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Practice Set 1 (Modules 1 - 3) 371 PDF
Practice Set 1 (Modules 1 - 3) 371 PDF
ems1t o3arebasedonthefol
lowinginfor
mati
on
BalongCo.hadthef
oll
owingmateri
alshandli
ngcostatthr
eemonthsofacti
vi
tyl
evel
s:
Kil
oshandled Costs
Month1 80,
000 P160,000
Month2 60,
000 P132,000
Month3 70,
000 P130,000
A 1.Whatist
a.
heval
1.
ueoft
4
hesl
opeofthelineat80,
000-ki
lol
evel
c.
?
1.4xnumberof
kil
os
b. 1.5 d. 112,000
C 2.Whati
st
a.
heval
0.
ueoft
80
hey-i
nter
ceptat60,
000-
kil
olev
el?
c. P48,
000permonth
b. P48, 000per
kil
o d. P48,
000per
year
C 3. What is t he est
imat
ed cost f
or handl
ing 500,
000 ki
los f
or t
he nex
t
oper
ati
ngy
ear
?
a. P700,
000 c. P1,
276,
000
b. P748,
000 d. P8,
976,
000
A 4. The st
atement “
fact
ory over
2
head i s a f unction of machi ne hour s wi th
coef
fi
cientofdet
ermi nati
on(r)=70per cent”iscor rectl
yinterpretedas
a. 70 per centoft otalv ari
ation off actor yov erhead is explained byt he regression
equationort hechangei nmachi nehour swhi l
et heremai ni
ng30per centisaccount ed
forbysomet hi
ngot herthanmachi nehour s.
b. An r-
squar ed of0. 70 wi t
har egression equat i
on means t hatpr edi
cti
ons wi l
lbe
accurate70%oft het i
me.
c. 30 per centoft otalv ari
ation off actor yov erhead is explained byt he regression
equation ort he change in machi ne hour s whi le 70 percenti s accounted forby
somet hingotherthanmachi nehours.
d. 30% per centofov erhead costpr ediction mightshow r esul t
s out si
de confi
dence
int
ervaldeterminedbyt hest andarddev iati
on.
5. A retai
lcompanydet erminessel
li
ngpr i
cebymarki
ngupv ari
ablecost
s60%.I naddi
tion,t
he
companyusesf requentsel
li
ngpricemarkdownst
osti
mulat
esales.Ifthemarkdownsav
erage10%,
whati
st hecompany ’
scontr
ibuti
onmarginr
ati
o?
a.27. 5% c.37.
5%
b.30. 6% d.41.
7%
6. Ifacompany’sv ar
iablecostrat
ioi
s60%,whichformular
epresent
sthecomputat
ionofpeso
sal
esthatwil
lyi
eldapr ofi
tequalt
o20%ofthecontr
ibut
ionmargi
nwhenS=sal esi
npesosandFC
=cost
s?
a. S=F÷1.2 c.S=F÷0.2
b. S=F÷0.32 d.S=F÷0.12
7. Thetotalpr
oducti
oncostfor20,000unit
swasP21, 000andthet ot
alproducti
oncostformaki
ng
50,
000unit
swasP34, 000.Oncepr oduct
ionexceeds25,000units,addi
ti
onalfixedcost
sofP4,000
werei
ncur
red.Whatistheful
lproducti
oncostperuni
tformaking30,000uni
ts?
a.P0.30 c. P0.84
b.P0.68 d. P0.93
8. Tot alpr
oducti
oncostf orYeyeCompanyar
ebudget
edatP230,
000for50,000uni
tsofbudgeted
outputandatP280, 000f or60,000uni
tsofbudget
edout
put
.Becauseoft heneedf oraddi
ti
onal
faci
li
ti
es,budget
edfixedcosts
for 60,000 unit
s ar e 25% more than t he budgeted f i
xed cost
s f
or 50,
000
uni
ts.HowmuchisYey
e’sbudget
edv
ari
abl
ecostperuni
tof
output?
a. P1.
60 c. P3.
00
b. P1.
67 d. P5.
