Quiz 1: (5 x 1 = 5 Marks)

Q1. At an activity level of 4,400 units in a month, Goldbach Corporation's total variable maintenance and repair
cost is $313,632 and its total fixed maintenance and repair cost is $93,104. What would be the total
maintenance and repair cost, both fixed and variable, at an activity level of 4,600 units in a month?
A. $420,992
B. $425,224
C. $415,980
D. $406,736.
Q2. McCoy Company wants to have an ending inventory of 6,000 units. McCoy Company has beginning
inventory of 11,000 units and expects to sell 43,000 units.
How many units should McCoy Company produce?
A. 49,000
B. 41,000
C. 40,000
D. 38,000.
Q3. LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5
hours of direct labor at the rate of $7.50 per direct labor-hour. Management would like you to prepare a
Direct Labor Budget for June.
The budgeted direct labor cost per unit of Product WZ would be:
A. $7.50
B. $6.00
C. $18.75
D. $17.50.
Q4. Murphy Products estimated that manufacturing overhead for the year would be $176,000 with direct labor
hours of 12,900. But the actual results for the years manufacturing overhead cost was $178,000 with direct
labor hours being 13,100. The predetermined overhead rate per direct labor hour is closest to:
A. $13.59
B. $13.80
C. $13.64
D. $12.10.
Q5. Darth Company sells three products. Sales and contribution margin ratios for the three products follow.
Product L Product Q
Sales $20,000 $40,000
Contribution margin ratio 45% 40%
Given these data, the contribution margin ratio for the entire company would be:
A. 85%
B. 41.7%
C. 33.3%
D. It is impossible to determine from the data given.

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TEST 2: Section A (2 x 3 marks = 6 marks)
Q1. Briefly narrate the differences between job costing and process costing.
Q2. Write briefly about the role of budgets in planning and controlling.
Section B (2 x 4 marks =8 marks)
Q3. If a merchandising company has a beginning finished goods inventory of $400,000 and a finished goods
ending inventory of $200,000, and the company purchased $1,600,000 of inventory during the month, what
is the companys cost of goods sold?
Q4. Lindex Company uses a process costing system. The following data are available for one department for
October:
Percent Completed
Units Materials Conversion
Work in process, October 1 50,000 90% 60%
Work in process, October 31 30,000 70% 50%
The department started 390,000 units into production during the month and transferred 410,000 completed
units to the next department.
Required:
Compute the equivalent units of production for October, if the company uses the FIFO method of
accounting for units and costs.
Section C (16 marks)
Q5. Porter Company's most recent contribution format income statement is shown below:
Total ($) Per Unit ($)
Sales (25,000 units) 225,000 9.00
Variable expenses 125,000 5.00
Contribution margin 100,000 4.00
Fixed expenses 34,000
Net operating income 66,000
Prepare a new contribution format income statement under each of the following conditions (consider each
condition independently):
i. The number of units sold increases by 10%.
ii. The selling price increases by 60 cents per unit, fixed expenses increase by $12,000, and the number
of units sold decreases by 10%.
iii. The selling price decreases by 40 cents per unit, and the number of units sold increases by 25%.
iv. Variable expenses increase by 10 cents per unit, the selling price increases by 15%, and the number
of units sold decreases by 8%.

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