1. A company produces a range of products and uses an absorption costing system.

Which of the following are unlikely to be a consequence of the company switching

to an activity based costing (ABC) system?
A. Indirect overheads will be shared between products on fairer bases
B. Product pricing decisions will be improved
C. Cost control on indirect overheads will be harder to achieve
D. Total production cost of each product will change

2. A company which makes 2 products, Ay and Be, uses activity-based costing to

absorb its overheads,
It has recently identified a new overhead cost pool for inspection costs and has
decided that the cost driver is the number of inspections.
The following information has been provided:

Total inspection costs $500,000

Ay Be
Production volume (units) 5,000 16,000000
Machine hours per unit 2 33
Units per batch 1,000 2,000000
Inspection per batch 8 2
What is the inspection cost per unit of product Ay?
A. $29.76
B. $8.93
C. $71.43
D. $80.00
1> cost per inspection: $500,000 / [(5,000/1,000)x8 + (16,000/2,000)x2] = $8.93
2> cost per batch of Ay: $8.93 x 8 = $71.43

3.Which of the following statements about activity based costing is true?

A. The cost driver for quality ínpection is likely to be batch size
B. The cost driver for materials handling and despatch costs ís likely to be the
number of orders handled
C. In the short run, all the overhead costs for an activity vary with the amount of the
cost driver for the activity
D. A cost is an activity based cost

4. Which of the following statements about activity based costing is true?

 A. ABC recognises the complexity of modern manufacturing by use of multiple
cost drivers
B. ABC reapportions support activity costs
C. ABC is an apportion costing system when overheads vary with time spent on
production
D. Implementation of ABC is unlikely to be cost effective when variable production
cost are a low proportion of total production costs are a low proportion of total
production costs

5. A company makes 2 products using the same type of materials and skilled
workers. The following information is available:
Product A Product B
Budgeted volume (units) 1,000 2,000
Material per unit (kg) 10 20
Labour per unit (hours) 5 20
Fixed costs relating to material handling amount to $100,000. The cost driver for
these costs is the volume of material purchased. General fixed costs, absorbed on
the basis of labour hours, amount to $180,000.
Using activity-based costing, what is the total fixed overhead amount to be
absorbed into each unit of product A ( to be nearest whole 5)?
A. $113
B. $120
C. $40
D. $105
1> material handling: [$100,000 / (1,000x10 + 2,000x20)] x 10 = $20 / unit A
2> general FC: ($180,000x5) / (1,000x5 + 2,000x20) = $20 / unit A
Total = $40

6. In target costing, which of the following would be an appropriate strategy to

reduce a cost gap for a product that existed in a competitive industry with
demanding shareholders?
A. Increase the selling price
B. Reduce the expectation gap by reducing the selling price
C. Reducing the desired margin on the product
D. Mechanizing production in order to reduce average production cost

7. Which of the following strategies would be an immediately acceptable method to

reduce an identified cost gap?
 A. Reduce the desired margin without discussion with business owers
B. Reduce the predicted selling price
C. Source similar quality material from another supplier at reduced cost
D. Increase the predicted selling price

8. Which of the following techniques is NOT relevant to……….costing?

A. Value analysis
B. Variance analysis
C. Functional analysis
D. Activity analysis

9. The selling price of product Z is set to be $250 for each unit and sales for the
coming year are expected to be 500 units. The company requires a return of 15%
in the coming year on its investment of $350,000 in product Z.
What is the target cost for each unit of Z for the coming year? Select from the list
as appropriate.
A. $105
B. $145
C. $212.5
D. $250
[($250/unit + 500 units) - 15% x $350,000] / 500 units = $145/unit
15% = ($250 x 500 - target cost) / $350,000 => = $145

10. Dimo Co. wants to calculate a target cost for a new product X. The price of X
will be set at $20,950. The company requires a 12% profit margin on sales.
What is the target cost?
A. $18,436
B. $18,705
C. $20,950
D. $23,464
12% = ($20,950 - target cost) / $20,950 => Target cost = $18,436

11. Dimo Co. Is in the process of introducing a new product Z. The target selling
price has been set at $78 per unit in order to achieve the required sales volume.
Costs estimates have been prepared based on the proposed product specification.
$ per unit
Direct material 7.5
Direct labour 32
 Direct machinery costs 5.5
Ordering and receiving 2.25
Quality assurance 8.5
Marketing 2.5
Distribution 0.25
After-sales service 1
The target profit margin for the product in 30% of the target selling price
What is the target cost gap?
A. $1.15
B. $3.65
C. $3.9
D. $4.9
Cost gap = Designed cost - Target cost
+ Target cost = $78 - $18 x 30% = $54.6 / unit
+ Designed cost = $59.5 => cost gap = $49

12. Which of the following is the correct formula to calculate target cost gap?
A. Target cost gap = Target selling price - Target profit
B. Target cost gap = Estimated cost - Target cost
C. Target cost gap = Target selling price - Target cost
D. Target cost gap = Target selling price - Estimated cost

13. A company has produced the following information for a product it is about to
launch. The product is expected to have a life of three years.
Year 1 2 3
Expected Sale units 2,000 5,000 7,000
$ $ $
Variable production cost per unit 2.3 1.8 1.2
Fixed production costs 3,500 4,000 4,500
Variable selling cost per unit 0.5 0.4 0.4
Fixed selling costs 2,000 2,100 2,100
Administrative costs 1,000 1,000 1,000
What is the life-cycle cost per unit?
 A. $2.64
B. $2.84
C. $3.29
D. $3.5

14. A manufacturing company which produces a range of products has developed

a budget for this life-cycle of a new product, X. The information is the following
table relates exclusively to product X:
Lifetime total Per unit
Design costs $1,600,000
Direct manufacturing costs $20
Depreciation costs $1,000,000
Decommissioning costs $40,000
Machine hours 4
Production and sales units 600,000
The company’s total fixed production overheads are budgeted to be $72 million
each year and total machine hours are budgeted to be 96 million hours. The
company absorbs overheads on a machine hour basis.
What is the budgeted life-cycle cost per unit for product X?
A. $25.08
B. $25.15
C. $27.33
D. $27.4
OAR = $72M / 96 = 0.75 / hour
fixed per unit = 0.75 x 4 = 83/unit