00
11. DatolCompanyhasacontri
but
ionmarginof20%,amar gi
nofsaf
etyr
ati
oof331/
3% anda
prof
itofP5,
000.WhatwasDat
olCompany
’sbreak-
evenpesosal
es?
a.P15,
000 c. P60,000
b.P50,
000 d. P75,000
14. Ji l
lCompanyhasf i
xedcostsofP300,
000.Itproducestwoproducts,XandY.ProductXhasa
vari
ablecostper cent
ageequalto60%ofitsP10peruni tsel
li
ngpri
ce.ProductYhasav ari
abl
ecost
percentageequalt o70%ofitsP30sell
ingpr
ice.Forthepastseveraly
ears,sal
esofproductXhave
averaged66.67% oft hesalesofproductY.Thatr ati
oi snotexpectedtochange.Whati sJil
l’
s
breakevenpointinpesos?
a.P300,000 c. P857,
142
b.P750, 000 d. P942,
857
15. Whensalesl evelr
eachesP100,
000retur
nonsalesis10%.Howmuchi
sthemar
ginofsaf
etyi
f
theoperat
ingl
everageatthissal
esl
eveli
s4t i
mes?
a. P2,500
b. 25,000units
c. 25%of sales
d. Cannotbedet ermi
nedfr
om thegiv
eni
nfor
mation.
16. JackCompanysel l
s50,000uni
tsofagadget.Theseweretakenf rom thecompany
’srecords:
AccountsReceivable P129,
000 Day ssalesout
st andi ng 15days
Contr
ibuti
onmar ginr at
io 49% Pr of
itf
ortheper i
od P485,040
Theendingr eceivablesbalancei
stheav eragebal
ancedur i
ngt hey ear.Usinga360-dayy earand
assumingthatallsalesaremadeoncr edi
t,whati
sthecompany ’
sev enpoi nt?
a.P1,032,000 c. P2,061, 122
b.P1,320,000 d. P2,106, 122
19. Ifthesal
esvol
umei sest
imat
edtobe2,100uni
tsi
nt henextyear,andifthepr
icesandcosts
stayatthesamelevel
sandamountsnexty
ear,t
heaf
ter
-taxi
ncomet hatGingercanexpectf
ornext
yeari
s:
a.P110,
250 c. P184,
500
b.P135,
000 d. P283,
500
20. Gi ngerhasapot ent
ialf
orei
gncust omerthathasof f
eredtobuy1,500unit
satP450peruni t
.
Assumet hatallofGinger’
scostswouldbeatthesamel evelsandratesasl
asty
ear.Whatneti
ncome
aft
ert axeswoul dGi ngerexpectifittookt hi
sor derandr ej
ectedsomebusinessfrom regul
ar
customerssoasnott oexceedcapaci
ty?
a.P211, 500 c. P256,
500
b.P252, 500 d. P297,500
21. Gi ngerpl
anst omar ketit
spr oducti nanew t err
itory
.Itesti
matesthatanadv ert
isi
ngand
promotionprogram costi
ngP61,500annual l
ywoul dneedt obeundert
akenforthenexttwotothr
ee
years.Inaddit
ion,aP25peruni tsalescommi ssi
onoverandabov ethecurrentcommissi
ont ot
he
salesforceinthenewt err
it
orywouldber equired.Howmanyuni tswouldhavetobesoldinthenew
terr
it
orytomaintainGinger’
scur
rentafter
-taxincomeofP94,500?
a.273.30 c.1,095.
00
b.307.50 d.1,545.
00
It
ems23t o27ar ebasedont hefollowi
nginformati
on
OrangeSkicanpr oduceupt o15, 000pairsofcross-countryskisofei t
hert heMountaineer
ingmodel
orTour ingmodel .Thesal esdepar tmentassuresmanagementt hatitcansellbetween9, 000and
13,000pai r
s( unit
s)ofei therproductthisyear.Becauset hemodel sarev erysi
mil
ar,OrangeSkiwill
produce onl y one of t he t wo model s. The i nf
ormat ion below was compi led by the
account i
ngdepar t
ment .
