Disclaimer: Students are responsible for all the materials covered in class.

This document is
for revision purposes only. The Instructor reserves the right to design the examinations to
meet the learning objectives.
Chapter 13
Q1) Activities of Corporate social responsibility
Q2) Sarbanes-Oxley Act of 2002 (SOX) in the context of Managerial Accounting
Chapter 14
Q3) An increase in volume within the relevant range will cause costs to change in what ways?
Q4)
ABC Company uses an activity-based costing system. It has the following manufacturing
activity areas, related cost drivers and cost allocation rates:
Activity
Machine setup
Materials handling
Machining
Assembly
Inspection

Cost Driver
Number of setups
Number of parts
Machine hours
Direct labor hours
Number of finished units

Cost Allocation Rate

$10.00
0.30
15.00
24.00
8.00

During the month, 100 units were produced, with no defects, requiring four setups. Each unit
consisted of 15 parts, 4 direct labor hours and 3 machine hours. Direct materials cost $40 per
finished unit.
What is the total manufacturing cost for the period?
100 x [(15 x $0.30) + (4 x $24) + (3 x $15) + $40 + $8] + (4 x $10) = $
100 x [$4.50 + $96 +$45+$48) + $40 = $19,390
Chapter 15
Q5) ABC Company sells one product at a price of $20 per unit. Variable expenses are 30
percent of sales, and fixed expenses are $30,000. The sales dollars level required to break even
are:
Break even in sales dollars = fixed costs divided by contribution margin percentage
= $30,000 / (100% 30%) = $42,857

Disclaimer: Students are responsible for all the materials covered in class. This document is
for revision purposes only. The Instructor reserves the right to design the examinations to
meet the learning objectives.
Q6)
The following costs relate to Soapbox Company for a relevant range of up to 10,000 units
annually:
Variable Costs:
Direct materials
Direct labor
Manufacturing Overhead
Selling and administrative
Fixed Costs:
Manufacturing overhead
Selling and Administrative

$2.50
0.75
2.25
2.00
$20,000
20,000

Soapbox sells each unit for $10.00.

Which of the following equations best describes the equation to determine total profit for a
sales volume of 8,000 units?
Profit = $10.00X ($40,000 + $7.50X)
Q7)
The following costs relate to Soapbox Company for a relevant range of up to 10,000 units
annually:
Variable Costs:
Direct materials
Direct labor
Manufacturing Overhead
Selling and administrative
Fixed Costs:
Manufacturing overhead
Selling and Administrative

$2.50
0.75
2.25
2.00
$20,000
20,000

Soapbox sells each unit for $10.00.

At a sales volume of 10,000 units, what is the total cost for Soapbox Company?
Total Cost = $20,000 + $20,000 + ($2.50 + $0.75 + $2.25 + $2.00)10,000 =$115,000

Disclaimer: Students are responsible for all the materials covered in class. This document is
for revision purposes only. The Instructor reserves the right to design the examinations to
meet the learning objectives.
Chapter 16
Q8) and Q9)
Relevant cost, Irrelevant cost, Sunk cost, Opportunity cost, Outlay cost,
Q10)
ABC Corporation manufactures a product with the following full unit costs at a volume of 4,000
units:
Direct materials
Direct labor
Manufacturing overhead (30% variable)
Selling expenses (50% variable)
Administrative expenses (10% variable)
Total per unit

$300
100
200
50
100
$560

A company recently approached ABCs management with an offer to purchase 450 units for
$450 each. ABC currently sells the product to dealers for $800 each. ABCs capacity is
sufficient to produce the extra 450 units. No selling expenses would be incurred on the
special order.
If ABC management accepts the offer, profits will:
Rationale: The relevant costs per unit to make the additional units are direct materials, $300,
direct labor, $100, manufacturing overhead, $60 (30% of $200), and administrative costs,
$10 (10% of $100), for a total relevant cost of $470, and a loss per unit of $20. The total
decrease in profit would be $20 x 450 or $9,000.
Chapter 17
Q11) What is period cost?
Q12) What is included in work in progress?

Disclaimer: Students are responsible for all the materials covered in class. This document is
for revision purposes only. The Instructor reserves the right to design the examinations to
meet the learning objectives.
Q13)
ABC Company has the following information for December of this year:

Raw materials purchases

Raw materials used
Direct labor
Actual manufacturing
overhead
Cost of goods completed

$60,000
45,000
50,000
56,000
120,000

Overhead rate is 150 percent of direct labor costs. ABC Company uses a process costing
system.
Calculate the total amount of cost added to Work-in-Process Inventory for December.
Answer:
Raw materials used
Direct labor
Manufacturing overhead applied (50,000 x 150%)
Total cost added to Work-in-Process
Q14) What is recorded in Job Order Costing?

$ 45,000
50,000
75,000
$170,000