COMPILATION OF

MULTIPLE CHOICE
QUESTIONS
IN
ACCOUNTING 14

Vasquez, Ram Vincent T.

WF-56
Mr. Rhamir C. Dalioan
BREAK- EVEN SALES

Multiple Choice Question:

Problem 1

Rhamir and Bro’s Garment Ltd. sells shirts for men and boys. The average selling price and variable cost
for each product are as follows:

MEN’S BOYS’
Selling Price P28.80 P24.00
Variable Cost P20.40 P16.80

Fixed Costs P38,400.

What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of
men’s shirts?
a. 1,600 units
b. 1,333 units
c. 3,200 units
d. 1,882 units

What is the operating income, assuming the sales mix is 2:1 in favor of men’s shirts, and sales total 9,000
shirts?
a. P172,000
b. P72,000
c. P33,600
d. P24,600

Problem 2

Yamate International manufactures two products; Yakult and Magnolia. Yakult sells for P800 and
Magnolia sells for P1,200. Company sell its products through its own stores and outlets owned by
various merchandising companies. Total fixed cost of Yamate International are P132,000 per month.

Variable Expenses per unit:

Yakult P480.00
Magnolia P240.00

Monthly sales in units:

Yakult 200 units
Magnolia 80 units

How much is the breakeven sales

a. P293,333 b. P240,000
c. P256,000 d. P132,000
How much is the Margin of Safety in pesos
a. P16,000 b. P37,333
c. P124,000 d. P53,333

Problem 3
Andeng’s Service Stations Inc., sells car batteries to service stations for an average of P1,500 each. The
variable cost of each battery is P1,000 and monthly fixed manufacturing costs total P500,000. Other
monthly fixed costs of the company total P400,000.
What is the breakeven point in batteries?

a. 900 c. 600
b. 1,800 d. 500

Problem 4

Miller, Inc., sells a single product. The company’s most recent income statement is given below.
Sales (4,000 units) P120,000
Variable Expenses (68,000)
Contribution Margin 52,000
Fixed Costs (40,000)
Net Income P12,000

What is Compute how many units must be sold to breakeven.

a. 3,077 c. 2,353
b. 2,667 d. 2,857

What is Compute how many units must be sold to achieve profits of P20,000.
a. 4,615 c. 3,529
b. 4,000 d. 4,286
Problem 5

The data below pertain to two types of products manufactured by Korn Corporation:

Unit Sales Price Unit Variable Costs

Product Y P120 P70
200
Product Z 500

Fixed costs total P300,000 annually.

The expected mix in units is 60% for product Y and 40% for product Z.
How much is Korn's breakeven sales in units?
A. 857 C. 2,000
B. 1,111 D. 2,459
HIGH-LOW METHOD
MULTIPLE CHOICE

Problem 1

RCD Company makes weather balloons. The company controller wanted to calculate the fixed and variable
costs associated with the maintenance cost incurred by the factory. Data for the past six months were
collected.

Month Maintenance Cost Machine Hours

January ₱10,120 526
February 9,560 389
March 9,712 412
April 10,460 569
May 10,226 541
June 9,686 399

Using the high-low method, calculate the fixed cost of maintenance and the variable rate per machine
hour.

A. Variable cost ₱5.00 ; Fixed Cost ₱7,615

B. Variable cost ₱4.00 ; Fixed Cost ₱8,004
C. Variable cost ₱3.00 ; Fixed Cost ₱8,393
D. Variable cost ₱2.00 ; Fixed Cost ₱P8,782

Problem 2

Grande Company’s factory overhead costs in the previous months are as follows:

Cost Level of Production

July ₱30,000 6,000
August ₱20,000 5,000
September ₱25,000 4,000

What is the variable cost per unit and total fixed cost using the high low method?

A. Variable cost ₱2.75 ; Fixed Cost ₱13,500

B. Variable cost ₱2.50 ; Fixed Cost ₱15,000
C. Variable cost ₱1.50 ; Fixed Cost ₱21,000
D. Variable cost ₱3.25 ; Fixed Cost ₱10,500

Problem 3

Siber Company’s factory overhead costs are ₱10,000 for 80,000 units are sold, and ₱14,000 when
120,000 units are sold. Using the high-low point method, what is the variable cost per unit and the fixed
factory overhead cost?
 A. Variable cost per unit ₱0.05 ; Fixed Cost ₱8,000
B. Variable cost per unit ₱0.10 ; Fixed Cost ₱2,000
C. Variable cost per unit ₱0.08 ; Fixed Cost ₱4,400
D. Variable cost per unit ₱0.06 ; Fixed Cost ₱6,800

Problem 4

Huett Co. wanted to calculate the fixed and variable costs associated with the maintenance cost
incurred by the factory. Data for the past six months were collected.

