STRAIGHT PROBLEMS

1. Basic gross variation analysis. The gross profit of T Corporation for 2012 and
2013 are given below:
Sales
Less: CGS
Gross Profit
Unit sales
price
Unit Cost
Unit Sold

2012
P 8, 000, 000
6, 000, 000
P 2, 000, 000
P
160

2013
P 12, 000, 000
10, 800, 000
P 1, 200, 000
P
250

120
50, 000

225
48, 000

Required:
Gross profit variations analysis, using the:
a. Traditional two-way variance analysis. (800,000)
b. Traditional three-way variance analysis. (800,000)
2. Strategic profitability analysis. The gross profit of T Corporation for 2012, and
2013 are given below:
2012
2013
Sales
P 8, 000, 000
P 12, 000, 000
Direct
(2, 000, 000)
(2, 310, 000)
materials
Direct labor
(800, 000)
(836, 000)
Other
(200, 000)
(200, 000)
expenses
Profit
P5, 000, 000
P8, 654, 000
Unit sales
P 160
P 250
price
Unit cost
120
225
Unit sold
50, 000
48, 000
DM: Quantity
200, 000 lbs.
210, 000 lbs.
Price/lb.
P10
P11
DL: Hours
40, 000 hrs.
38, 000 hrs.
Rate/hr.
P20
P22
Required:
Strategic profitability analysis showing:
a. Price- recovery factors.
b. Productivity-recovery factors.
c. Growth-recovery factors.
3. Sales variance ratio. Sales last year of P6 million decreased to P5.4 million.
REQUIRED: Determine the sales price variance, sales quantity variance and sales
quantity variance ratio if:
a. The USP increases by 20%. 900; (1500); 25%
b. The USP decreases by 4%. (225); (375); 6.25%;
c. The quantity sold increases by 5%. (900); 600; 5%
4. Cost variance ratios. Cost of goods sold this year amounting to P9.6 million is
20% higher than that of last year. On the average, cost prices increased by 25%.

REQUIRED: compute the following:

a. Cost price variance. (1920)
b. Cost quantity variance and cost quantity variance ratio. 320; 4%
5. CM variance analysis. The contribution margin of H Corporation for 2012 and
2013 are given below:
Sales
Less: Variable
costs
CM

2012
2013
P 8, 000,
P 12, 000,
000
000
6, 000, 000
8, 000, 000

P 2, 000,
P 4, 000,
000
000
The number of units sold increased by 5%.
REQUIRED: compute the following for the year 2013:
a. Sales price variance and sales price variance ratio. 3,600; 42.85%
b. Sales quantity variance. 400
c. Variable cost price variance and variable cost price variance ratio. (1700);
26.98%
d. Variable cost quantity variance. (300)
6. Gross profit variance analysis. B Distributions presents the following data for
two types of canned products, T and A, for 2012 and 2013:
2012
Units

Per Unit

Amount

2013
Units

Per Units

Sales
T

8, 000

P 8.00

P 64, 000

12,000

P 10.00

8, 000

4.00

2,
000
96,
000
48, 000
24, 000
72, 000
P 24, 000

20, 000

6.00

CGS
T
S
G Profit

8, 000
8, 000

P 6.00
3. 00

16, 000

P 1.50

Amount
P120,
000
120, 000
240, 000

12, 000
20, 000

P 9.00
5.00

32, 000

P 1.00

108, 000
100, 000
208, 000
P32, 000

Required: compute the price, sales mix and final sales volume variances. 64,000;
(16,000); 80,000
7. Market variance analysis. Primus Water reported the following sales date in
2013:
Western Region
Cola Co.
Market share
Unit sales price

Actual
24
million
3 million
12.5%
P 11.00

Budgeted
25 million
2.5 million
10%
P 10.00

Budgeted UCM
Required:

P 3. 00

Calculate the market-share and market-size variances for Primus Water in 2013.
Calculate all variances in terms of contribution margin. Comment on results.
1,800,00; (300,000)

MULTIPLE CHOICE QUESTIONS

1. G Corporation, which sells a single product, provided the following data from
its income statements for the calendar years, 2013 and 2012:
Sales (150, 000
units)
Cost of Goods
Sold
Gross profit

