Professional Documents
Culture Documents
1. ANSWER B
2. ANSWER B
3. ANSWER B
4. ANSWER C
5. ANSWER A
6. ANSWER B
7. ANSWER D
8. ANSWER C
9. ANSWER D
10. ANSWER B
11. ANSWER C
Expected sales - units 20,000
Less break-even sales:
Fixed costs (20,000 x [10 + 5]) P300,000
Unit contribution margin
(120 [35 + 15 + 10 + 20]) P40 7,500
Margin of safety 12,500 units
Margin of safety in pesos (12,500 x P120) P1,500,000
Margin of safety ratio (12,500 20,000) 62.5%
12. ANSWER C
13. ANSWER B
Fixed costs:
Manufacturing (148,500 x 60% x 120%) P106,920
Non-manufacturing (148,500 x 40% x 110%) 65,340
Total fixed costs P172,260
Contribution margin ratio:
Selling price P75.00
Less variable costs:
Manufacturing (P22.50 + P4.50) P27.00
Selling and administrative 4.50 31.50
Contribution margin per unit P43.50
Selling price 75.00
Contribution margin ratio P 58%
14. ANSWER A
Page 3
15. ANSWER C
16. ANSWER B
Mix variance P450 U
Yield variance 150 U
Quantity variance P600 U
17. ANSWER A
The usage variance is P3,000 unfavorable. The standard price is P1.25. Using the formula for Usage
variance, the difference in quantity may be computed as follows:
If the difference in quantity is unfavorable, the actual quantity is greater than the standard quantity:
= P15,000 unfavorable
18. ANSWER D
19. ANSWER C
20. ANSWER C
21. ANSWER B
Page 4
22. ANSWER A
23. ANSWER D
24. ANSWER D
20 TO 24
Actual variable overhead P4,100
Actual time x std. var. rate (2,100 x P2) 4,200
Spending variance favorable P 100
25. ANSWER D
26. ANSWER C
27. ANSWER A
28. ANSWER B
29. ANSWER B
30. ANSWER C
31. ANSWER D
32. ANSWER C
Change in inventory (100k 80k) 20,000
x fixed overhead cost per unit (P180k 100 1.80
Difference in income P36,000
33. ANSWER B
Product X Product Y
CM per unit P 50 P 64
hours per unit 5 8
CM per hour P 10 P 8
80% of capacity must be applied to Product X, the product with the higher CM per hour.
34. ANSWER A
Loss P15,000
Desired profit 10,000
Required increase in profit P25,000
number of units 5,000
Profit per unit P 5.00
Add production costs:
Materials (P6.00 P1.50) P 4.50
Labor 10.00
Variable overhead 3.00
Variable selling exp (P2 P1) 1.00 18.50
Sales price per unit P23.50
35. ANSWER C
36. ANSWER D
Page 6
37. ANSWER D
The special order is for 500 boxes of 24 bottles each or a total of 12,000 bottles. Materials costs will be:
Chem 1: Total required 12,000 bottles x 4 ml 48,000 ml
Available Chem 5 that can be substituted
for Chem 1, 20,000 ml, salvage value * P 6,000
Balance of Chem 1 required
(48,000 ml 20,000 ml) x P0.54 15,120
Chem 2: 12,000 bottles x 3 ml x P0.36 12,960
Chem 3 12,000 bottles x 2 ml x P0.20 4,800
Chem 4 12,000 bottles x 5 ml x (P0.40 P0.10)* 18,000
* The relevant cost of existing stocks is equal to their salvage value that will not be realized if the stocks are
used in the Clever order.
38. ANSWER A
The overtime premium is part of labor cost, not of overhead cost, because the overtime work is attributable to a
particular job.
The total fixed factory overhead is assumed to remain constant whether or not the special order is accepted,
hence, irrelevant.
39. ANSWER C
40. ANSWER D
Materials:
Chem 1 12,000 bottles x 4 ml x P0.54 P25,920
Chem 2 12,000 bottles x 3 ml x P0.36 12,960
Chem 3 12,000 bottles x 2 ml x P0.20 4,800
Chem 4 12,000 bottles x 5 ml x P0.40 24,000
P67,680
Variable conversion cost (from Item #45) 123,600
Total variable manufacturing costs P191,280
For subsequent orders, the company will have to buy all the required materials because by this time,
the inventory of Chem 4 and Chem 5 would have been fully utilized in the first order.
Page 7
41. ANSWER A
Fixed costs under continued operations (for 2 months):
Factory overhead (P460,000 x 2 months) P 920,000
Selling costs (P620,000 x 2 months) 1,240,000
Total P2,160,000
Less shutdown costs*:
Factory overhead (P340,000 x 2 months) P 680,000
Selling costs ([P620,000 P62,000] x 2 months) 1,116,000
Start-up costs 56,000 1,852,000
Difference P 308,000
Divide by CM per unit (P280 P168) P112
Shutdown point in units 2,750 units
42. ANSWER A
43. ANSWER C
PAT CHIN
Cont. margin P200,000 P2,000,000
units (P300k P30) 10,000 50,000
CM per unit P 20 P 40
X change in units 25,000 (5,000)
Change in CM P500,000 (P200,000)
44. Answer A
45. Answer A
46. ANSWER A
47. ANSWER D
Cost of DPS P12
Preferred = Net issuance = P120 P10 = 10.91%
Stocks price
Page 8
48. ANSWER C
Depreciation expense, as a tax shield, provides tax savings. The difference in the present
values of the tax savings under the two depreciation methods will represent the difference
in the net present values of the equipment.