Month Hours of Maintenance Maintenance Cost

January 625 ₱ 7950

February 500 7400
March 700 8275
April 550 7625
May 775 9100
June 800 9800

What is the variable cost per unit and total fixed cost?
A. Variable cost ₱7.50; Fixed Cost ₱3,650
B. Variable cost ₱6.25; Fixed Cost ₱4,275
C. Variable cost ₱8.00; Fixed Cost ₱3,400
D. Variable cost ₱7.00; Fixed Cost ₱P3,900

Problem 5

Super Truck Inc. provided information for costs of its delivery fleet:

Month Miles Total Cost

January 58,000 ₱95,000
February 67,000 100,000
March 49,000 80,000
April 79,000 101,000

Use the high low method to determine the variable cost per unit and total fixed costs.

A. Variable cost ₱1.00 ; Fixed Cost ₱22,000

B. Variable cost ₱1.20 ; Fixed Cost ₱6,200
C. Variable cost ₱0.50 ; Fixed Cost ₱61,500
D. Variable cost ₱0.70 ; Fixed Cost ₱45,700
VARIABLE COSTING METHOD ( METHOD)

MULTIPLE CHOICE PROBLEMS

Problem 1 (AGAMATA)

Santino Cleaning Products Inc. completed it’s first year of operations during which time the following
information were generated.

Units Produced 100,000

Units Sold 80,000 at 100 per unit

Work In Process Inventory

Cost:

Fixed Cost

Factory Overhead PHP1,200,000

Selling and Admin 700,000

Per Unit Variable Cost

Raw Materials PHP 20.00

Direct Labor 12.50

Factory Overhead 7.50

Selling and Admin 10.00

If the company used the variable costing method, the operating income would be?

A. P 2,100,000 C. P 2,480,000
B. P 4,000,000 D. P3,040,000
Problem 2 (Agamata)

The books of Sogo Corporation pertaining to the year ended December 31, 2017 operations, showed the
following figures relating to product A

Beg. Inv (Finished Goods and Work in Process) None

No. of units produced 40,000 units

No. of units sold at P15 32,500 units

Direct Materials Used P177,500

Direct Labor Used 85,000

Manufacturing Cost

Fixed P 110,000

Variable 61,500 P 171,500

Fixed Administrative Expenses 30,000

Under Variable Costing what would be the finished goods inventory as of 12/31/17?

A. P 81,375.00
B. P 60,750.00
C. P 87,000.00
D. P 49,218.75
E. Answer not given

Problem 3 (Roque)

Cassandra Corporation produces and sells a single product. In 200A, It’s first year of operation, planned
and actual production was 80,000 units. It sold 75,000 of these units for P 30 per unit

Planned and actual cost of 200A were as follows:

Manufacturing Non-Manufacturing

Variable P480,000 P400,000

Fixed P320,000 P240,000

Using Variable Costing Method, The company’s operating income in 200A would be?

A. P 860,000 C. P 1,500,000
B. P 840,000 D. P 1,400,000

Problem 4 (Roque)

Kabighabighani Company produces a single product. Last year the company’s net operating income
computed by the absorption costing method was P36,000 and it’s net operating income computed by the
variable costing method was P26,000. The company’s unit product cost was P18 under variable costing.
During this period, Inventory changed by 5,000 units.

How much is the company’s unit product cost using Variable Costing Method?

A. P 20 C. P 16
B. P 18 D. P 2

Problem 5 (Agamata)

The following operating data are available from the records of Jidda Company for the month of January
2018

Sales (P70 per unit) P 210, 000

Direct Materials 59,200

Direct Labor 48,000

Manufacturing Overhead

Fixed 36,080

Variable 24,000

Marketable and General Expense

Fixed 11,000

Variable 5% of sales

Units of Production – 3, 280

Note: No beginning inventory

What is the net income for the month under variable costing method would be?