2013
P 750, 000
525, 000

P 225, 000
2012 (Base Year)
Sales ( 180, 000)
P 720, 000
Cost of goods sold
575, 000
Gross profit
P 145, 000
In an analysis of variation in gross profit between the two years, what would
be the effects of changes in sales price and sales volume?
Sales price
Sales volume
A. P150, 000 F
P 120, 000 UF
B. P 150, 000 UF
P 120, 000 F
C. P 180, 000 F
P 150, 000 UF
D. P 180, 000 UF
P 150, 000 F
Questions 2 through 4 are based on the following information:
The gross profit of R Co. for each of the years ended December 31, 2012 and
2013 were follows:
2012
2013
Sales
P 792, 000
P 800, 000
CGS
464, 000
480, 000
Gross profit
328, 000
P 320, 000
2. Assuming the selling prices were 10% lower during 2013, what would be the
amount of decrease in gross profit due to the change in selling price?
A. P 8, 000
B. P 72, 000
C. P 79, 200
D. P 88, 800
3. Assuming the quantity sold increases by 5% during the year, what would be
the amount of change in gross profit due to this change?
A. P39, 600 F
B. P16, 400 F
C. P23, 200 UF
D. P31, 600 F
4. Assuming the quantity sold increases by 5% during the year, what would be
the percentage changes in cost price due to this change?
A. 1.48%
B. 3.80%
C. 7.08%

D. 3.99%
5. From the records of FE Co. the following were taken (in thousands):

6.

7.

8.

9.

Quantity
Sales
Cost of Sales
Product
Budget
Actual
Budget
Actual
Budget
Actual
Green
45
45.8
450
458
270
274.8
Ann
30
26.7
180
186.9
108
96.12
Co.
5
9.3
25
55.8
15
27.9
80
81.8
655
700.7
393
398.82
Determine the sales price (SP), sales volume (SV), cost price (CP) and cost
volume (CV) variances:
A. SP is P9,700 favorable; SV is P36,000 favorable; CP is P5,820 favorable;
and CV is P0 unfavorable
B. SP is P5,820 favorable; SV is P0 favorable; CP is P36,700 favorable; and CV
is P9,000 favorable
C. SP is P36,000 favorable; SV is P9,700 favorable; CP is P0; and CV
is P5,820 unfavorable;
D. SP is P36,700 favorable; SV is P5,820 favorable; CP is P0 unfavorable; and
CV is P900, 000 favorable
YE, Inc., has a practical production capacity of two million units, the current
years budget was based on the production and sales of 1.4 million units
during the current year. Actual statistics came out to be: production of 1.44
million units and sales of 1.2 million. Selling price is at P20 each and the
contribution margin ratio is 30%. The peso value that best quantifies the
marketing divisions failure to achieve budgeted performance for the current
year is
A. P4,800,000 UF
B. P4,000,000 UF
C. P1,440,000 UF
D. P1,200,000 UF
In gross profit analysis, if the cost variance is zero, such variance indicates
that:
A. Manufacturing management was unable to keep production costs at
budgeted costs.
B. Manufacturing management was able to control production cost below
budgeted costs.
C. Manufacturing management was able to control production cost
at budgeted costs.
D. Manufacturing management was not able to control production at
budgeted costs but purchasing was able to keep at budgeted price..
The difference between the master budget amount and the amounts in the
flexible budget are due to
A. Activity level variances
B. Favorable variances
C. Gaps in affectivity
D. Unfavorable variances
In analyzing operation, the controller of Jay Corporation found a P250, 000
favorable flexible budget revenue variance. The variance was calculated by

comparing the actual results with the flexible budget. This variance can be
wholly explained by
A. The total flexible budget variance
B. Changes un unit selling prices
C. The total static budget variance
D. Changes in the number of units sold
10.Actual and budgeted information about the sales of a product are presented
below for June:
Units
Sales revenue

Actual
8,000
P92,000

Budget
10,000
P105,000

The sales price variance for June was:

A. P8,000 F
B. P10,000 F
C. P10,000 UF
D. P105,000 UF
11.The exhibit below reflects a summary of performance for a single item of a
retail stores inventory for the month ended April 30, 2013.
Actual results

