CTP Dos Cercas Allowed Time: 60 mins.
IV Cycle Diversified Education
Total Points: 40 pts Percentage: 20%
School Year 2024 I Partial I Period
Teacher: M.Sc. Danny Ureña Arias English Oriented to Accounting
Oral Comprehension Exam Listening
Student’s name:____________________________ Date:___________________
Parent’s Signature:_________________________ Section:_________________
Obtained Points________ Percentage:______________
Score:__________
General Instructions:
Read carefully the instructions presented in each part of this test. Write with pen color blue or black. Avoid the use
of white out. If you cannot omit the use of pencil or correction liquid Check the exam has seven
parts and four numbered pages.
Accounting for Costs
Some costs are easy to account for. Direct costs, which are also called variable costs, are easily attributed to a
specific product or activity. For example, a company that makes pens has to buy plastic and ink and pay its
employees to manufacture the pens. These are obviously direct costs. But businesses also incur indirect costs, or
fixed costs, which remain constant and are not tied to specific products or services. Take, for example, a
manufacturing company. Manufacturing firms have both direct and indirect costs.
Direct costs include:
• Raw materials, often called direct materials
• Direct labor - the wages paid to production-line employees
• Variable overhead - other costs that increase or decrease with production (For example, if production requires
water, the water bill will fluctuate with the volume of production.)
Indirect manufacturing costs include:
• Fixed overhead - depreciation, insurance, rents
So how should indirect costs be accounted for? One popular method is called activity-based costing
(ABC). In this method, cost drivers are created for each product. Then indirect costs are allocated according to
those cost drivers. For example, in a manufacturing plant, an indirect cost like rent could be allocated to each
piece of machinery based on how much space it occupies.
I PART SHORT ANSWER 6 PTS
1. Explain the definition of direct costs and give to examples. 3pts
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2. Explain the definition of direct costs and give to examples. 3pts
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II PART MATCHING 5PTS
Match the words (1-5) with the definitions (A-E).
1 ____ variable cost A any expense tied to production
2 ____ cost drivers B a method for allocating fixed costs
3 ____ direct labor C the cost of paying workers
4 ____ indirect cost D any expense not tied to production
5 ____ activity-based costing E units involved in production
III PART MULTIPLE CHOICE Listen the conversation. Choose the best answer.
Client: Hi, Sarah. Thanks for helping me set up my books.
Accountant: No problem. That's what I'm here for. Let's start by listing your direct and indirect costs.
Client: Direct and indirect costs? I'm sorry ...4._____
Accountant: Well, direct costs are tied directly to a product or service.
Client: OK. Can you give me an example?
Accountant: Um, your company makes paper clips, right? The cost of the metal is a direct cost.
Client: So, then, what would be an indirect cost?
Accountant: Let's see ... do you own your manufacturing plant?
Client: No, I rent it.
Accountant: Well, your 5._____how many paper clips you manufacture. It's an indirect cost.
Client: Oh, I see. So, 6.____ these different types of costs?
Accountant: It's easy with the direct costs. 7._____ that you get from selling your products.
Client: Right. But what about the indirect costs? 8.______ a method called ABC. What is that?
Accountant: It's a way to allocate 9.______
Client: Can you show me how to do that?
Accountant: Well, it’s complicated . Let me explain.
1 What is the dialogue mostly about?
A direct versus indirect costs B allocating direct costs
C pairing costs with prices
2 The cost of metal is
A a cost driver. B a variable cost.
C an indirect cost.
3. How might you account for a cost like rent in a manufacturing company?
A pairing costs with prices B renting versus owning
C allocating it to a cost driver
4. Client: Direct and indirect costs? I'm sorry ...4.___________________
A. I'm not sure I understand. B. how should I account
C. Just pair them with the money
5. Accountant: Well, your 5.________________
A renting versus owning B. rent is not based on
C. Just pair them with the money
6. Client: Oh, I see. So, 6._________________
A how should I account B. Just pair them with the money
C. allocate indirect costs as production costs
7. Accountant: It's easy with the direct costs. 7.________________
A how should I account B. Just pair them with the money
C. a indirect costs as production costs
8. Client: Right. But what about the indirect costs? 8.______________
A I'm not sure I understand. B. Someone told me there's
C. indirect costs as production costs
9. Accountant: It's a way to allocate 9.________________
A I'm not sure I understand. B. Someone told me there's
C. indirect costs as production costs
Variable expenses
FUTURE TECH DEVELOPMENT CORPORATION
Variable expenses rose dramatically in 2010. Several factors contributed to this rise.
