Student Name: ID #: Permit #:

Course: ACC 223 Examination: 4th examination 1st term Page:

College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

MULTIPLE CHOICE: Shade the box corresponding to the letter of your answer.

Project Feasibility Study, Business Planning, and Strategic Plans

Understanding

1. Which of the following is a drawback of business planning?

a. Reduces risk by providing a guide for business
b. It will help to secure any finance required
c. The plan will need to be constantly updated
d. Allows the business to review its process.

2. Which of the following is a major problem that an entrepreneur might

encounter when writing a business plan for the first time?
a. To explain the business idea and where it came from
b. To include details about the owners
c. To find an appropriate format to present the plan
d. Forecasting product sales accurately

3. Which of the following is a major problem that an entrepreneur might

encounter when writing a business plan for the first time?
a. To explain the business idea and where it came from
b. To include details about the owners
c. To find an appropriate format to present the plan
d. Forecasting product sales accurately

Standard Costing and Variance Analysis

Understanding

4. Standard costs are least useful for:

a. Determining minimum inventory levels
b. Job order production systems
c. Measuring production efficiency
d. Simplifying costing procedures

5. Under a standard cost system, the materials efficiency variance is the

responsibility of
a. Production and industrial engineering.
b. Purchasing and sales.
c. Purchasing and industrial engineering.
d. Sales and industrial engineering.

Decentralization
Understanding
6. Among these, which is an advantage of decentralization?
a. Faster decision-making process
b. Slow growth
c. There is less initiative among subordinates
d. Demotivates managerial talent

7. Which one of the following is the importance of decentralization?

a. Decline initiative among subordinates
b. Develops initiative among subordinates
c. Stress towards top management
d. Slow decision making

Responsibility Accounting and Transfer Pricing

Understanding
8. In responsibility accounting, the most relevant classification of costs is
a. fixed and variable
b. discretionary and committed
c. incremental and non-incremental
d. controllable and non-controllable
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

9. Which of the following is a key factor to consider in deciding whether to make

internal transfers and, if so, in setting the transfer price?
a. Is there an outside supplier?
b. Is the seller's variable cost less than the market price
c. Is the selling unit operating at full capacity?
d. All of the above are key factors.
10. A distinguishing characteristic of an investment center is that
a. revenues are generated by selling and buying stocks and bonds.
b. interest revenue is the major source of revenue.
c. the profitability of the center is related to the funds invested in the
center.
d. it is a responsibility center that only generates revenues.
11. The objective of a transfer pricing system should be to
a. maximize the transfer price
b. minimize the transfer price
c. maintain goal congruence between the divisions and the entire firm
d. none of the above

Business Process Reengineering

Understanding
12. Which of the following is true for business process reengineering?
a. Business process reengineering is efficient, fast, and economical.
b. Business process reengineering, when combined with ERP, has a 100
percent success rate.
c. Systems analysts need to interview key personnel throughout the
organization to determine how best to use the new technology.
d. Due to its streamlined process, business process reengineering
requires very little time and expertise.

13. What is the greatest barrier to successful business process change?

a. ineffective project management
b. usability of implemented solution
c. selecting the correct process to change
d. organizational change

Relevant Costing
Understanding
14. A plant operating at capacity would suggest that:
a. every machine and person in the plant is working at the maximum
possible rate.
b. only some specific machines or processes are operating at the
maximum rate possible.
c. fixed costs will need to change to accommodate increased demand.
d. managers should produce those products with the highest contribution
margin in order to deal with the constrained resource.

15. Consider the following statements:

I. A vertically integrated firm is more dependent on its suppliers than a
firm that is not vertically integrated.
II. Many firms feel they can control quality better by making their own
parts.
III. A vertically integrated firm realizes profits from the parts it is "making"
instead of "buying" as well as profits from its regular operations.