Mountai
neering Touring
Selli
ng price peruni t P88.00 P80.00
Variable cost peruni t P52.80 P52.80
Fixedcost swilltotalP369,600i fthemount ai
neeri
ngmodeli sproducedbutwi l
lbeonl yP316,800if
thetouringmodeli sproduced.Or angeSkiCompanyi ssubj ecttoa40%i ncometaxr
ate.
23. I fOrangeSkiCompanydesi resanaf t
er-
taxnetincomeofP24, 000,howmanypai rsofTouri
ng
modelski swi l
lthecompanyhav et osel
l?
a.13,853 c. 12,
529
b.13,118 d. 4,
460
24. Thet ot
alsalesrevenueatwhi
chOrangeSkiCompanywoul
dmaket hesamepr
ofi
torl
oss
regar
dlessoftheskimodelitdeci
dedt
opr oducei
s
a. P924,000 c. P686,
400
b. P880,000 d. P422,
400
26. Ifthevari
abl
ecostperuni
tofTouri
ngskisdecr
easeby10%,
andt
het
otalf
ixedcostofTour
ing
ski
sincreasesby10%,thenewbr
eakev
enpointwil
lbe
a. 10,
730pair
s
b. 12,
812pair
s
c. 13,
007pair
s
d. Unchangedfr
om 11,
648pai
rsbecauset
hecostchangesar
eequalandt
her
efor
e
somewhatoff
set
ti
ng
28. Amai l
-orderconf ectionersel l
sf i
necandyi none-poundboxes.Ithasthecapaci
tytoproduce
600,000boxesannual l
ybutf or ecastst hati twil
lproduceandsellonly500,000boxesi
nthecomi ng
year.Thecost st omanuf act ur eanddi st ri
butethecandyar edetai
ledbelow.Theorgani
zati
onhas
i
nv est
edcapitalofP6. 75mi l
lion.
Variablecostperpound
Manuf act ur
ing P4.85
Packagi ng 0.35
Distribution 1.80
Total P7.00
Annualf ixedcost s
Manuf act ur
ingov erhead P810,000
Mar ketinganddi stri
buti
on 270,000
Whati sthesell
ingpriceperpoundt hatt heconf ecti
onershoul
dchargeforaone-poundboxofcandy
toobtaina20%r ateofreturnoni nvestedcapi tal
?
a. P9. 70 c. P11.50
b. P11. 05 d. P11.86
30. Thefol
lowingdat aareav ai
lableforMont eCarl
oCorpor
ati
on:
Directmaterialsused P22,500
Pay r
oll P30,000
Var i
abl
eov erhead( budgetedandactual
) P2peruni t
Fixedov er
head( budget edandactual
) P40,000
Unitsproduced 7,
500uni t
s
Unitssold 7,
000uni t
s
Beginninginventory None
Nor malcapacity 8,
000uni t
s
Anycapaci
tyvari
ancei sclosedt ocostofsal es.
Howmuchi sthecostofsal esunder( 1)ful
lcosti
ngand(2)dir
ectcost
ing?a.(1)98,800(2)
63,
000 c.
(1)103,333( 2)65,500
b. (1)100,310(2)65,500 d. (1)100,500(2)63,
000
31. Thef
oll
owi
ngi
nfor
mat
ionper
tai
nst
oIt
alyCompany
’sPr
oduct
A-810:
Standardcost s:
Variabl
emanuf actur
ing P12perunit
Fi
xed manuf act
uring (based on
normalpr oductionof20,000uni
ts) P4perunit
Variances:
Variabl
emanuf actur
ing-unf
avor
abl e P12,000
Capacity P8,000
Otherdat a:
Production 22,
000units
Sales(P25/ unit
) 16,
000units
Oper at
ingcost s P64,000
Al
lvar
iancesarecl
osedt ocostofgoodsol d.Whatisthecompany ’
sproftunderGAAPcost
i ing?