15. Which of the following are said to be benefits of life-cycle costing?

(i) It provides the true financial cost of a product
(ii) The length of the life-cycle can be shortened
(iii) Lower costs can be achieved earlier by designing our costs
(iv) Better selling prices can be set
A. (i), (ii) and (iii) only
B. (i), (iii) and (iv) only
C. (ii), (iii) and (iv) only
D. All of the above

16. Which of the following is NOT the benefit of life-cycle costing?

 A. Decline stages of the life-cycle can be avoided
B. Lower costs can be achieved earlier by designing out costs
C. Expensive errors can be avoided in that potentially failing products can be
avoided
D. It provides the true financial cost of a product

17. In which of the following ways might financial returns be improved over the
life-cycle of a product?
(i) Minimizing the breakeven time
(ii) Minimizing the time to the market
(iii) Maximizing the length of the life-cycle
A. (i) only
B. (i) and (ii) only
C. (ii) and (iii) only
D. All of the above

18. BL Co. is about to start developing a new product for launch in its existing
market. They have forecast sales of 30,000 units and the marketing department
suggests a selling price of $45/unit. The company seeks to make a mark-up of 40%
product cost. It is estimated that the lifetime costs of the product will be as follows:
Design and development costs $45,000
Manufacturing costs $15/unit
Plant decommissioning costs $30,000
The company estimates that if it were to spend an additional $15,000 on design
manufacturing costs/unit could be reduced
What is the life-cycle cost per unit of the new product?
A. $17.5
B. $18
C. $23.5
D. $24
Design and development per unit: $45,000 / 30,000 units = $1.5 / unit
Plant decommissioning costs: $30,000 / 30,000 units = $1 / unit
$15 + $1.5 + $1 = $17.5

19. The following information relates to the expected cost of a new product over its
expected three-year life.
Year 0 Year 1 Year 2 Year 3
Units made and sold 30,000 100,000 70,000
R&D costs $100,000,000 $100,000
Production costs
Variable per unit $25 $20 $15

Fixed costs $500,000 $500,000 $500,000

Selling and distribution costs
Variable per unit $5 $4 $3
Fixed costs $700,000 $500,000 $300,000
Customer service costs
Variable per unit $3 $2 $1
What is the expected average life-cycle cost per unit?
A. $42.80
B. $43.30
C. $44.60
D. $45.10
Total R&D cost = 1,100,000
Total variable cost = 30,000*25 + 100,000*20 + 70,000*15 = 3,800,000
Total fixed cost = 1,500,000
Total variable Selling and distribution costs = 30,000*5+100,000*4+70,000*3 =
760,000
Total fixed Selling and distribution costs = 1,500,000
Total variable customer service costs = 30,000*3+100,000*2+70,000*1 = 360,000
Total life cycle cost = 1,100,000+3,800,000+760,000+1,500,00*2+360,000 = 9,020,000
Total production units = 200,000
Expected average life-cycle cost per unit = 9,020,000/200,000 = $45,1 per unit

20. The following costs have arisen in relation to the production of a product:
(i) Planning and design costs
(ii) Testing costs
(iii) Production costs
(iv) Customer service costs
In calculating the life-cycle cost of a product, which of the above items would be
included?
A. (iii) only
B. (i) and (iii) only
C. (i), (ii) and (iii) only
D. All of the above
21. Which of the following statements about life-cycle costing is TRUE?
A. A product is usually most profitable during the growth of its life-cycle
B. Life-cycle costing is useful for deciding the selling price for a product
C. An important use of life-cycle costing is to decide whether to go ahead with
the development of a new product
D. Life-cycle costing is most useful for products with an even weighting of cost
over their life

22. Different management accounting techniques can be used to account for

environmental costs. One of these techniques involves analyzing costs under three
distinct categories: material, system and delivery and disposal.
What is this technique known as?
A. Activity based costing
B. Life-cycle costing
C. Input-output analysis
D. Flow cost accounting

23.Which of the following statements is/are true regarding the issue faced by
business in the management of their environmental costs?
(i) The costs involved are difficult to define
(ii) Environmental costs can be categorized as quality related cost
(iii) Cost control can be an issue, in particular if costs have been identified incorrect…..
the first place.
A. (i) only
B. (ii) and (iii) only
C. None of them
D. All of them

24. Flow cost accounting is a technique which can be used to account for
environmental costs. Inputs and outputs are measured through each individual
process of production.
Which of the following is NOT a category within flow cost accounting?
A. Material flows
B. Water flows
C. System flows
D. Delivery and disposal flows

25. Accountants usually find it difficult to deal with environmental costs.

Which of the following is NOT a reason for this?
 A. Costs are often hidden
B. Costs are mostly minor
C. Cost are often very long term
D. Accounting systems rarely split off these costs automatically

PART B
26. The contribution ratio of product A is 40%. The manufacturer of product A
wishes to make a contribution of $100,000 towards fixed costs. If the selling price is
$ per unit, the number of units of A that must be sold is:
A. 50,000 units
B. 40,000 units
C. 20,000 units
D. 8,000 units
contribution per unit
C/s ratio = =40%
price
$ 100,000
= $50,000
$2

27. A company makes a single product and incurs fixed costs of $100,000 per
month. Variable cost per unit is $10 and each unit sells for $20. It’s budgeted to
sell 10,000 unit monthly.
How much is contribution earned from each $1 of sales revenue?
A. $2
B. $1
C. $0.5
D. $0.25
C/s ratio =?
Contribution per unit = 20 – 10 = £10
C/S ratio = 10/20 = 50%
Contribution earned from each £1 of sales revenues = 1 * 50% = £0.5