Which of the above statements represent advantages to a firm that is

vertically integrated?
a. Only I
b. Only III
c. Only I and II
d. Only II and III

Quantitative Management and Techniques

Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

Understanding

16. Network logic suggests that:

a. Activity D can start at any time.

b. Activity A must be completed before Activity B can be done.
c. Activities A, B, and C must be completed before Activity D can be
done.
d. Activity C must begin before Activity B begins

17. A modeling technique to be employed in a situation involving a sequence of

events with several possible outcomes associated with each event is
a. Network analysis c. Linear programming
b. Decision tree analysis d. Probability

18. A manager has just received the expense checks for six of her employees.
She randomly distributes the checks to the six employees. What is the
probability that exactly five of them will receive the correct checks (checks
with the correct names).
a. 1 c. 1/3
b. ½ d. 0

19. A quantitative technique used for selecting the combination of resources that
maximizes profits or minimizes costs is
a. PERT model c. linear programming model
b. CPM model d. queuing model

20. In an influence diagram, decision nodes are represented by

a. circles or ovals c. diamonds
b. squares or rectangles d. triangles

SHORT ANSWERS: Provide what is required per problem. For problem-solving,

show solutions and label answers properly. If applicable, round off to two decimal
places only and encircle the final answers. (2 points @)

Standard Costing and Variance Analysis

Application
Problem 1
21. JULEN Company has a standard costing system. The following data are
available for September:

Actual quantity of direct materials

P20,000 pounds
purchased

Standard price of direct materials P2 per pound

Material price variance P3,000 unfavorable

Material quantity variance P5,200 favorable

The actual price per pound of direct materials purchased in September is:
a. P1.78
b. P2.00
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

c. P2.15
d. P2.22
SOLUTION:
Material price variance = (Standard Price - Actual Price) Actual Quantity
3000 = (2*20,000-20,000x)
20,000X = 43,000
X(Actual price) = 2.15

Problem 2
22. CD King Corporation's standards call for 4,900 direct labor hours to produce
1,400 units of product. During May 1,300 units were produced and the
company worked 1,300 direct labor hours. The standard hours allowed for
May production would be
a. 4,900 hours
b. 1,300 hours
c. 4,550 hours
d. 3,600 hours
SOLUTION:
Standard labor hour allowed = 4,900/1,400*1,300 = 4,550

Problem 3
23. Cheng Qing Corporation recently purchased 25,000 gallons of direct material
at P5.60 per gallon. Usage by the end of the period amounted to 23,000
gallons. If the standard cost is P6.00 per gallon and the company believes in
computing variances at the earliest point possible, the direct-material price
variance would be calculated as:
a. P800F
b. P9,200F
c. P9,200U
d. 10,000F

SOLUTION:
Material price variance = (Standard cost per unit for actual output -
Actual cost per unit)*Actual Quantity
= (P5.6 - P6) * 25,000
= P10,000F

The variance is favorable (F) since the actual cost per unit incurred is
lower than the budgeted (standard). Since the variances are being
computed at the earliest point possible, we shall consider 25,000 units
(since 23,000 will not be determinable beforehand).

Responsibility Accounting and Performance Evaluation

Application
Problem 4
Department Direct costs Employees Hours of use
Administration/Personnel 400,000 10 3,300
Utilities 850,000 5 1,100
A 450,000 30 1,800
E 300,000 15 2,200
I 550,000 25 4,500

CHLS Corporation has two service departments: Administration/Personnel

and Utilities. The company also has three divisions: A, E, and I. Utilities costs
are allocated based on hours of use and Administration/Personnel costs are
allocated based on number of employees.

Assume that Utilities provides more service than Administration/Personnel.

24. Using the direct method, what amount of Utilities costs is allocated to A (round
to the nearest peso)?
a. P180,000
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

b. P450,000
c. P0
d. P220,000
SOLUTION : P850,000*(1,800/8,500)= P180,000

25. Using the direct method, what amount of Utilities costs is allocated to E (round
to the nearest peso)?
a. P180,000
b. P450,000
c. P0
d. P220,000
SOLUTION: 850,00 *(2,200/8,500)= P220,000

26. Using the direct method, what amount of Utilities costs is allocated to I (round
to the nearest peso)?
a. P180,000
b. P450,000
c. P0
d. P220,000
SOLUTION: 850,000 *(4,500/8,500)= P450,000
Problem 5
27. The information that follows relates to Arjon Corporation:

Sales margin: 7.5%

Capital turnover: 2
Invested capital: P20, 000,000

On the basis of this information, the company's sales revenue is:

a. P1,500,000
b. P3,000,000
c. P10,000,000
d. P40,000,000
SOLUTION:
Capital turnover = Sales / Invested capital
2 = Sales / 20,000,000
Sales = 2 * 20,000,000
= 40,000,000

