UNIVERSITY OF NUEVA CACERES

COLLEGE OF BUSINESS AND ACCOUTANCY

Comprehensive Accounting (BATCH 2019)

FIRST PREBOARD
MANAGEMENT ADVISORY SERVICES OTUY/ JGAMBOA

1. If a firm produces more units than it sells, full costing, relative to marginal costing will result in
a. Higher income and assets c. Lower income but higher assets
b. Higher income but lower assets d. Lower income and assets
Items 2 to 3 are based on the following information: During its second year of operations, a company produced
82,500 units but sold only 80,000 units for Php26 per unit. It had an inventory balance of 5,000 units at the start of
the year. The following costs were incurred during the year:
Variable costs per unit
Direct materials Php4.50
Direct labor 3.00
Manufacturing overhead 3.75
Selling and administrative 0.75
expenses
Fixed costs
Manufacturing overhead Php660,000
Selling and administrative 412,500
expenses

2. Determine the difference in net income under absorption costing and variable costing.
a. Income under absorption costing (AC) is higher by Php20,000
b. Income under variable costing (VC) is higher by Php20,000
c. Income under AC is higher by Php60,000
d. Income under VC is higher by Php60,000

3. Assume that the number of units produced were 80,000 units and the number of units sold were 82,500 units.
Determine the difference in net income under absorption costing and variable costing
a. Income under AC is higher by Php20,625
b. Income under VC is higher by Php20,625
c. Income under AC is higher by Php20,000
d. Income under VC is higher by Php20,000

4. ABC Company’s master budget was prepared based on the following projects:
Sales Php5,400,000
Decrease in inventories 135,000
Decrease in accounts payable 225,000
Gross margin rate 30%

ABC’s estimated cash disbursements for inventories are

a. P2,070,000 c. P3,150,000
b. P2,250,000 d. P3,870,000

5. Bean Company produces two products, A and B. The direct cost associated with Product A is Php300 per unit and
Product B is Php400 per unit. The company was able to produce 80 units and 120 units of Product A and B,
respectively. Overhead amounting to Php172,800 is to be allocated to products using direct costs as the relevant
cost driver. Determine the per-unit cost of Product A.
a. Php720/u c. Php1,020/u
b. Php960/u d. Php1,360/u

6. Which of the following is a type of costing that refers to the continuous accumulations of small betterment
activities rather than innovative improvements?
a. Target costing c. Variable costing
b. Kaizen costing d. Process costing

Items 7 and 8 are based on the selected information concerning the operations of Monte Corp. for the year ended
December 31, 2018: units produced 10,000; units sold 9,000; direct materials used P40,000; direct labor incurred
P 20,000; fixed factory overhead P25,000; variable factory overhead P12,000; fixed selling and administrative
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expenses P30,000; variable selling and administrative expenses P 4,500; finished goods inventory, January 1
NONE; work in process inventory, January 1, NONE.

7. What would Monte Corp’s finished goods inventory at December 31, 2018 under the marginal costing method?
a. P 7,200 c. P 8,000
b. P 7,650 d. P 9,700

8. Which costing method, absorption or variable costing, would show a higher operating income for 2018 and by
what amount?
a. Absorption costing P2,500 c. Absorption costing P5,500
b. Variable costing P2,500 d. Variable costing P5,500

9. The terms direct cost and indirect cost are commonly used in accounting. A particular cost might be considered a
direct cost of a manufacturing department but an indirect cost of the product produced in the manufacturing
department. Classifying a cost as either direct or indirect depends upon
a. The behavior of the cost response to volume changes
b. Whether the cost is expensed in the period in which it is incurred
c. The cost object to which the cost is being related
d. Whether expenditure is unavailable because it cannot be changed regardless of any action taken

10. If companies A and B manufacture similar products that require negligible distribution costs, and if their assets,
operations and accounting are similar in all respects except that A uses direct costing and B uses full costing.
a. A would report a higher inventory value than B for the year in which production exceeds sales
b. A would report a higher value than B for the years in which production exceeds the normal or practical
capacity
c. B would report a higher inventory value than A for the years in which production exceeds sales
d. B would report a higher net income than A for the years in which production equal sales

11. PAMPAM Company has estimated the following cost formulas for overhead:
Expenses Cost formula
Lubricants Php7,245 plus Php0.60 per machine hour
Utilities Php9,660 plus Php0.72 per machine hour
Depreciation Php4,830
Maintenance Php966 plus Php0.12 per machine hour
Machine setup Php0.36 per machine hour

