PHILIPPINE CHRISTIAN UNIVERSITY – DASMARINAS CITY, CAVITE

COST ACCOUNTING 1
1ST LONG QUIZ

___1. Maggi House makes handmade furniture. Although the company is very
successful, it is
unable to hire enough skilled workers to meet the demand for many of its products. The
company will be most profitable if it produces those products with the highest:
a. contribution margin per direct labor hour.
b. contribution rate.
c. sales per unit.
d. contribution margin per unit.

___2. A 45% contribution rate means that:

a. the company should contribute 45% of its operating income to qualified charities for
maximum tax benefits.
b. 55% of the company’s revenue is consumed by fixed and variable costs.
c. the company’s revenue has increased by 45% during the current accounting period.
d. 45% of the company’s revenue is available to cover fixed costs and to contribute toward
operating income.

___3. In the area of CVP analysis, the contribution margin rate shows how much each peso of
of the sales contributes to:
a. covering the fixed costs of the business and providing operating income.
b. fixed expenses and variable expenses.
c. variable expenses and interest charges.
d. variable expenses when production is at normal capacity.

___4. A semivariable cost:

a. increases and decreases directly and proportionately with changes in volume.
b. changes in response to a change in volume, but not proportionately.
c. increases if volume increases but remains constant if volume decreases.
d. changes inversely in response to a change in volume.

___5. Which of the following is an example of a fixed cost for an airline?

a. Depreciation on the corporate headquarters.
b. Fuel costs.
c. Income taxes expenses.
d. Passengers’ meals

___6. The break-even point in a CVP graph is always found:

a. at 50% of full capacity.
b. at the sales volume resulting in the lowest average unit cost.
c. at the volume at which total revenue equals total variable costs.
d. at the volume at which total revenue equals total fixed costs plus total
variable costs.

___7. A 45% contribution rate means that:

a. The company should contribute 45% of its operating income to qualified
charities for maximum tax benefits.
b. 55% of the company’s revenue is consumed by fixed and variable costs
c. The company’s revenue has increased by 45% during the current accounting
period.

d. 45% of the company’s revenue is available to cover fixed costs and to

 contribute toward operating income.

____8. In the area of cost volume profit analysis, the contribution rate show how
much each peso of sales contributions to:

a. Covering the fixed cost of the business and providing operating income.
b. Fixed expenses and variable expenses.
c. Variable expenses and interest charges.
d. Variable expenses when production is at normal capacity.

____9. In comparison to selling a product with a low contribution rate, selling a

product with a high contribution rate always:

a. Requires lower sales volume to cover a given level of fixed costs.

b. Results in a greater margin of safety.
c. Results in higher operating income.
d. Results in a higher contribution margin per unit sold.

___10. Contribution margin means

a. What remains from total sales after deducting fixed expenses
b. What remains after deducting cost of goods sold to cover fixed and variable
expenses
c. The sum of cost of goods sold and variable expenses.
d. What remains from total sales after deducting all variable expenses.

___11. Which costs will change with a decrease in volume?

a. Total fixed cost and total variable cost
b. Unit fixed cost and total variable cost
c. Unit variable cost and unit fixed cost
d. Unit fixed cost and total fixed cost.

___12. When production levels are expected to decline within a relevant range, what
effects would be anticipated with respect to each of the following?

Fixed costs per unit Variable costs per unit

a. Increase Increase
b. Increase No change
c. No change No change
d. No change Increase

___13. Within a relevant range, the amount of variable cost per unit
a. Differs at each production level.
b. Remains constant at each production level.
c. Increases as production increases.
d. Decreases as production increases.

___14. Duterti Food Imports determines that its shipping expense is Php 18,000 for
16,000 pounds shipped and Php 22,500 form 22,000 pounds shipped. If the
company shipped 18,000 pounds during the current month, projected shipping
cost should be

a. Php 18,500 c. Php 19,500

b. Php 20,400 d. Php 24,000