Strategic Cost Management

1. The Gross profit increased by 100,000. There is also an increase in sales price by 10%. Based on the given facts, we can conclude that

Sales increased in CY

Sales decreased in CY

Sales price variance is unfavorable

Sales Qty variance is favorable

None of the above

2. The relevance of a particular cost to a decision is determined by

Amount of the cost.

Potential effect on the decision.

Number of decision variables.

Riskiness of the decision.

None of the above

3. Which of the following is not a benefit of activity-based costing?

More accurate product costing

Enhanced control over overhead costs

Better management decision

Less costly to use

4. It summarized the planned activities of all sub-units of an organization - sales, production,distribution and finance and quantifies target for sales, cost driver activity, purchases,production, net income, cash position, and any other objective that management specifies.

Capital budget

Fixed budget

Zero-based budgeting

Master budget

None of the above

5. Twice Company has two divisions, one located in Cebu called Dahyun Division and the other located in Pampanga called Chaeyoung Division. Dahyun sells a specialized circuit to Chaeyoung and just recently raised the circuit's transfer price. This price hike had no effect on the volume of circuits transferred nor on Chaeyoung's option of acquiring the circuit from either Dahyun or from an external supplier. With this information, which of the following statements is most correct?

The profit reported by Dahyun will increase and the profit reported by Chaeyoung will decrease.

The profit reported by Dahyun will increase, the profit reported by Chaeyoung will decrease, and Twice's profit will be unaffected.

The profit reported by Dahyun will decrease, the profit reported by Chaeyoung will increase, and Twice's profit will be unaffected.

The profit reported by Dahyun and the profit reported by Chaeyoung will be unaffected.

6. Which is one of the purpose of budgeting?

Budgeting function

Motivational function

Staffing function

Favorable function

None of the above

7. The term relevant cost applies to all of the following decision situations except the

Replacement of equipment.

Determination of product price.

Acceptance of special product order.

Manufacture or purchase of a component part.

None of the above