If the company expects to incur a total of 1,500 machine hours, what would be the expected cost?
a. P24,435 c. P24,321
b. P25,401 d. P14,661

12. The following four months of data were collected on utility cost and the number of labor hours in a factory
Month Utility Labor hours
cost
January Php33,150 3,975
February 36,900 5,430
March 35,250 4,400
April 30,210 3,200

Using the high-low method, what would be the estimate of electricity cost if the factory incurred 4,700 labor
hours next month?
a. P20,260 c. P34,710
b. P23,410 d. P42,610

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COLLEGE OF BUSINESS AND ACCOUTANCY
Comprehensive Accounting (BATCH 2019)

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Items 13 to 16 are based on the following annual flexible budget which has been prepared for use in making
decisions relating to Product Jade.
100,000 units 150,000 units 200,000 units
Sales volume P 800,000 P 1,200,000 P 1,600,000
Manufacturing costs:
 Variable P 300,000 P 450,000 P 600,000
 Fixed 200,000 200,000 200,000
Total P 500,000 P 650,000 P 800,000
Selling and other expenses
 Variable P 200,000 P 300,000 P 400,000
 Fixed 160,000 160,000 160,000
Total P 360,000 P 460,000 P 560,000
Income (loss) P (60,000) P 90,000 P 240,000

The 200,000 unit budget has been adopted and will be used for allocating fixed manufacturing costs to units of
Product Jade. At the end of the first six months the following information is available: Units: production
completed 120,000, units sold (sales) 60,000. All fixed costs are budgeted and incurred uniformity throughout the
year and all costs incurred coincide with the budget. Over-and under-applied fixed manufacturing costs are
deferred until year-end. Annual sales have the following seasonal pattern:
Portion of annual Portion of annual sales
sales
First quarter 10% Third quarter 30%
Second quarter 20% Fourth quarter 40%

13. The amount of fixed factory costs applied to product during the first six months under absorption costing would
be
a. Overapplied by P20,000 c. Underapplied by P40,000
b. Equal to the fixed costs incurred d. Underapplied by P80,000

14. Reported net income (or loss) for the first six months under absorption costing would be
a. P 160,000 d. P (40,000)
b. P 80,000 e. None of these
c. P 40,000

15. Reported net income (loss) for the first six months under variable costing would be
a. P 144,000 d. P (36,000)
b. P 72,000 e. None of these
c. P 0

16. Assuming that 90,000 units of Product Jade were sold during the first six months and that this is to be sued as a
basis, the revised budget estimate for the total number of units to be sold during this year would be
a. 360,000 d. 120,000
b. 240,000 e. Some other number
c. 300,000

17. Under variable costing

a. Net income will tend to vary inversely with production changes
b. Net income will always be higher than under absorption costing

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c. Inventory costs will always be lower than under absorption costing

d. Net income will tend to move upward and downward in response to changes in levels of production.

18. A company is attempting to determine if there is a cause-and-effect relationship between scrap value and output
produced. The following exhibit presents the company’s scrap data for the last fiscal year:
Scrap Value as a Percent of Standard Peso Value of Output
Produced
Month Standard Peso Percent Scrap
Value of Output (%)
Nov 2017 P1,500,000 4.5
Dec 2017 P1,650,000 2.5
Jan 2018 P1,600,000 3.0
Feb 2018 P1,550,000 2.5
Mar 2018 P1,650,000 1.5
Apr 2018 P1,550,000 4.0
May 2018 P1,400,000 2.5
June 2018 P1,300,000 3.5
July 2018 P1,650,000 5.5
Aug 2018 P1,000,000 4.5
Sept 2018 P1,400,000 3.5
Oct 2018 P1,600,000 2.5

Based on the above data, the company’s scrap value in relation to the standard peso value of output produced
appears to be
a. A variable cost
b. A fixed cost
c. A semi-fixed cost
d. Unrelated to the standard peso value of output

19. Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting?
a. A focus on reporting to external parties.
b. An area of accounting that us heavily regulated.
c. A focus on providing information that is relevant for planning, decision making, directing and control.
d. A focus on reporting to personnel within an organization and a focus on providing information that
is relevant for planning, decision making, directing, and control.