28. Taylor. Co makes a single product, which it sells for $25 per unit. Fixed costs
are $87,500 per month and the product has a contribution ratio of 25%.
In a month when actual sales were $425,000, Taylor’s margin of safety, in units, was:
A. 17,000 units
B. 14,000 units
C. 3,500 units
 D. 3,000 units
FC $ 87,500
+) BE in revenue= = =$350,000
C/ s ratio 25 %
$ 425,000 $ 75,000
+) Safety margin in revenue= -$350,000= =3,000 units
$ 75,000 25,000

29. The following information is available for a manufacturing company which

procedures multiple products:
(i) The production mix ratio
(ii) Contribution to sales ratio for each product
(iii) General fixed cost
(iv) Method of apportioning general fixed costs
Which of the above are required in order to calculate breakeven sales revenue for the
company?
A. (i), (ii) and (iii) only
B. (i), (ii) and (iv) only
C. (ii) and (iii) only
D. All of the above
BEF in value = FC/ (weighted C/S ratio)

30. A company makes a single product and incurs fixed costs of $90,000 per month.
Variable cost per unit is $10 and each unit sells for $25.
The breakeven point in terms of monthly sales units is:
A. 9,000 units
B. 6,000 units
C. 3,600 units
D. None of the answers are correct

Contribution per unit = 25 -10 = 15

Breakeven point in units = 90,000/15 = 6,000 units
31. Taylor is producing 2 products with the following information:

Product A Product B
Sales price per unit $40 $50
Variable cost per unit $20 $25
Budgeted sales per mix 1 unit 2 units
Total fixed costs $500,000 $500,000
What is the breakeven point in value for Taylor company?
 A. Impossible to calculate without more information
B. $1,000,000
C. $1,125,000
D. $1,500,000

Total contribution per mix = 20+25*2 = 70

Total sale per mix = 40+50*2 = 140
Average C/S ratio = 70/140 = 50%
Breakeven point in value = $500,000/50% = $1,000,000
32. Taylor is producing 2 products with the following information.

Product A Product B
Sales price per unit $40 $50
Variable cost per unit $20 $25
Budgeted sales per mix 1 unit 2 units
Total fixed costs $600,000 $500,000
What is the sales revenue required to make a profit of $250,000 for Taylor company?
A. Impossible to calculate without more information
B. $1,500,000
C. $1,700,000
D. $2,000,000

Contribution per mix = ($40 - $20) x 1 + ($50 - $25) x 2 = 70

-> Qtp = (FC + TP) / (P - vc) = ($600,000 +$250,000) / 70 = 12,142
-> Sales revenue required = 12,142 x 1 x $40 + 12,142 x 2 x $50 = 1,700,000

33. Which of the following statements regarding cost-volume-profit analysis are

correct?
(i) It assumes that selling prices remain constant
(ii) It ignores non-production costs
(iii) It ignore economies of scale that impact on the cost per unit
(iv) It assumes that fixed costs remain constant throughout the range of production and
sales volumes
A. (i) and (ii) only
B. (i), (ii) and (iii) only
C. (ii), (iii) and (iv) only
D. (i), (iii) and (iv) only
34. A company has fixed costs of $1.3 million. Variable costs are 55% of sales up to a
sales level of $1.5 million, but at higher volumes of production and sales, the variable
cost for incremental production units falls to 52% of sales. What is the breakeven point
in sales revenue, to the nearest $1,000?
A. $1,977,000
B. $2,027,000
C. $2,708,000
D. $2,802,000

Contribution at level of $1.5m = 1.5*45% = 675,000

Total fixed cost = 1.3m => To achieve breakeven point, we need to cover 1.3m fixed

⇨ The remain fixed cost that need to be cover = 1.3m – 675,000 = 625,000
cost

⇨ Sale revenue need to be sold to cover $625,000 fixed cost = 625,000/(100%-52%)

⇨ Total sale revenue = 1.5m + 1,302,083 = $2,802,083

= $1,302,083 (phầần doanh thu trên 1.5m cầần thu đc)

35. A company makes three products to which the following budget information
relates:
Product A Product B Product C
$ per unit $ per unit $ per unit
Selling price ($ per unit) 50 35 60
Material @ $5/kg 10 7.5 12.5
Labour @ $8/hour 12 8 16
Variable production OH 1.5 1 2
Fixed OH 6 4 8
Maximum annual demand in for 2.000 units of product A, 1500 unit of product B and
1200 unit of product C, and the factory has budgeted to produce that number of units.It
has just been discover that next year material will be limited to 9000kg and labor to
7000 hours
If the company wishes to maximize profit, the priority in which the products should be
made and sold is:
A. A then B then C
B. B then A then C
C. A then C then B
D. C then B then A
36. Taylor manufactories 3 components, X, Y and Z , using the same machine for
each and assembles them into a single product .The budget for the next period call
for the production and assembly of 1,000 of each component .The variable for
production cost per unit of the final product is as follow:
Variable cost per unit ($) Machine hour(s) per unit
(hours)
 X 10 2
Y 9 1.0
Z 12 2.5
Only 5,000 hours of machine time will be available during the period, and subcontractor
has quoted the following unit prices of supplying components : X$14, Y$12, Z$18.
What should production mix be to maximize profit?
A. 1000 units of X, 1000 units of Y, 800 units of Z
B. 750 units of X, 1000 units of Y, 1000 units of Z
C. 1000 units of X, 500 units of Y , 1000 of Z
D. None of the answer are correct

37. A company make 3 products to which the following budget information relates:
Contribution per unit Labor hours per unit
Product X 10 2
Product Y 9 1.5
Product Z 12 2.5
Due to industrial action only 5,000 labour hours are available next period , when
expected demand is 1000 units of each product.Fix cost are $12000 for the
period .This company has no plan for outsourcing or hiring extra labour from the
outside .What is the maximum profit that can be achieved next period
A. $ 26,200
B. $ 14,200
C. $24,997
D.$32,000

38. The following statement have been made about the use of the
i) It can only be used to solve programmes with two variables( eg: two products)
ii )It can only be used to solve problems with two constraints
iii) It assumes the objective function is a linear function
iv ) There will always be one enquire solution
Which of the above statements are/is correct?
A. (i) and ( iii)
B.(iii) only
C. ( ii) and ( iv)
D.(ii) only
39. Which of the following costs are not identified as relevant costs?
A. Opportunity costs
B. Incremental costs
C. Future costs
D. Committed costs

