level of 16,000 units?
a. P4.375 c. P5.375
b. P5.000 d. P5.500

31. Baywatch Company’s maintenance cost at 2,800 machine hours is budgeted at P24,400 and at 5,200
machine hours, (outside the normal capacity) the budget is P33,640 which include an increase in fixed cost
of P2,000 and an increase in total variable cost of P40 due to the increase in variable rate. Normal capacity
is 5,000 machine hours.
What would be the estimated maintenance cost at 5,400 machine hours?
a. P32,280 c. P34,240
b. P34,200 d. P34,820

32. Titanic, Ltd. Submitted the following information relating to repairs costs for the last four months of 200G:
Labor hours Total costs Hours x cost (hours)2
September 250 P2,000 500,000 62,500
October 350 2,500 875,000 122,500
November 450 3,000 1,350,000 202,500
December 350 2,500 875,000 122,500
1,400 P10,000 3,600,000 510,000
The company uses the method of least squares for splitting a semi-variable cost. If normal capacity is 400
hours, what would be the estimated maintenance cost per hour?
a..P6.5678 b..P6.875 c..P7.140 d..P7.250

33. The following cost data for maintenance costs at different hours of operations are submitted to you by the
accountant of ET Manufacturing Company for your analysis:
Number of months observed 10
Sum of hours 350
Sum of costs 1,000
Sum of hours x costs 39,200
Sum of hours squared 14,250
How much is the fixed maintenance cost per month?
a..P26.50 b..P30.10 c..P35.00 d..P36.10

34. Shown below is a scatter chart constructed by the management accountant of Boogie Company.
Cost (P)
33,000

11,000
hours
4,000
Based on the chart, what would be the estimated cost at 3,600 hours?
a..P29,100 b..P30,800 c..P38,000 d..P41,800

35. The following information is found in the scatter chart constructed by accountant of Pasiklab Company:
Independent variable, P1,000,000
Slope of the line, 0.25
Y-axis intercept, P7,500
Based on the above date, what is the estimated cost?
a..P250,000 b..P257,500 c..P1,000,000 d..P1,007,500