FINAL EXAM

MGT115 – MANAGERIAL ACCOUNTING

Instructor: Romeo B. Baynosa Credit/No. of Units: 3 units
Number of Hours: 3 hours Time: TBA
Prerequisite: Period Cover: August 25 – 28, 2021
Classroom Code: 3A/ yu4jhay – 3B/ qj4xggo
GMVCC.S.2020-21

Name: ROCHELLE T. MARIREZ Date: Course/Year/Section:

BSAB-3B Score:

TEST I. MULTIPLE CHOICE: Read the question carefully and circle the letter of the correct answer for each item.
1. During a year in which the number of units manufactured is less than the number of units sold, the operating
income reported under the variable costing concept would be:
a. larger than the operating income reported under the absorption costing concept.
b. smaller than the operating income reported under the absorption costing concept.
c. the same as the operating income reported under the absorption costing concept.
d. none of the above.
2. Applegate Company has a normal budgeted capacity of 200 machine hours. Applegate produced 600 units. Each
unit requires a standard 0.2 machine hour to complete. The standard fixed factory overhead is P12 per hour,
determined at normal capacity. The fixed factory overhead volume variance is:
a. 4,800 unfavorable. c. 960 unfavorable.
b. 4,800 favorable. d. 960 favorable.
3. During a year in which the number of units manufactured is less than the number of units sold, the operating
income reported under the variable costing concept would be:
a. larger than the operating income reported under the absorption costing concept.
b. smaller than the operating income reported under the absorption costing concept.
c. the same as the operating income reported under the absorption concept.
d. none of the above
4. The total estimated sales for the coming year is 250,000 units. The estimated inventory at the beginning of the
year is 22,500 units, and the desired inventory at the end of the year is 30,000 units. The total production
indicated in the production budget is:
a. 242,500 units. c. 280,000 units.
b. 257,500 units. d. 302,500 units.
5. Which approach to transfer pricing uses the price at which the product or service transferred could be sold to
outside buyers?
a. Cost price approach c. Standard cost approach
b. Negotiated price approach d. Market price approach
TEST II. Short Response. Provide a short, concise, and coherent discussion of the following.
1. What is the basic difference between absorption costing and variable costing?
Absorption costing includes all of the direct costs associated with manufacturing a product, while variable
costing can exclude some direct fixed costs. Absorption costing, also known as full costing, entails allocating
fixed overhead costs across all units produced for the period, resulting in a per-unit cost.
2. Discuss some of the major benefits to be gained from budgeting.
A budget enables you to know what you can afford, take advantage of buying and investing opportunities,
and plan how to lower your debt. It also tells you what is important to you based on how you allocate your
funds, how your money is working for you, and how far you are towards reaching your financial goals.
3. Distinguish between ideal and practical standards.
Ideal standards are those benchmarks that are set assuming perfect working conditions and without
accounting for any possibility of wastages or inefficiencies. Practical standards are those benchmarks that
are set assuming normal working conditions after factoring in expected wastages/reasonable working
efficiency.
4. How can standards be used by management to help control costs?
 Standard costs are useful in setting selling prices. The budget shows the expected expenses incurred by the
business. By considering these expenses, management can determine how much to charge for a product so
that it can produce the desired net income.
5. What benefits result from decentralization?

Empowering Employees Employees can be empowered by having more autonomy to make their own decisions,
giving them a sense of importance and making them feel as if they have more input in the direction o

TEST III. ANALYSIS AND COMPUTATION.

1. Dexter Corporation produces and sells a single product, a wooden hand loom for weaving small items such as
scarves. Selected cost and operating data relating to the product for two years are given below:

Selling price per unit P50

Manufacturing costs:
Variable per unit produced:
Direct materials P11
Direct labor P6
Variable overhead P3
Fixed year P120, 000
Selling and administrative costs:
Variable per unit sold P4
Fixed per year P70, 000

Year 1 Year 2
Units in beginning inventory 0 2, 000
Units produced during the year 10, 000 6, 000
Units sold during the year 8, 000 8, 000
Units in ending inventory 2, 000 0

a. Assume the company uses absorption costing, prepare an income statement for each year.
b. Assume the company uses variable costing, prepare an income statement for each year.
c. Reconcile the variable costing and absorption costing net operating incomes.

2. Mynor Corporation manufactures and sells a seasonal product that has peak sales in the third quarter. The
following information concerns operations for Year 2—the coming year—and for the first two q uarters of Year
3:
i. The company’s single product sells for $8 per unit. Budgeted sales in units for the next six quarters are as
follows (all sales are on credit):
Year 2 Quarter Year 3 Quarter
1 2 3 4 12
Budgeted unit sale 40,000 60,000 100,000 50,000 70,000 80,000

ii. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25%
in the following quarter. On January 1, Year 2, the company’s balance sheet showed P65,000 in accounts
receivable, all of which will be collected in the first quarter of the year. Bad debts are negligible and can
be ignored.
iii. The company desires an ending finished goods inventory at the end of each quarter equal to 30% of the
budgeted unit sales for the next quarter. On December 31, Year 1, the company had 12,000 units on hand.
 iv. Five pounds of raw materials are required to complete one unit of product. The company requires ending
raw materials inventory at the end of each quarter equal to 10% of the following quarter’s production
needs. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand.
v. The raw material costs $0.80 per pound. Raw material purchases are paid for in the following pattern:
60% paid in the quarter the purchases are made, and the remaining 40% paid in the following quarter. On
January 1, Year 2, the company’s balance sheet showed P81,500 in accounts payable for raw material
purchases, all of which will be paid for in the first quarter of the year.
Prepare the following budgets and schedules for the year, showing both quarterly and total figures:
a. A sales budget and a schedule of expected cash collections.
b. A production budget.
c. A direct materials budget and a schedule of expected cash payments for purchases of materials.
3. Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis
of direct labor-hours. The standard costs for one unit of product are as follows:

Direct material: 6 ounces at P0.50 per ounce P3

Direct labor: 1.8 hours at P10 per hour P18
Variable manufacturing overhead: 1.8 hours at P5 per hour P9
Total standard variable cost per unit P30

During June, 2,000 units were produced. The costs associated with June’s operations were as follows:

Material purchased: 18,000 ounces at P0.60 per ounce P10,800

Material used in production: 14,000 ounces
Direct labor: 4,000 hours at P9.75 per hour P39,000
Variable manufacturing overhead cost incurred: P20,800

Compute the direct materials, direct labor, and variable manufacturing overhead variances.
Prepared by: Reviewed by: Approved:

(SGD) ROMEO B. BAYNOSA (SGD) MARILY E. ASPE (SGD) SUSY C. MARTIREZ

INSTRUCTOR PROGRAM HEAD COLLEGE DEAN