20. When volume equals zero units

a. Fixed costs equals zero c. Net income equals zero
b. Total costs equal zero d. Variable costs equals zero

Items 21 to 23 are based on the following information: The management of Jackie Inc. has performed costs
studies and projected annual costs based on 40,000 units of production and sales:
Total annual costs Percent of variable portion of
total annual costs
Direct material P 400,000 100%
Direct labor 360,000 75%
Manufacturing overhead 300,000 40%
Selling, general and administrative 200,000 25%

21. What unit selling price will yield a 10 percent profit from sales of 40,000 units?
a. 33.50 per unit d. 30 per unit
b. 35 per unit e. None of these
c. 40 per unit
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COLLEGE OF BUSINESS AND ACCOUTANCY
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22. What is the total variable cost of Jackie Inc.?

a. P 1,260,000 d. P 960,000
b. P 840,000 e. None of these
c. P 420,000

23. What is the total fixed cost for Jackie Inc.?

a. P 400,000 c. P 800,000
b. P 330,000 d. P 420,000

24. When developing comprehensive performance indicators to assist in assuring total quality management,
performance indicators should not
a. Be forward looking
b. Focus on significant external as well as internal relationship
c. Track nonfinancial as well as financial indicators
d. Rely on traditional, historical, internal financial measures

25. In relation to peso amount of sales, which of the following cost classifications is appropriate for (1) advertising
and (2) sales salaries costs?
a. (1) Variable cost; (2) Fixed cost
b. (1) Fixed cost; (2) Variable cost
c. (3) Mixed cost; (2) Mixed cost
d. (1) Fixed cost; (2) Fixed cost

26. Lino Company developed the following sales forecast and associated probabilities:
Sales forecast Probability Sales forecast Probability
P 400,000 10% P700,000 10%
P 500,000 40% P 800,000 5%
P 600,0000 35%
The expected value of sales is
a. P 560,000 c. P 3,000,000
b. P 600,000 d. Some other number

Items 27 to 29 are based on the following information: The January 31, 2019 balance sheet of Jackie Corp.
follows:
Cash P 8,000 Accounts payable P 82,500
Accounts receivable (net of allowance for 38,000 Common stock 50,000
uncollectible accounts P2,000)
Inventory 16,000 Retained earnings (deficit) (30,500)
Property, plant and equipment (net of 40,000
allowance for accumulated depreciation
P60,000)
Total P 102,000 Total P 102,000

Additional information:
• Sales are budgeted as follows: February P110,000; March P120,000
• Collections are expected to be 60% in the month of sales, 38% the next month and 2% uncollectible
• The gross margin is 25% of sales. Purchases each month are 75% of the next month’s projected sales.
The purchases are paid in full the following month
• Other expenses for each month, paid in cash, are expected to be P16,500

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• Depreciation each month is P5,000

27. What are the budgeted collections for February 2019?

a. P 63,800 c. P 101,800
b. P 66,000 d. P 104,000

28. What is the pro-forma income (loss) before income taxes for February 2019?
a. P(3,700) c. P3,800
b. P(1,500) d. P6,000

29. What is the projected balance in accounts payable on February 28, 2019?
a. P 82,500 c. P90,000
b. P86,250 d. P106,500

30. Eva Company is preparing a flexible budget for 2019 and the following maximum capacity estimates for
department Inno are available:
At maximum capacity
Direct labor hours 60,000
Variable factory overhead P 150,000
Fixed factory overhead P 240,000

Assume that Eva’s normal capacity is 80% of maximum capacity. What would be the total factory overhead rate,
based on direct labor hours, in a flexible budget at normal capacity?
a. P 6.00 c. P 7.50
b. P 6.50 d. P 8.13

Items 31 to 34 are based on the following information: Cortes Retailers seeks your assistance to develop cash and
other budget information for May, June and July. At April 30, the company had cash of P5,500, accounts
receivable of P437,000, inventories of P309,400 and accounts payable of P133,055. The budget is to be based on
the following assumptions:
SALES PURCHASES
Each month’s sales are billed on the last day of the  54% of all purchases of material and selling,
month general and administrative expenses are paid in
Customers are allowed a 3 percent discount if the month and the remainder in the following
payment is made within 10 days after the billing date month.
Receivables are booked at gross  Each month’s units of ending inventory is equal
60% of the billings are collected within the discount to 130% of the next month’s units of sales
period, 25% are collected by the end of the month,  The cost of each unit of inventory is P20
9% are collected by the end of the second month and  Selling, general and administrative expenses of
6% prove uncollectible. which P2,000 is depreciation are equal to 15% of
the current month’s sales.

