MANAGEMENT ACCOUNTING

Cost Behavior & CVP Analysis

1. Depreciation expense based on the number of April 420,000 853,560

units produced is classified as what type of cost? May 430,000 766,560
A. Out-of-pocket cost. Using these data and the high-low method,
B. Variable cost. what is the reasonable estimate of the cost of
c. Marginal cost. manufacturing supplies that would be needed
D. Fixed cost. for July?
A. 1,155,000
2. A company changed its cost structure by B. 1,230,000
increasing fixed costs and decreasing its per-unit C. 1,150,000
variable costs. The change: D. Answer cannot be determined
A. Increases risk and increases potential profit.
B. Increases risk and decreases potential profit.
C. Decreases risk and decreases potential profit.
D. Decreases risk and increases potential profit.

3. Which of the following graphs represents the

movement of variable cost per unit?
A. B.

C. D.

4. Nite Corporation has developed the following

flexible budget formula for annual indirect
labor costs: Total Cost = P480,000 + P5.00/MH
Operating budgets for the current month are
based upon 20,000 machine hours of planned
machine time. Indirect labor costs included in
this planning budget are:
A. P 48,333 C.P580,000
B. P100,000 D.P140,000

The controller of Gema Company has requested a

quick estimate of the manufacturing supplies
that it needs for the month of July when the
expected production are 470,000 units. Below
are the actual data from the prior three months
of operations.

Units Manu.
produced Supplies
March 450,000 P723,060