a. P76,
000 c. P44,
000
b. P52,
000 d. P42,
000
It
ems34t o40arebasedont hefol
lowinginfor
mation
Fuchsi
aCor por
ationempl oysanabsor pti
oncosti
ngsy st
em forinternalr
epor
tingpur poses;howev
er,
thecompanyi sconsi deri
ngusi ngv ari
ablecosti
ng.Datar egardingFuchsi
a’spl annedandact ual
operat
ionsforthecal
endary eararepresentedbel
ow:
Pl
annedActivi
ty Act
ualAct i
vit
y
Begi
nning f
ini
shed
goods inventory in 35,
000 35,0000
units
Salesinunit
s 140,
000 125,
000
Product i
oninuni
ts 140,
000 130,
000
Thef oll
owi ngpl annedper unit
cost fi
gures wer e basedont heest i
mat ed
product i
on and sal e of 140, 000 uni ts f
or t he y ear. Fuchsi a uses a
predet ermi ned manuf act uri
ng ov erhead rate for applyi
ng manuf acturi
ng
ov erhead t oi tspr oduct ;thus,acombi ned manuf act ur
ing over head r ateofP9. 00 peruni twas
empl oyedf orabsor ptioncost ingpur poses.Anyov er-orunder -appliedmanuf act
ur i
ngov erheadi s
closedt ot hecostofgoodssol daccountatt heendoft hereportingy ear .
PlannedCost
PerUni t Tot al I
ncur r
edCost
Directmat erials P12. 00 P1, 680,000 P1, 560, 000
Directl abor 9.00 1,250,000 P1, 170, 000
Var i
abl emanuf act uringov erhead 4.00 560, 000 520, 000
Fixedmanuf act uri
ngov erhead 5.00 700, 000 715, 000
Var i
abl esel lingexpenses 8.00 1,120,000 1,000, 000
Fixedsel li
ngexpenses 7.00 980, 000 980, 000
Var i
abl eadmi nistrati
v eexpenses 2.00 280, 000 250, 000
Fixedadmi ni strati
v eexpenses 3.00 420, 000 425, 000
Tot al P50. 00 P7, 000,000 P6, 620, 000
Thebegi nningf ini
shedgoodsi nventoryforabsor pti
oncost i
ngpur poseswasv al
uedatt hepr ev i
ous
year ’
s pl anned uni tmanuf act ur
ing cost ,whi ch was t he same as t he curr
entpl anned uni t
manuf act uri
ngcost .Ther ear enowor k-
in-processi nv entori
esatei thert hebeginningort heendof
they ear .Thepl annedandact ualunitsell
ingpr icewasP70. 00peruni t.
34. Thev alueofFuchsi aCor porati
on’sact ualendi ngf i
nishedgoodsi nvent
oryont heabsor pt i
on
cost i
ngbasi swas
a.P900, 000 c. P1, 000, 000
b.P1, 200, 000 d. P1, 350, 000
35. Theval
ueofFuchsi
aCor
p.’
sact
ualendi
ngf
ini
shedgoodsi
nventoryonthev
ari
abl
ecost
ing
basi
swas
a. P1,
400,
000 c. P1,
000,000
b. P1,
125,
000 d. P750,000
36. Fuchsi
aCor por
ation’sabsorpt i
oncost
ingincomewas
a. Higher t han v ariabl
e cost
ing i ncome because act ual pr oduct
ion
exceededact ualsales
b. Lower t han v ariable costi
ng i ncome because act ual pr oduct
ion
exceededact ualsales
c. Lowert hanv ar
iablecost i
ngi
ncomebecauseactualproduct
ionwaslesst
hanthe
plannedproduction
d. Lowert hanv ar
iablecost i
ngi
ncomebecauseactualsaleswerel
essthant
he
plannedsales.
39. Thet
otalv
ari
abl
ecostexpensedcur
rent
lybyFuchsi
aCor
por
ati
onont
hev
ari
abl
ecost
ing
basi
swas
a. P4,
550,
000 c. P 4,
375,
000
b. P4,
500,
000 d. P 4,
325,
000
40. Thedi
ff
erencebetweenFuchsi
aCorporat
ion’si
ncomecal
culat
edontheabsor
pti
oncost
ing
basi
sandcal
culat
edont hev
ari
ablecost
ingbasiswas
a. P25,000 c. P65,
000
b. P40,000 d. P90,
000