Problem 6
Supposing you are presented with the following information:

Division East Division West

Operating Assets P5,000 P12,500
Operating Income P1,000 P 2,250
ROI 20% 17%

28. Which is the more successful division in terms of ROI?

a. Both
b. Division East
c. Division West
d. None of the above
ANSWER:Division East (20% >17%)

Problem 7
ANN, a division of Ann Zoldyck Manufacturing, has assets of P450, 000 and
an operating income of P110, 000.
29. What is the division’s ROI?
a. 25%
b. 30%
c. 24%
d. 20%
SOLUTION: 110,000/450,000 = 0.24 or 24%
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

30. If the minimum rate of return is 12%, what is the division’s residual income?
a. 54,000
b. 65,000
c. 45,000
d. 56,000
SOLUTION:
Investment 450,000
Imputed income rate 12%
Minimum Income 54,000

Segment Income 110,000

Less Minimum Income 54,000
Residual Value 56,000

Relevant Costing
Application
Problem 8
31. CATD Company needs 20,000 units of a certain part to use in its production
cycle. The following information is available:

Cost to Ariel to make the part:

Direct materials P14

Direct labor 16

Variable overhead 8

Fixed overhead applied 10

P38

Cost to buy the part from Ursula P36

If CATD buys the part from MM instead of making it, CATD could not use the
released facilities in another manufacturing activity. Sixty percent of the fixed
overhead applied will continue, regardless of what decision is made.

In deciding whether to make or buy the part, the total relevant costs to make
the part are

a. P560,000
b. P640,000
c. P720,000
d. P760,000

SOLUTION:

Particulars Amount

Direct materials (14*20,000) P80,000

Direct labor (16*20,000) 320,000

Variable overhead (8*20,000) 160,000

FOH applied (10*40%)*20,000 80,000

Total relevant costs P640,000

Problem 9
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

32. Oldstown Construction plans to discontinue its roofing segment. Last year, this
segment generated a contribution margin of P65,000 and incurred P70,000 in
fixed costs. Discontinuing the segment will allow the company to avoid half of
the fixed costs. What effect is expected to occur on the company's overall
profit?
a. P5,000 increase
b. P30,000 decrease
c. P5,000 decrease
d. P30,000 increase

SOLUTION:
Income if continued is:
= Contribution margin - Fixed costs
= P65,000 - P70,000
= -P5,000
The effect on income is therefore:
= P-5,000 + (70,000 / 2)
= P30,000 decrease

Problem 10
33.Assume that Roronoa Company presently produces and sells 20,000 units of
Product A which represents 80% of its normal capacity 25,000. Its regular
selling price is P390 per unit and its manufacturing, selling and administrative
costs are as follows:

Materials P65
Labor 30
Variable Fixed overhead 15
Fixed Overhead 20
Variable Selling and Administrative costs 11
Fixed Selling and administrative Costs 5

Roronoa Company received an order from a distributor for 4,000 units. The
customer asks for a special discount of 25%. It is expected that the company
will incur no additional selling and administrative costs. How much is the
incremental profit from accepting the special order?
a. 745,000
b. 730,000
c. 700,000
d. 732,000
SOLUTION:
Selling Price P292.50 (390*.75)
Materials 65
Labor 30
Variable Fixed Overhead 20
Incremental profit 182.50*4,000= 730,000
Problem 11
34. Consider the following production and cost data for two products, L and C
Product L Product C

Contribution Margin per unit P130 P120

Machine set-ups needed per 10 set-ups 8 set-ups

unit

The ACC Company can only perform 65,000 machine set-ups each period due
to limited skilled labor and there is unlimited demand for each product. What is
the largest possible total contribution margin that can be realized each period?
a. P845,000
b. P975,000
c. P910,000
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

d. P1,820,000
SOLUTION:
Product L Product C

CMU P130 P120

*65,000 units 8,450,000 7,800,000

machine set-ups /10 /8

Total contribution margin 845,000 975,000

Problem 12
35. Dragneel Inc. operates two stores, Kings Landing and Winterfell. The following
information relates to storing Kings landing:

Sale 0073 P1,300,000

Variable operating expenses 600,000
Fixed expenses traceable to K and controllable by K 275,000
Fixed expenses traceable to K and controllable by others 80,000

Kings landing segment contribution margin is?

a. 700,000
b. 500,000
c. 600,000
d. 800,000
SOLUTION:
SALES- VARIABLE COST = 1,300,000- 600,000= 700,000

Problem 13
36. Feisty Femme Mfg. Co. manufactures two joint products and it uses the net
realizable value method for allocating joint costs. Product A sells for P30 while
Product B sells for P60. Joint costs for June, 2013 were:

Direct materials P30,000

Direct labor P15,000
Factory overhead P10,000
Product unit costs P55,000

Further processing costs after the split-off point in order to finish the
products into their final form amounted to P24, 000 for Product A and
P36,000 for Product B. The total units produced during the month were 2,000
for Product A and 1,000 for Product B. The number of joint costs allocated to
Product A was:
a. P33,000
b. P27,500
c. P22,000
d. P32,000

SOLUTION:
Final Sales Value Further Process SV @ Split-off
Costs point

A (2,000*30) P60,000 (P24,000) P36,000

B (1,000*60) 60,000 (36,000) 24,000

TOTAL P60,000
Joint costs allocated to Product A:
(36,000/60,000) x P55,000 = 33,000
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

Problem 14
37. The Trafalgar Corporation has 400 obsolete desk calculators that are carried
in inventory at a total cost of P26,800. If these calculators are upgraded at a
total cost of P10,000, they can be sold for a total of P30,000. As an
alternative, the calculators can be sold in their present condition for P11,200.
What is the financial advantage (disadvantage) to the company from
upgrading the calculators?
a. P20,000
b. P8,800
c. (P8,000)
d. (P18,000)
SOLUTION:

Particulars Amount

Sales value after upgrade P30,000

Sales value at present condition (P11,200)

Incremental value P18,800

Upgrade cost P10,000

Incremental income (loss) P8,800

Problem 15
38. If the selling price is P395, materials P100, labor P87, variable manufacturing
overhead P24, fixed costs under continued operations P25, 240 and
shutdown cost is P13,250. What is the shutdown point in units?
a. 65
b. 55
c. 70
d. 105
SOLUTION:
Selling Price 395
Materials 100
Labor 87
Variable Manu. Overhead 24
Contribution Margin 184
FC under continued operations 25,240
Shutdown Costs 13,250
11,990
Contribution margin 184
Shutdown point in units 65

Quantitative Management and Techniques

Application
Problem 16
39. The Barattie manufacturing company is considering expanding its production capacity to
meet a growing demand for its product line of air fresheners. The alternatives are to build
at the countries of Vietnam, Taiwan, and Thailand.
Probabilities
Wet Dry Normal
Vietnam .5 .2 .3
Taiwan .6 .3 .1
Thailand .4 .4 .2
Price/Pound ($)
Student Name: ID #: Permit #:
Course: ACC 223 Examination: 4th examination 1st term Page:
College: CAE Term/ Semester: 1st/2nd S.Y: 2022-2023
Total Points: 60 Exam Date: 2023-03-08 SET A

Wet Dry Normal

Vietnam .95 1.10 1.00
Taiwan .85 1.20 .98
Thailand .90 1.15 1.05

What country should the Barattie Company choose? Choose the most
profitable alternative.
a. Vietnam – 0.995
b. Thailand -1.03
c. Taiwan – 0.968
d. Thailand – 0.940

SOLUTION:
EV (Vietnam) = .5(.95) + .2(l.10) + .3(1.00) =.995
EV (Taiwan) = .6(.85) + .3(l.20) + .1(.98) = .968
EV (Thailand) = .4(.90) + .4(1.15) + .2(l.05) = 1.03
The company should select the country from Taiwan because it is the
cheapest price.

Problem 17
Employees of a local university have been classified according to gender and job
type.
Gender .
Job Male (M) Female (F)
Faculty (FA) 110 10
Salaried staff (SS) 30 50
Hourly staff (HS) 60 40

40. If an employee is selected at random what is the probability that the employee
is male?
a. 0.666
b. 0.668
c. 0.667
d. 0.669

SOLUTION:
P(M) = 200/300 = .667