Flexible Budget
Variations

Flexible budget

Static (Master)
Budget

Sales (units)
11,000
Revenue
P208,000
Variable costs
121,000
CM
87,000
Fixed Costs
72,000
Profit
P15,000
The sales volume variance is
A. P10,000 F
B. P11,000 F
C. P10,000 U
D. P12,000 U

P12,000 U
11,000 U
23,000 U
P23,000 U

11,000
P220,000
110,000
110,000
72,000
P 38,000

12,000
P240,00
120,000
120,000
72,000
P 48,000

Questions 12 to 16 are based on the following information. Eastern Fashion

sells a line of womens dresses. Easterns performance report for November is
shown below. The company uses a flexible budget to analyze its performance
and to measure the effect on operating income of the various factors affecting
the differences between budgeted and actual operating income.
Dresses sold
Sales
Variable costs
CM
Fixed costs
Profit

Actual
5,000
P235, 000
(145,000)
90,000
(84,000)
P 6,000

Budget
6,000
P 300,000
(180,000)
120,000
(80,000)
P 40,000

12.The effect of the sales quantity variance on the contribution margin for
November is
A. P30,000 U
B. P20,000 U
C. P18,000 U
D. P15,000 U
13.The sales price variance for November is
A. P30,000 U
B. P20,000 U
C. P18,000 U
D. P15,000 U
14.The variable cost flexible budget variance for November is
A. P5,000 F
B. P4,000 F
C. P5,000 U
D. P4,000 U
15.The fixed cost variance for November is
A. P5,000 F
B. P4,000 F
C. P5,000 U
D. P4,000 U
16.What additional information is needed for Eastern to calculate the peso impact
of a change in market share on operating income for November?
A. Esaterns budgeted market share and the budgeted total market size.
B. Easterns budgeted market share, the budgeted total market size, and
the average market selling price.
C. Easterms budgeted market share and the actual total market
size.
D. Easterns actual market share and the actual total market size.
Questions 17 and 18 are based on the following information. CZ, Inc.,
manufactures and sells boxes of pocket protectors. The static master budget and the
actual results for May 2013 appear below:
Actual
Budget
Unit sales
12,000
10,000
Sales
P132,000
P100,000
Var CGS
70,800
60,000
CM
61,200
40,000
Fixed Costs
32,000
30,000
profit
P29,200
P10,000
17.The operating income for CZ using a flexible budget for May 2013 is
A. P12,000
B. P30,000
C. P19,200
D. P18,000
18.Which one of the following statements concerning CZs actual results for May
2013 is correct?
A. The flexible budget variance is P8,000 favorable.

B. The sales price variance is P32,000 favorable.

C. The sales volume variance is P8,000 favorable.
D. The fixed costs flexible budget variance is P4,000 favorable.
The following information applies to question applies to questions 19
through 23:
Peters Company manufactures tires. Some of the companys data was
misplaced. Use the following information to replace the lost data:
Actual
Results

Flexible
Budget
Variance

Unit Sold
225,000
Revenues
P84,160
P2,000 F
Variable
( C)
P400 U
Costs
Fixed Costs
P16,560
P1,720 F
Profit
P35,480
(D)
19.What amounts are reported for revenues in the
static-budget ( B), respectively?
A. P82,160; P84,960
B. P82,160; P79,360
C. P84,960; P83,360
D. P84,960; P88,960
20.What are the actual variable costs?
A. P32,120
B. P36,400
C. P27,040
D. P31,320
21.What is the total flexible-budget variance (D)?
A. P0
B. P120 UF
C. P3,320 F
D. P680 F
22.What is the total sales-volume variance?
A. P2,800 F
B. P7,480 UF
C. P7,480 F
D. P1,880 F
23.What is the total static-budget variance?
A. P3,320 F
B. P5,200 F
C. P1,880 F
D. P1,880 UF

Flexible
Budget
225,000
(A)
P31,720

SalesVolume
Variances
P2,800 U
P4,680 F

P18,280
0
P32,160
( E)
flexible-budget (A) and the

Static
Budget
206,250
(B)
P36,400
P18,280
P 30,280