Employee Benefits - In February, we increased our contributions to the employees'
retirement plan. This resulted in a 5% rise in our employee benefits cost.
Advertising – Advertising costs skyrocketed from $10,000 in March to $30,000 in April. This
was due to the launching of a new TV commercial campaign.
Charitable Contributions - In May, after several months of steadily rising profits, we
increased charitable contributions by 2%.
Repairs - In July, equipment failures resulted in a temporary spike in expenses. All repairs
were completed by August and our expenses leveled off.
Profit Sharing Plan - In September, the Board of Directors discontinued the profit-sharing
plan due to declining sales revenue.
Compensation of Officers - We promised executives in every department a 5% bonus on
any revenue generated over the previous year's revenue. Sales skyrocketed in 2010. As a
result, $100,000 was paid in bonuses from October through December
IV. PART MATCHING Match the words (1-5) with the definitions (A-E). 5 PTS
1 ___ profit sharing plan A done to help other people
2 ___ level off B fixing something that is broken
3 ___ repairs C a sharp, dramatic rise
4 ___ charitable D giving employees part of a company's revenue
5 ___ spike E to stop rising or falling
V. PART SHORT ANSWER Fill in the blanks with the correct words and phrases
from the word bank. 5pts
WORD BANK
discontinue --- temporary ---- campaign --- employee benefits --- failure
1. The economic downturn is not permanent; it's _______________
2 Our competition is running a strong ___________________ of radio ads.
3 Lack of funding forced the company to ___________________ the program.
4 In July, equipment ____________ resulted in an increase in expenses.
5 Henry's job has health insurance and a lot of other great_______________
VI PART MULTIPLE CHOICE. Listen to a conversation. Choose the correct answers. 7pts
Controller (F): Good morning Mr. Martin Did you see my report on last year's expenses?
CFO (M): I did. We really had a 3 __in overall variable expenses, didn't we?
Controller: Yes, we did. How do you feel about that?
CFO: Well, most of it is pretty standard stuff but the advertising ... how could it go up so much?
Controller: Yeah, that's a pretty 4 ___
CFO: No kidding. From $10,000 to $30,000 - that's huge!
Controller: Well, TV advertising is expensive, but 5 __
CFO: That's true. I think the 6 ___ covered the expense.
Controller: It did. And it 7 ____that we were able to increase our charitable contributions.
CFO: That's always good for public relations.
Controller: So, do you think we'll be offering executive bonuses again next year?
CFO: I think so. It seems to have worked.
1 What is the dialogue mostly about?
A explaining a report B increasing bonuses
C limiting advertising costs
2 The man thinks that TV advertising _______________
A will be stopped B caused profits to increase
C should focus on charity
3. CFO: I did. We really had a 3 __________
A additional revenue B huge increase
C sharp increase
4. Controller: Yeah, that's a pretty 4 ___________ .
A additional revenue B huge increase
C sharp increase
5. Controller: Well, TV advertising is expensive, but 5 ___________
A it boosts sales B additional revenue
C generated enough profit
6. CFO: That's true. I think the 6 __________ covered the expense.
A it boosts sales B additional revenue
C generated enough profit
7. Controller: It did. And it 7 ______
A additional revenue B generated enough profit
C sharp increase
VII PART WRITTEN PRODUCTION. Use the conversation from to complete the letter. Make up names
for the CFO and the president. 3pts
From: _________ _________ CFO
To: ________ _________ President
Ms. ______,
As you know, our variable expenses rose considerably last year. But this is nothing to be concerned
about. Let me explain.
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Best wishes, ______________