40. A machine owned by a company has been idle for some months but could now
be used on a one-year contract which is under consideration. The net book value of
machine is $1,000. If not used on this contract, the machine could be sold now for a
net amount of $1,200. After use on the contract, the machine would have no
saleable value and the cost of disposing of it in one year’s time would be $800.
What is the total relevant costs of the machine to the contract?
A. $400
B. $800
C. $1,200
D. $2,000
ANSWER:
Oppoturnity cost = $1,200
User cost of the machine = $800
Total relavant cost = 1200 + 800 = 2000

41. “The value of a benefit sacrificed in favor of an alternative course of action”

Which term is best described by the definition above?
A. Avoidable cost
B. Opportunity cost
C. Relevant cost
D. Variable cost

42. A contract is under consideration which requires 600 labour hours to complete.
There are 350 hours of spare labour capacity. The remaining hours for the
contract can be found either by weekend overtime working paid at double the
normal rate of pay or diverting labour from the production of product A. If the
contract is undertaken and labour is diverted, then sales of product A will be lost.
Product A takes three labour hours per unit to produce and makes a contribution
of $12 per unit. The normal rate of pay for labour is $9 per hour.
What is the total relevant cost of labour for the contract?
A. $1,000
B. $2,250
C. $3,250
D. $4,500
spare labour capacity: 350*cong nhan roi
600-350=250
Over time: 250 hours x $9 x 2 = $4,500
Divert=250*$12/3=$1,000
-> Cost higher => choose

43. A company is evaluating a new contract which requires 400kg of raw material
M. It has 100 kg of material M in inventory which were purchased recently at the
price of $50 per kg. Since then the purchase price of material M has risen by to $52
per kg. Raw material M is used regularly by the company in normal production.
What is the revelamy cost of material M for the contract?
A. $20,800
B. $20,600
C. $20,000
D. $15,600
ANSWER
Relavant cost of material M = 400*52 = $20,800

44. Your company is launching a brand-new product that would require two type
of labour: 10 hours of skilled labour along with 5 hours of semi skilled. If a skilled
worker is free and can work on the product, the payment would be $8 per hour.
On the other hand, if the skilled worker must be taken from another job;
replacement would cost $6 per hour for the work they supposed to do in the
presettled job. For semi-skilled workers, the rate is $3 per hour and workers
appointed for this work is additional. Determine the relevant cost of labour needed
for one unit of the new product?
A. $95
B. $155
C. $15
D. $75
ANSWER:
The rate of $8 per hour is not relevant because it would be paid anyway. The relevant
hourly rate is the incremental cost of $6 per hour.
Skilled labour 10 hour × $6 = 60
Semi skilled 5 hours × $3 = 15
Total
= $75

45. Annual rent of the store is $500,000. The annual rent cost is not a relevant cost.
Why is this cost NOT a relevant cost?
A. It is an uncontrollable cost
B. It is not an opportunity cost
C. It occurs in every plans
D. It is a notional cost

46. The price of a good is $5 per unit and annual demand is 1,000,000 units.
Market research indicates that an increase in price of 25 cents per unit will result
in a fall in annual demand of 100,000 units.
What is the price elasticity of demand? (Ignore the negative sign)
A. 2
B. 1
 C. 0.5
D. 1.25
ANSWER:
% change in demand = 100,000/1,000,000 = 10%
% change in price = 0,25/5 = 5%
PED = % change in demand / %change in price = 10%/5% = 2
47. The following statements have been made about price elasticity of demand.
(i) When sales demand is inelastic, a company can increase profits by rising the selling
price of its product.
(ii) Price elasticity of demand is a measure of the exent of change in market demand for
a good in response to a change in its price.
Which of the above statements is/are true?
A. (i) only
B. (ii) only
C. Neither (i) or (ii)
D. Both (i) and (ii)
If the price elasticity of demand for a firm's output is inelastic, then a decrease in price
will reduce the firm's total revenue.

48. In a traditional pricing environment which of the following “C” words is NOT
traditionally considered when setting a price?
A. Cost
B. Cash flow
C. Competition
D. Customers

49. If the demand for a product is 5,000 units when the price is $400 and 6,000
units when price is $380, what is the optimal price to be charged in order to
maximise profit if the variable cost of the product is $200?
A. $150
B. $200
C. $350
D. $700
ANSWER:
Demand Curve: P = a – b*Q
- B = change in price / change in quantity
= 20/1000 = 0,02

⇨ A = 500
- 400 = a – 0,02*5000

⇨ Demand Curve: P = 500 – 0,02*Q

MR = 500 – 0,04*Q

⇨ To maximize profit: MR = MC
MC = 200

⇨ 500 – 0,04*Q = 200

⇨ Q = 7,500
⇨ P = 500 – 0,02*7500
⇨ P = 350

50. The following price and demand combinations have been given:
P1 = 400, Q1 = 5,000
P2 = 380, Q2 = 5,500
The variable cost is a constant $80 per unit and fixed costs are $600,000 per annum.
What is optimal price and maximum profit?
A. Price = 340. Maximum profit = $1,090,000
B. Price = 340. Maximum profit = $1,690,000
C. Price = 380. Maximum profit = $1,350,000
D. Price = 380. Maximum profit = $1,950,000
ANSWER:
Demand Curve: P = a – b*Q
- B = change in price / change in quantity
= 20/500 = 0,04