Year 1 P144,000 x 32% = P46,080 0.909 P41,886.72
2 108,000 x 32% = 34,560 0.826 28,546.56
3 72,000 x 32% = 23,040 0.751 17,303.04
4 36,000 x 32% = 11,520 0.683 7,868.16
49. ANSWER B
Break-even time: the cumulative present value of cash inflows equals the cost of investment
Cash Inflows x PVF = PV
1 216,309.75 0.926 P200,302.83
2 216,309.75 0.857 185,377.46
3 216,309.75 0.794 171,749.94
4 216,309.75 0.735 158,987.67
5 216,309.75 0.681 147,306.94
50. ANSWER C
D 1.20
Price = = = P30
KG 13 9
51. ANSWER A
52. ANSWER B
Demand 200
Less beginning inventory 70
Production 130
53. ANSWER B
54. ANSWER C
55. ANSWER D
56. ANSWER B
57. ANSWER A
It is assumed that each unit of product requires one unit of materials. So, production is equal to raw materials
to be used.
Budgeted raw materials to be used (or production) 140,000+ 5,000 145,000 units
Add raw materials ending inventory 18,500
Total 163,500
Less raw materials beginning inventory 16,000
Budgeted purchases 147,500
Less actual purchases, 1st quarter 27,500
Required purchases in the remaining 3 quarters 120,000 units
Cost computation:
First quarter purchases (27,500 units) P1,760,000
Second quarter (120,000/3 or 40,000 x [P1,760,00027,500] or P64/unit) 2,560,000
Third and fourth quarters ([40,000/qtr. x 2] x[P64 x 105%]) 5,376,000
Total cost of budgeted purchases P9,696,000
58. ANSWER B
The company uses the FIFO method of costing inventory. Thus, the ending inventory should be valued at the new
purchase price of P67.20.
59. ANSWER D
60. ANSWER B
Materials:
Inventory, January 1 P 960,000
Add purchases 9,696,000
Available for use P10,656,000
Less inventory, December 31 1,243,200 P 9,412,800
Labor 829,920
Factory overhead:
Variable:
61. ANSWER A
62. ANSWER B
63. ANSWER C
64. ANSWER A
65. ANSWER C
OR
200B units @ 200A gross profit per unit
(P160,000 x 110%) P176,000
Less 200A gross profit 160,000
Gross profit volume variance P 16,000 F
66. ANSWER A
67. ANSWER B
68. ANSWER B
Average Age
Turnover (360 days
Turnover)
R M Inventory RM used P96,000 360
1. = = 12 times 30 days
Turnover Ave. RM Inventory P8,000 12
P576,000 x
FG Inventory Cost of Goods Sold 360
2. = = 75% 36 times 10 days
Turnover
Ave. FG Inventory P12,000 36
69. ANSWER C
Current assets
* Current ratio =
Current liabilities
Current assets
3.50 = Current assets = 2,100,000
600,000
Quick assets
Acid-test ratio =
Current liabilities
Quick assets
3.00 = Quick assets = 1,800,000
600,000
Inventory, ending 300,000
70. ANSWER C
71. ANSWER B
72. ANSWER C
Failure costs:
Rework cost (750 units x P10) P7,500
Returned units (150 x P15) 2,250
Not reworked (250 units x P15) 3,750 P13,500
Prevention costs 10,000
Appraisal cost 5,000
Total quality costs P28,500
73. ANSWER C
Page 12
74. ANSWER C
75. ANSWER B
Sales P600,000
Less cost of goods sold 250,000
Gross margin P350,000
Variable selling P30,000
Fixed selling (P50,000 x 80%) 40,000
Fixed admin (P20,000 x 50%) 10,000 80,000
Controllable income P270,000
Assets 800,000
ROI 33.75%
76. ANSWER A
77. ANSWER A
EOQ = = 1,000 units
78. ANSWER D
1,400 units is the only amount that will not cause Constraint 1 to be violated.
79. ANSWER D
80. ANSWER B
81. ANSWER D
82. ANSWER A
83. ANSWER B
84. ANSWER C
85. ANSWER A
86. ANSWER B
87. ANSWER D
88. ANSWER A
89. ANSWER A
90. ANSWER D
91. ANSWER D
92. ANSWER A
93. ANSWER D
94. ANSWER D
95. ANSWER C
96. ANSWER C
97. ANSWER A
98. ANSWER D
99. ANSWER A
100. ANSWER D
- end