A. P 32,420 C. P 23,320
B. P 25,500 D. P 22,420
ABSORPTION COSTING METHOD

MULTIPLE CHOICE PROBLEMS

Problem 1

Senyora Santibanez Ltd. Maufactures a single product for which the costs and selling prices are:

Variable Production Cost P50 per unit

Selling Price P150 per unit

Fixed Production Overhead P200,000 per quarter

Fixed Selling and Admin. Overhead P480,000 per quarter

Normal capacity is 20,000 units per quarter. Production in one quarter was 19,000 units and sales
volume was 16,000 units. No opening of inventory for the quarter.

What is the total amount of profit for the quarter using Absorption Costing?

A. P 920,000 C. P 960,000
B. P 950,000 D. P 970,000

Problem 2

Pasukan Mo Corporation produces a single product. Variable manufacturing cost is P20 per unit and
fixed manufacturing cost is P150,000. Pasukan Mo Corporation uses a normal activity of 5,000 units to
set it’s standard

Labasan Corporation began the year with no inventory, produced 5,500 units and sold 5,250 units.

What is Pasukan Mo Corporation’s Ending Inventory Cost Using Absorption Costing Method?

A. P 25,000 C. P 5,000
B. P 12,500 D. P 11,818
Problem 3

Wattaloves Company produces a single product. Production is done only when orders are received from
customers. Thus, no inventory is kept at the end of the period. For the last period, the following data
were available:

Sales P32,000

Materials 7,240

Labor 4,840

Rent (90% Factory, 10% Office) 2,400

Depreciation (80% Factory, 20%) 2,400

Supervision (2/3 Factory, 1/3 Office) 1,200

Salesmen’s Salaries and Commission 1,040

Insurance (60% factory, 40% office) 960

Office supplies 600

Advertising 560

Assume that the company uses Absorption Costing Method, The Cost of Goods sold during the
period was?

A. P 18,640 C. P 20,840
B. P 17,216 D.P 12,080
Problem 4

Masipag Corporation produces 10,000 units of Sansei Shampoo during the month of December.
Cost were incurred during the month were as follows:

Direct Materials Used P 20,000

Direct Labor 16,000

Variable Manufacturing Overhead 8,000

Fixed Manufacturing Overhead 10,000

Variable Selling and Administrative Expense 2,400

Fixed Selling and Administrative Expense 9,000

P65,400

What were Sansei Shampoo’s product cost per unit under Absorption Costing?

A. P 6.54 C. P 3.60
B. P 4.40 D. P 5.40

Problem 5

For P1,000 per box, The Fantastic Producers, Inc. produces and sells delicacies. Direct materials are P400
per box and direct manufacturing labor averages P75 per box. Variable overhead is P25 per box and
fixed overhead is P12,500,000 per year. Administrative expenses, All fixed run P4,500,00 per year, with
sales commission of P100 per box. Production is expected to be 100,000 boxes, which is met every year.
For the year just ended, 75,000 boxes were sold.

What is the Inventoriable Cost per box using Absorption Costing?

A. P 625 C. P 770
B. P 500 D. P 670
Relevant Costing

Multiple Choice Problems

Problem 1

Plainview Company manufactures part X for use in it’s production cycle. The cost per unit for 10,000
units of part G are as follows:

Direct Material P 3.00

Direct Labor 15.00

Variable Overhead 6.00

Fixed Overhead 8.00

Welfareville Company has offered to sell Plainview 10,000 units of Part G for P30 per unit. If Plainview
accepts Welfareville’s offer, the released facilities could be used to save P 45,000 in relevant costs in the
manufacture of Part H. In addition, P5 per unit of the fixed overhead applied to part G would be totally
eliminated. What alternative is more desirable and by what amount is it more desirable?

Alternative Amount

A. Manufacture P 10,000
B. Manufacture 15,000
C. Buy 35,000
D. Buy 65,000

Problem 2
ACS Corporation manufactures a product that is sold for P 37.95. It uses absorption cost system.
Plant capacity is 750,000 units annually, but normal volume is 500,000 units. Cost at normal are
given below:
Unit Cost Total Cost
Direct Materials P 9. 80 P 4,900,000
Direct Labor 4.50 2,250,000
Manufacturing OH 12.00 6,000,000
Selling and Administrative
Variable 2.50 1,250,000
 Fixed 4.20 2,100,000
Total Cost P 33.00 P 16,500,000