⇨ A = 600
- 400 = a – 0,04*5000

⇨ Demand Curve: P = 600 – 0,04*Q MR = 600 – 0,08*Q

⇨ To maximize profit: MR = MC
MC = 80

⇨ 600 – 0,08*Q = 80
⇨ Q = 6,500
⇨ P = 600 – 0,04*6500
⇨ P = 340
⇨ Maximum profit = 6,500*(340-80) – 600,000 = $1,090,000
51. Blake produces one single product A. Variable costs per unit are $15. Total
fixed overheads are $120,000 per annum. Budgeted sales per month are 400 units
to allow the product to break even.
Calculate the budgeted price for product A.
A. $315
B. $300
C. $40 (120,000/(Price-15))=400*12 =>CALC)
D. $10
52. The following statements have been made about cost plus pricing.
(i) A price in excess of full cost per unit will always ensure that a company will cover
all its costs and make a profit.
(ii) Cost plus pricing is an appropriate pricing strategy when jobs are carried out to
customer specifications.
Which of the above statements is/are true?
A. (i) only
B. (ii) only
C. Neither (i) nor (ii)
D. Both (i) and (ii)

53. Which of the following terms would NOT normally be used to describe a
relevant cost for a decision?
A. Incremental
B. Future
C. Cash flow
D. Fixed cost

54. Which of the following pricing policies is the most appropriate for a new
product for which the price elasticity of demand is expected to be inelastic?
A. Marginal cost plus
B. Market skimming
C. Penetration pricing
D. Price discrimination

55. A company currently sells a products for $100 and at this price, demand is
2,000 units per month. It has been estimated that for every $4 increase or
reduction in the price, monthly demand will fall or increase by 100 units.
What is the formula for the demand curve for this product?
A. P = 180 - 0.04*Q
B. P = 180 - 0.08*Q
C. P = 260 - 0.04*Q
D. P = 260 - 0.08*Q
ANSWER:
Price at which demand is 0 = 100 + (2 000/100) × 4= 180
When P = a – bQ, b = 4/100 = 0.04

55*: Domi Co is in the process of introducing a new product Z. The target selling
prices has been set $78/unit in order to achieve…
Table
The taget profit margin for the product is 30%.
4.9 là đúng

56. Which one of the following is not the objective of a budgetary system?
A. Planning
B. Control
C. Ensuring success
ɛnˈʃʊrɪŋ səkˈsɛs
D. Motivation

57. Which one of the following is the best description of “top-down budgeting
approach”?
A. Senior manage set budget targets and prepare budgets that meet the targets
B. Senior managers set budget targets; Lower managers prepare budgets that
meet the targets
ˈsinjər ˈmænəʤərz sɛt ˈbʌʤɪt ˈtɑrɡəts; ˈloʊər ˈmænəʤərz priˈpɛr ˈbʌʤɪts ðæt
mit ðə ˈtɑrɡəts
C. Lower managers set budget targets and prepare budgets that meet the targets
D. All above are wrong.

58. Which one of the following is the best description of “bottom-up budgeting
approach”?
A. Lower managers draft the budgets: Senior managers combine lower budgets
ˈloʊər ˈmænəʤərz dræft ðə ˈbʌʤɪts: ˈsinjər ˈmænəʤərz ˈkɑmbaɪn ˈloʊər
ˈbʌʤɪts
B. Lower managers draft the budgets and combine those budgets.
C. Senior managers draft the budgets and combine lower budgets
D. All above are wrong.

59. ‘Next year’s budget is prepared by using the current year’s actual results as a
starting point, and making adjustments for expected inflation, sales growth or
decline and other known changes’ is the principle of which following budgeting
approaches?
A. Incremental budgeting
ˌɪnkrəˈmɛntəl ˈbʌʤɪtɪŋ
B. Zero-based budgeting
C. Activity-based budgeting
D. Rolling budgets

60. Which of the following is the advantage of ‘incremental budgeting approach’?

 A. Builds in previous problems and inefficiencies
B. Managers may spend for the sake of spending in order to use up their budget for
year and thus ensure that they get the same (or a larger) budget next year
C. Uneconomical activities may be continued
D. Suitable for organizations that operate in a stable environment

61. The budget for each cost center should be made from 'scratch' or zero' is the
principle of which following budgeting approaches?
A. Incremental budgeting
B. Zero-based budgeting
C. Activity-based budgeting
D. Rolling budgets

62. Defining the key activities that account for overhead spending, and considering
the costs of the activity' is the principle of which following budgeting approaches?
A. Incremental budgeting
B. Zero-based budgeting
C. Activity-based budgeting
D. Rolling budgets

63. Which of the following budgets may be used when the pace of change in the
business environment is fast and continual?
A. Incremental budgeting
B. Zero-based budgeting
C. Activity-based budgeting
D. Rolling budgets
64. The first unit of output of a new product requires 80 hours. An 85% learning
curve applies. Output is being doubled each time. What's the average time per unit
if there are 4 units produced?
A. 68 hours.
B. 57.8 hours.
C. 49.13 hours.
D. None of above.

ANSWER:
Learning Curve: y = ax^b
B = log(0.85) / log(2)
Y = 80 * 4^log(0.85 )/ log(2) = 57.8 hour
65. The first unit of output of a new product requires 80 hours. An 85% learning
curve applies. Output is being doubled each time. What's the total time for
production if there are 4 units produced?
A. 272 hours.
B. 231.2 hours.
C. 196.52 hours.
D. None of above.

=57.8*4sp=231.2 hours.

66. A company operates in export and import markets, and its operational cash
flows are affected by movements in exchange rates, which are highly volatile. As a
result, the company has great difficulty in establishing a budgeting system that is
reliable for more than three months ahead.
Which of the following approaches would be most appropriate for this company's
situation?
A. Flexible budget
B. Incremental budget
C. Rolling budget
D. Zero based budget

67. 'Ideal standard': aɪˈdil ˈstændərd

A. Can be attained under perfect operating conditions
B. Can be attained if production is carried out efficiently, machines are properly
operated and/or materials are properly used
C. Based on current working conditions
D. Remains unchanged over the years and is used to show trends

68. 'Attainable standard':

A. Can be attained under perfect operating conditions
B. Can be attained if production is carried out efficiently, machines are
properly operated and/or materials are properly used
C. Based on current working conditions
D. Remains unchanged over the years and is used to show trends