Actual and projected sales are as follows:

Pesos Units Pesos Units
March P 354,000 11,800 June P 342,000 11,400
April 363,000 12,100 July 360,000 12,000
May 357,000 11,900 August 366,000 12,200

31. Budgeted purchases for May and June are

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a. P241,800 and P236,000 c. P225,000 and P243,600

b. P238,000 and P228,000 d. P357,000 and P342,000

32. Budgeted cash disbursements during the month of June are

a. P 292,900 c. P294,900
b. P 287,379 d. P285,379

33. Budgeted cash collections during the month of May are

a. P333,876 c. P340,410
b. P355,116 d. P355,656

34. The budgeted number of units of inventory to be purchased during July is

a. 15,860 c. 12,000
b. 12,260 d. 15,600

35. CC, which has a P3.00 standard cost per unit and budgeted production at 1,000 units, actually produced 1,200
units. total standard cost for the period is
a. P 3,000
b. P 3,600
c. Amount that cannot be determined without knowing the variances for the period
d. None of these

36. RC makes payments of purchases 30% during the month of purchase and the remainder the following month.
April purchases are projected to be P80,000; May purchases will be P120,000. Accounts Payable on May 31 will
be
a. P36,000 c. P84,000
b. P54,000 d. P92,000

37. In working on CVP analysis, the accountant is unsure of the exact results and assumptions under which to
operate. What can the accountant do to help management in this CVP decision?
a. Nothing. It is not the responsibility of the accountant to be concerned with the ambiguity of the results
and/ or assumptions
b. Ascertain the probabilities of various outcomes and work with management on understanding
those probabilities in reference to the CVP decision
c. Calculate the probability of various outcomes and make the decision for management
d. Use a random number table to generate a decision model and make the decision for management

38. A basic tenet of direct costing is that period costs should be currently expenses. What is the basic rationale behind
this procedure?
a. Period costs are uncontrollable and should not be charged to a specific product
b. Period costs are generally immaterial in amount and the cost of assigning the amounts to specific products
would outweigh the benefits
c. Allocation of period costs is arbitrary at best and could lead to erroneous decisions by management
d. Period costs will occur whether or not production occurs and so it is improper to allocate these
costs to production and defer a current cost of doing business

Items 39 to 46 are based on the following information: All-Ace Candy Company (AAC) is a wholesale distributor
of candy. The company services grocery, convenience and drug stores in a large metropolitan area. Small but
steady growth in sales has been achieved by the company over the past few years while candy prices have been
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increasing. The company is formulating its plans for the coming fiscal year. Presented below are the data used to
project the current year’s after-tax net income of P110,400. Manufacturers of candy have announced that they will
increase prices of their products an average of 15 percent in the coming year due to increases in raw materials
(sugar, cocoa, peanuts, etc..) and labor costs. AAC expects that all other costs will remain the same rates or levels
as the current year.

Average selling price P 4.00 per box Annual fixed costs:

Average variable costs:  Selling P 160,000
 Costs of candy P 2.00 per box  Administrative 280,000
 Selling expenses 0.40 per box Total P 440,000
Total P2.40 per box Expected annual sales volume (390,000 boxes) P 1,560,000
Tax rate is 40 percent.

39. What is the current contribution margin per box?

a. P 2.00 d. P 4.00
b. P 2.40 e. Some other number
c. P 1.60

40. What is the breakeven point in units before a 15 percent increase in prices?
a. 200,000 d. 100,000
b. 275,000 e. Some other number
c. 175,000

41. If fixed costs double, what happens to the breakeven point?

a. Increase but by less than a factor of two c. Increase by a factor of two
b. Decrease by less than a factor of two d. Decrease by a factor of two

42. If the current contribution margin ratio is maintained, what would be the selling price of the candy to cover the 15
percent increase?
a. P4.00 d. P4.50
b. P4.15 e. Some other number
c. P4.60

43. If candy costs increase 15 percent but the selling price remains at P4.00 per box, what will be the breakeven point
in units?
a. 338,462 d. 305,556
b. 346,457 e. None of these
c. 285,715

44. If the candy costs remain constant but the selling price increases 15 percent, what will be the breakeven point in
sales pesos?
a. P648,000 c. P920,000
b. P838,462 d. P1,556,953

45. Why was the tax rate at 40% not a factor in the previous two questions?
a. At the breakeven point there is zero profit
b. Income taxes are normally ignored in CVP analysis
c. The problem ignores income taxes
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d. Income tax is a variable cost that is incorporated into CVP analysis

46. If net income after taxes is to remain the same after the cost of candy increases but no increase in the sales price is
made, how many boxes of candy must AAC sell?
a. 480,000 d. 29,300
b. 400,000 e. None of these
c. 27,600

47. In a well-run organization, a manger may have responsibility for activities that he cannot significantly influence.
This arrangement may be justified because of the
a. Manager’s knowledge about the activities and the potential for behavioral change
b. Manager’s knowledge about the activities but not the potential for behavioral change
c. Improvement in managerial morale, effort, and performance
d. Improvement in managerial morale and potential for behavioral change
48. Total production costs of prior periods for a company are listed as follows. Assume that the same cost behavior
patterns can be extended linearly over the range of 3,000 to 35,000 units and that the cost driver for each cost is
the number of units produced.