69. The following statements have been made about standard mix and yield
variances.
(1) Mix variances should be calculated whenever a standard product contains two or
more direct materials. F
(2) When a favorable mix variance is achieved, there may be a counterbalancing
adverse yield variance. T
Which of the above statements is/are true?
A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2
ta mix NVL => favorable mix variance
materials cheap, more quantity số lượng
expensive, less khối lượng?
=> COST decrease
70. The following statements have been made about standard mix and yield
variances.
(1) Mix and yield variances enable management to resolve problems with the quality of
production output.
(2) Persistent adverse mix variances may have an adverse effect on sales volume
variances and direct labor efficiency variances.
Which of the above statements is/are true?
A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

71. The following information is given about standard and actual material costs
during one month for a production process.
Material Standard cost Actual cost standard mix actual mix
per kg per kg (kg)
P 3.00 3.50 10% 820
Q 2.50 2.75 20% 1,740
R 4.00 3.50 30% 2,300
S 5.25 5.00 40% 2,640

What was the materials mix variance?

A. 880 (F)
B. 880 (A)
C. 1,090 (F)
D. D. 1,090 (A)
 Material Standard Actual standard mix actual mix Variance
cost per kg cost per (kg)
kg
P 3.00 3.50 10% 750kg 820 70(A)
Q 2.50 2.75 20% 1,500kg 1,740 240(A)
R 4.00 3.50 30% 2,200kg 2,300 50(A)
S 5.25 5.00 40%3,000kg 2,640 360(F)
7,500kg 7,500 0

Material Standard Variance

cost per
kg
P 3.00 70(A)
Q 2.50 240(A)
R 4.00 50(A)
S 5.25 360(F)

=3*70+2.5*240+4*50-5.25*360=-880

72. The following information is given about standard and actual material costs
during one month for a production process.

Material Standard cost Actual cost standard mix actual mix

per kg per kg (kg)
P 3.00 3.50 20% 820
Q 2.50 2.75 30% 1,740
R 4.00 3.50 50% 2,300

What was the materials mix variance?

A. 270 (F)
B. 270 (A)
C. 271 (F) = -3*152+2.5*282-4*130=-271
D. 271 (A)
 Material Standard Actual standard mix actual Variance
cost per cost per mix (kg)
kg kg
P 3.00 3.50 20% 972kg 820 152kg(F)
Q 2.50 2.75 30% 1458kg 1,740 282kg(A)
R 4.00 3.50 50% 2430kg 2,300 130kg (F)
4860

73. The following information is given about standard and actual material costs
during one month for a production process.

Material Standard Actual cost standard actual mix

cost per kg per kg mix (kg)
P 3.00 3.50 10% 820
Q 2.50 2.75 40% 1,740
R 4.00 3.50 50% 2,300

What was the materials mix variance?

A. 25 (F)
B. 26 (F)
C. 27 (F)
D. 28 (F)

Material Standard Actual cost standard actual mix Variance

cost per kg per kg mix (kg)
P 3.00 3.50 10%486kg 820 334(A)
Q 2.50 2.75 40%1944kg 1,740 204(F)
R 4.00 3.50 50%2430kg 2,300 130(F)
4860

334*3-204*2.5-130*4=-28
74. The following information is given about standard and actual material costs
during one month for a production process.
Material Standard Actual cost standard actual mix
cost per kg per kg mix (kg)
P 3.00 3.50 30%768kg 820 52(A)
Q 2.50 2.75 70%1792kg 1,740 52(F)
2560

What was the materials mix variance?

A. 26 (A) = 52*3-52*2.5
B. 27 (A)
C. 28 (A)
D. 29 (A)

75. The following information is given about standard and actual material costs
during one month for a production process.
Material Standard cost Actual cost standard mix actual mix
per kg per kg (kg)
P 3.00 3.50 40% 820
Q 2.50 2.75 60% 1,740

What was the materials mix variance?

A. 100 (F)
B. 101 (F)
C. 102 (F) =-204*3+204*2.5
D. 103 (F)

Material Standard Actual cost standard actual mix

cost per kg per kg mix (kg)
P 3.00 3.50 40%1024kg 820 204(F)
Q 2.50 2.75 60%1536kg 1,740 204(A)
2560

76. For which one of the following variances should a production manager usually
be held responsible?
 A. Material price planning variance
B. Material price operational variance
C. Material usage planning variance
D. Material usage operational variance

a production manager => Material usage

Material price manager purchase
planning thi uncontrollable of manager

77. A standard product uses 3 kilograms of direct material costing $4 per kg.
During the most recent month, 120 units of the product were manufactured. These
required 410 kilograms of material costing $4.50 per kg. It is decided in retrospect
that the standard usage quantity of the material should have been 3.5 kg, not 3 kg.
What is the materials operational usage variance, if it is chosen to use planning and
operational variances for reporting performance?
A. 40 (F)
B. 40 (A)
C. 50 (F)
D. 50 (A)
ANSWER:

78. A standard product uses 3 kilograms of direct material costing $4 per kg.
During the most recent month, 120 units of the product were manufactured. These
required 410 kilograms of material costing $4.50 per kg. It is decided in retrospect
that the standard usage quantity of the material should have been 2.5 kg, not 3 kg.
What is the materials operational usage variance, if it is chosen to use planning and
operational variances for reporting performance?
A. 440 (F)
B. 440 (A)
C. 450 (F)
D. 450 (A)
79. A standard product uses 3 kilograms of direct material costing $4 per kg.
During the most recent month, 120 units of the product were manufactured. These
required 410 kilograms of material costing $4.50 per kg. It is decided in retrospect
that the standard usage quantity of the material should have been 3.5 kg, not 3 kg.
What is the materials planning usage variance, if it is chosen to use planning and
operational variances for reporting performance?
A. 240 (F)
B. 240 (A)
C. 250 (F)
D. 250 (A)
=(revised standard usage-initial standard usage)*actual units*standard price
=(3.5-3)*120*$4=240 - F

80. A standard product uses 3 kilograms of direct material costing $4 per kg.
During the most recent month, 120 units of the product were manufactured. These
required 410 kilograms of material costing $4.50 per kg. It is decided in retrospect
that the standard usage quantity of the material should have been 2.5 kg, not 3 kg.
What is the materials planning usage variance, if it is chosen to use planning and
operational variances for performance?
A. 240 (F)
B. 240 (A)
C. 250 (F)
D. 250 (A)
=(2.5-3)*120*$4=240

Day - 3
81. Which one of the following is not a financial performance indicator?
 A. Revenues
B. Cost
C. Profit
D. Innovation

82. Which one of the following is NOT a financial performance indicator?

A. Service quality
B. Reliability
C. Assets value
D. Flexibility

83. Which one of the following is NOT perspective of balance scorecard?

A. Financial
B. Customer
C. Digital transformation
D. Innovation

84. In which one of the following centers, a manager is responsible for cost,
revenue and asset?
A. Investment center
B. Profit center
C. Revenue center
D. Cost center

85. Is the following statement TRUE or FALSE regarding activity-based costing?

“A cost pool is an activity which consumes resources and for which overhead costs
are identified and allocated”
TRUE

86. Is the following statement TRUE or FALSE regarding activity-based costing (ABC)
and cost drivers?
“A cost driver is any factor that cause a change in the cost of an activity”
TRUE

87. Is the following statement TRUE or FALSE regarding activity-based costing?

“Life-cycle costing takes into account all costs incurred in a product like life-cycle
with exception of sunk costs incurred on research and development”
FALSE

88. Is the following statement TRUE or FALSE regarding activity-based costing?

“Life-cycle costing ensures a profit is generated over the life of the product”
TRUE

89. Is the following statement about target costing TRUE or FALSE ?

“Products should be discontinued if there is a target cost gap”
TRUE

90. Is the following statement about target costing TRUE or FALSE ?

“A target cost gap is the difference between the target cost for a product and its
projected cost”
TRUE

91. Is the following statement about target costing TRUE or FALSE ?

“A risk with target costing is that cost reductions may affect the perceived value of
the product”
TRUE

92. Is the following statement about target costing TRUE or FALSE ?

“Cost may be reduced in target costing by removing product features that do not
add value”
TRUE

93. Is the following statement about target costing TRUE or FALSE ?

“The high cost of (for ex) research, design and marketing in the early stages in a
product’s life-cycle necessitate a high initial selling price”
FALSE

94. Is the following statement about material flow cost accounting (MFCA) TRUE or
FALSE ?
“In MFCA, output costs are allocated between positive and negative product costs”
TRUE

95. Is the following formula to calculate break even point TRUE or FALSE
Breakeven point in units = Total fixed costs / Contribution per unit
TRUE

96. Is the following formula to calculate break even point TRUE or FALSE
“The breakeven point is at the intersection of the sales line and the total costs line”
TRUE
97. Is this TRUE or FALSE if material is identified as limiting factor in the case as
follows
It needs 3 kg of material X and 2 machine hours to produce one unit of product A
and those of 2 kg and 1.5 hours for product B. It was expected that 6,000 machine
hours and 10,000 kg of X being available for production. Sales demand was 2,000
units for each product
FALSE

98. Is the following statement about multiple limiting factors analysis TRUE or
FALSE
“Surplus occurs when maximum availability of a other constraining factor is not
used”
FALSE

99. Is the following statement about price elasticity of demand (P.E.D) TRUE or
FALSE
“The price elasticity of demand (PED) is a measure of the extent of change in
demand for a good in response to a change in its price”
TRUE

100. Is the following statement about full cost-plus pricing TRUE or FALSE
“Full cost-plus is a method of deciding the sales price by adding a percentage
mark-up for profit to the marginal cost of the product”
FALSE

101. Is the following statement about sunk costs TRUE or FALSE

“Sunk costs are costs that have already been incurred. Sunk costs can be relevant
costs”
FALSE

102. Is the following statement about joint costs in further processing decision TRUE
or FALSE
“In a decision about whether or not to sell a joint product at the split-off point or
after further processing, joint costs are irrelevant”
TRUE

103. Is the following statement about price skimming strategy TRUE or FALSE
“Price skimming strategy in suitable for new and innovative products”
TRUE
104. Is the following statement about cost plus pricing TRUE or FALSE
“Cost-plus pricing methods take the approach of adding a specified of MARGIN to
the cost of a product”
FALSE

105. Is the following statement about cost plus pricing TRUE or FALSE
“Cost-plus pricing methods always consider the relationship between price and
demand”
FALSE

106. Is the following statement about limiting factor analysis TRUE or FALSE
“If there is one limiting factor, the best contribution would be earned by
maximizing the contribution per unit of that limiting factor”
TRUE

107. Is the following statement about depreciation TRUE or FALSE

“Depreciation is not a relevant cost because it is not a cash flow”
TRUE

108. Is the following statement about decision rule for make or buy decisions TRUE or
FALSE
“”When there are no limiting factors restricting the in-house production capacity,
the relevant costs are the differential costs between the two options”
TRUE

109. Is the following statement about outsourcing true or false ?

"The outsourcing option is likely to give management more direct control over the
work of products or services from external suppliers”
FALSE

110. A budget is a quantified plan of action for a forthcoming accounting period ?

TRUE

111. ‘Control’ is not one of the objectives of a budgeting system?