The company is concerned about its current operating performance that is summarized as follows:
Sales (P12.50 per unit) P300,000
Variable cost 180,000
Net operating loss (40,000)

How many additional units should have been sold in order for the company to break even?
a. 32,000 c. 12,800
b. 16,000 d. 8,000

49. A company allocates overhead to jobs in process using direct labor costs, raw material costs, and machine hours.
The overhead application rates for the current year are
100% of direct labor
20% of raw materials
$117 per machine hour
A particular production run incurred the following costs:
Direct labor, P8,000
Raw materials, P2,000
A total of 140 machine hours were required for the production run

What is the total cost that would be charged to the production run?
a. P18,000 c. P34,780
b. P18,400 d. P24,780

50. Generally, individual department rates rather than a plantwide rate for applying overhead would be used if
a. A company wants to adopt a standard cost system
b. A company’s manufacturing operations are all highly automated
c. Manufacturing overhead is the largest cost component of its product cost
d. The manufactured products differ in the resources consumed from the individual department in
the plant

51. CVP analysis is based on some basic assumptions. Which of the following is not one of such basic assumptions?
a. That the actual sales mix will conform to the predicted sales
b. That selling prices may vary at different levels of activity

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c. That the material prices and labor rates will not vary significantly from the data on which the CVP
projections are based
d. That the productivity capacity of the plant will remain relatively constant
52. Bethany Company has just completed the first month of producing a new product but has not yet shipped any of
this product. The product incurred variable manufacturing cost of P5,000,000, fixed manufacturing costs of
P2,000,000, variable marketing costs of P1,000,000, and fixed marketing costs of P3,000,000.

If Bethany uses the variable cost method to value inventory, the inventory value of the new product
would be
a. P6,000,000 c. P11,000,000
b. P5,000,000 d. P8,000,000

53. Ward Corporation’s current year-end sales totaled P240 million and its ending cash balance was P20 million.
Ward anticipates its sales for the upcoming year will be P260 million. On average, 10% of a year's sales will be
collected
during the following year. Assume Ward has no uncollectible accounts. Ward also anticipates cash expenses of
P240 million and depreciation of P5 million. During the next year, Ward intends to spend P30 million cash for
capital improvements. If Ward's policy is to have a minimum of P10 million cash available at the beginning of
each year, its budgeted cash flow projections indicate that it will need outside financing of
a. P26 million c. P2 million
b. P0 d. P7 million

54. A company with three products classifies its costs as belonging to five functions: design, production, marketing,
distribution, and customer services. For pricing purposes, all company costs are assigned to three products. The
direct costs of each of the five functions are traced directly to the three products. The indirect costs of each of the
five business functions are collected into five separate cost of pools and then assigned to the three products using
appropriate allocation bases. The allocation base that would most likely be best for allocating the indirect cost of
the distribution function is
a. Number of customer phone calls c. Number of sales
b. Number of shipments d. Peso sale volume

55. A company has sales of P500,000, variable costs of P300,000, and pre-tax profit of P150,000. If the company
increased the sales price per unit by 10%, reduced fixed costs by 20%, and left variable cost per unit unchanged,
what would be the new breakeven point in peso sales?
a. P88,000 c. P110,000
b. P100,000 d. P125,000

56. The Profit and Loss Statement of Madengrad Mining Inc. include the following information for the current fiscal
year.
Sales P160,000
Gross profit 48,000
Year-end finished goods 58,300
inventory
Opening finished goods inventory 60,190

The cost of goods manufactured by Madengrad for the current fiscal year is
a. P46,110 c. P110,110
b. P49,890 d. P113,890

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57. A company increased the selling price for its product from P1 to P1.10 a unit when the fixed cost increased from
P400,000 to P480,000 and variable cost per unit remain unchanged. How could these changes affect the
breakeven point?
a. The breakeven point units would increase
b. The breakeven point in units would be decreased
c. The breakeven point in units would remain unchanged
d. The effect cannot be determined from the information given

Items 58 to 60 Multiframe Company has the following

Plastic Frames Glass Frame
Budgeted unit sales 100,000 300,000
Sales Price P10.00 P15.00
Direct materials (2.00) (3.00)
Direct labor (3.00) (5.00)
Fixed overhead (1.95) (2.60)
Net income per unit P3.05 P4.40

The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is budgeted at
P975,000. Assume that company plans to maintain the same mix ratio. In numerical calculations, Multifframe
rounds to the nearest cent and unit.

58. The total number of units that Multiframe needs to produce and sell to break even us:
a. 150,000 units c. 177,273 units
b. 354,545 units d. 300,000 units

59. The total number of units needed to break even if the budgeted direct labor costs were P2 for plastic frames
instead of P3 is:
a. 154,028 units c. 156,000 units
b. 144,444 units d. 146,177 units

60. The total number of units needed to break even if sales were budgeted at 150,000 units of plastic frames and
300,000 units of glass frames with all other costs remaining constant is:
a. 171,958 units c. 153,947 units
b. 418,455 units d. 365,168 units

61. A manufacturer at the end of its fiscal year recorded the data below:
Prime cost P800,000
Variable manufacturing overhead 100,000
Fixed manufacturing overhead 160,000
Variable selling and other expenses 80,000
Fixed selling and other expenses 40,000

Using absorption (full) costing, inventoriable cost are

a. P1,060,000 c. P800,000
b. P900,000 d. P1,080,000

62. KJR Corp. has the following partial contribution income statement at a sales volume of 900,000 units for its
single product:
Sales revenue P81,000,000
Variable cost 56,700,000
Contribution margin P24,300,000

KJR’s controller has calculated that the company’s break-even point is 750,000 units. What are KJR’s total fixed
costs?
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MANAGEMENT ADVISORY SERVICES OTUY/ JGAMBOA

a. P24,300,000 c. P20,250,000
b. P4,050,000 d. P18,225,000

63. Once the tentative estimates of sales have been agreed upon, the usual next step in the preparation of a master
budget is
a. Preparation of a sales forecast
b. Determination of the quantities of finished goods which must be produced to meet both sales and
inventory requirements
c. Determination of quantities of raw materials needed to meet the production and inventory requirements
d. Determination of the peso amount of purchases\

64. Which one of the following accounting and management techniques is least likely to assist internal auditors in
appraising the efficiency with which resources are being used by respective profit centers?
a. Cost Variance Analysis c. Activity-based management
b. Joint cost allocation d. Flexible budget

65. A major advantage of using standard costs is that

a. They are easier to compute than actual costs
b. They are lower than actual costs
c. Products with standard costs can be sold at lower prices
d. They provide information for control purposes

66. Based on discussions with former customers, a company determines that sales have been lost due to the length
turnaround time and inflexible pricing in their proposal and bid process. Which of the following internal activities
could not be used to improve the closing ratio?
a. Activity-based management c. Activity-based costing
b. Benchmarking best practices d. Process reengineering

67. ABC Corporation has sales of Php100,000, variable expenses of Php75,000, fixed expenses of Php30,000, and a
net loss of Php5,000. How much would ABC have to sell to achieve a profit of 10% of sales?
a. P180,000 c. P200,000
b. P187,500 d. P225,500

Items 68 to 69 INQ Corporation manufactures two versions of a product. Production and cost information show
the following:
Version 1 Version 2
DLH per unit 2.00 hours 4.50 hours
Units 400 units 1,600 units
produced

Material handling costs total Php500,000. Number of material movement amounted to 120 times for Version 1
and 380 times for Version 2.

68. Under the traditional costing method, the material handling costs are allocated based on direct labor hours.
Determine the material handling costs allocated to Version 1.
a. P50,000 c. P400,000
b. P100,000 d. 450,000

69. Under ABC, the material handling costs allocated to each unit of Version 2 would be:
a. P62.50 b. P120.00

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 UNIVERSITY OF NUEVA CACERES
COLLEGE OF BUSINESS AND ACCOUTANCY
Comprehensive Accounting (BATCH 2019)

FIRST PREBOARD
MANAGEMENT ADVISORY SERVICES OTUY/ JGAMBOA

c. P237.50 d. P300.00

70. If an income statement is prepared as an internal report using the direct costing method, fixed factory overhead
would
a. Not be used
b. Be used in the computation of operating income but not in the computation of contribution margin
c. Be used in the computation of contribution margin
d. Be treated the same as variable factory overhead

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