FALSE

112. Planning forces management to look ahead, to set out detailed plans for achieving
the targets for each department, operation and each manager?
TRUE
113. The activities of different departments or subunits of the organization do not need
to be co-ordinated to ensure maximum integration of effort towards common goal?
FALSE

114. Budgetary planning and control systems require that managers of budget centers
are made responsible for the achievement of budget targets for the operations under
their personal control.
TRUE

115. A budget is a yardstick against which actual performance is measured and assessed
?
TRUE

116. Actual performance is a yardstick in which a budget is measured and assessed ?

FALSE

117. With top-down budgeting , budget targets are set at senior management level for
the organization as a whole and for each major department or activity within the
organization ?
TRUE

118. With bottom-up budgeting, the budgeting process starts at senior management
level?
FALSE

119. Incremental budgeting is a method of budgeting in which next year's budget is

prepared by using the current year's actual results as a starting point, and making
adjustments for expected inflation, sales growth or decline and other known changes?
TRUE

120. Incremental budgeting is a method of budgeting in which next year's budget is

prepared by using the current year's budgets as a starting point , and making adjustments
for expected station ,sales growth or decline and other known changes?
FALSE

121. The principle behind zero based budgeting ( ZBB ) is that the budget for each cost
center should be made from ‘scratch’ or zero . Every item of expenditure must be
justified in its entirety in order to be included in the next year's budget ?
TRUE
122. The principle behind zero based budgeting ( ZBB ) is that the budget for each cost
center should be made from the previous year's actual performance ?
FALSE

123. Activity based budgeting differs from traditional (absorption) budgeting in the
way that budgets are prepared for overhead costs . Overhead costs are budgeted on the
basis of activities , rather than on a departmental basis ?
TRUE

124. Activity based budgeting is similar to traditional budgeting in the way that budgets
are prepared for overhead costs ?
FALSE

125. Rolling budgets are budgets which are continuously updated throughout a financial
year , by adding a further period ( say a month or a quarter ) and removing the
corresponding period that has just ended ?
TRUE

126. Rolling budgets are budgets which are continuously updated throughout a financial
year, by reviewing the current period (say a month or a quarter) and removing when it
has just ended?
TRUE

127. In the “Learning curve theory”, the workers are likely to become more confident
and knowledgeable about the work as they gain experience, to become more efficient,
and to do the work more quickly?
TRUE
DAY - 3
128. In the "Learning curve theory", the more units that a worker makes, the longer time
spent for producing a unit?
FALSE

129. A standard cost is an estimated unit cost built up of standards for each cost element
(standard resource price and standard resource usage)?
TRUE

130. Standard costing is used to value inventoríe, prepare cost budgets for production
and provide control information (variances).
TRUE
131. The essence of control is 'measurement of results' and 'comparing' them 'with the
original plan'. Any 'deviation from the plan' indicates that 'control actions are required'
to make the 'results more closely with the plan'.
TRUE

132. The essence of control is 'measurement of results' and 'comparing' them 'with the
original plan'. Any 'deviation from the plan' always indicates that 'there is some
problems with the actual performance'?
TRUE

133. The essence of control is 'measurement of results' and 'comparing' them 'with the
original plan". Any 'deviation from the plan’ always indicates that ‘there is some
problems with the original plan’
FALSE

134. A variance is the difference between an actual result and an expected result?
FALSE

135. Variance analysis is the process by which the total difference between standard and
actual results is analyzed?
TRUE

136. When actual results are better than expected results, do we have an adverse
variance (A)?
TRUE

137. If actual results are worse than expected results, do we have a favorable variance
(F)?
TRUE

138. The selling price variance measures the effect on expected profit of a selling price
different to the standard selling price?
TRUE

139. The selling price variance measures the effect on expected profit of a sales volume
different to the expected sales volume?
FALSE

140. 'Unforeseen discounts received' is one of the reasons for a favorable material
variance? (TRUE)
141. 'Material price increase' is one of the reasons for a favorable material variance?
FALSE
142. 'More effective use made of material' one of the reasons for an adverse material
variance?
FALSE

143. 'Theft' is one of the reasons for an adverse material variance?

TRUE
144. 'Use of workers at a lower rate of pay than standard' is a reason of a favourable
labour variance?
TRUE
145. 'Use of workers at a lower rate of pay than Standard' is a reason of an adverse
labour variance?
FALSE
146. 'Machine breakdown” always make a favourable labour variance?
FALSE

147. 'Better quality of equipment or materials' may be a reason for a favourable labour
efficiency variance?
TRUE

148. The materials usage variance can be subdivided into a sales mix variance and a
materials yield variance when more than one material is used in the product?
FASLE

149. Calculating a mix and yield variance is only meaningful for control purposes when
management is in a position to control the mix of materials used in production?
TRUE

150. The sales volume variance can be analysed further into a sales mix variance and a
sales quantity variance?
TRUE

151. If a company sells only one product, it is possible to analyse the overall sales
volume variance into a sales mix variance and a sale quantity variance?
FALSE

152. When circumstances may occur that make the original budget or standard cost
invalid or inappropriate, it may be appropriate to revise a budget or standard cost?
TRUE
153. ‘Planning variances’ have arisen because of inaccurate planning or faulty
standards?
TRUE

154. ‘Operational variances’ have been caused by adverse or favorable operational

performance?
TRUE

155. In a system of standard costing, idle time is an adverse labour efficiency variance,
and is undesirable. But in JIT manufacturing, idle time variance should therefore be
expected?
TRUE

156. Idle time variance should be reported in ‘Just in time’ manufacturing?

FALSE

157. The philosophy in TQM of ‘right first time’ may be inconsistent with a standard
cost that includes an allowance for wastage
TRUE

158. A standard cost is based on an assumption of a desirable steady state: this view is
inconsistent with the principle of continuous improvement in TQM. (TRUE)

159. A budgetary control and variance reporting system can only motivate managers
and employees to improve performance and it can’t produce undesirable negative
reactions.
FALSE

160. Performance measures may be divided into 2 types: Financial and Non-financial
performance indicators?
TRUE

161. Financial measures are typically measures relating to revenues, cost, return on
capital, asset values or cash flows and service quality?
FALSE

162. Performance measures should only include factors which managers can control by
their decisions, and for which they can be held responsible
TRUE
163. We should use only one performance measure for one manager
FALSE

164. The balanced scorecard focuses on 4 different perspectives as follows: Financial,

Customer, Internal and Innovation and Learning?
TRUE

165. The balanced scorecard focuses on 4 different perspectives as follow: Financial,

Customer, Internal and Internal and Competitor
FALSE

166. Each divisional manager is responsible for the performance of the division
TRUE

167. A profit center often includes cost center and revenue center
FALSE

168. A manager of a revenue center is never responsible for the cost incurred in this
center
FALSE