RB MAS Module1 PDF

ICCT Colleges Foundation Inc.
V.V Soliven Ave. II, Cainta, Rizal
ACCOUNTING INTEGRATION PART 5
MANAGEMENT ADVISORY SERVICES MODULE RBR BACAY, CPA, MBA
The following information applies to questions 1 and 2.
Havana Village Association is planning another Riverboat Extravaganza.

The Extravaganza committee has assembled the following expected costs
for the event:
Dinner (per person)…………………………………………………………………………….P 7
Favors and Program (per person)……………………………………………. 3
Band……………………………………………………………………………………………………………………. 1,500
Tickets and Advertising…………………………………………………………………. 700
Riverboat rental……………………………………………………………………………………. 4,800
Floorshow and strolling entertainers………………………………. 1,000
The committee members would like to charge P30 per person for the
evening’s activities.
1. The break-even point for the Extravaganza (in terms of the number
of persons that must attend) is (2-42)
a. 300 persons c. 450 persons
b. 350 persons d. 400 persons
2. Assume that only 250 persons attended the Extravaganza last year.
If the same numbers attend this year, what price per ticket must be
charged to break even? (2-43)
c. P45.00 c. P40
d. P43.50 d. P42
The following information pertains to the questions 3 through 5
Omega Enterprise sells two products, Model E100 and F900. Monthly sales
and the contribution margin ratios for the two products, follow :
…………………Product………………
Model E100 Model F900 Total
Sales P700,000 P300,000 1,000,000
Contribution margin ratio 60% 70% ?
The company’s fixed expenses total P598,500 per month.
3. What is the company’s total contribution margin ratio? (2-43)

a. 60% c. 70%
b. 63% d. 65%
4. What is the company’s total net operating income? (2-44)
a. P630,000 c. P210,000
b. P 31,500 d. P420,000
5. The break-even point for the company based on the current sales
mix is (2-44)
a. P900,000 c. P1,000,000
b. P950,000 d. P1,050,000

Hoopie Company sells a single product. The company’s sales and expenses
for a recent month follow: Total Per Unit
Sales P 600,000 P 40
Less variable expense 420,000 28
Contribution margin 180,000 P 12
Less fixed expense 150,000
Net operating income P 30,000
6. What is the monthly break-even point in units sold? (2-45)

a. 12,000 units c. 15,200 units
b. 12,500 units d. 11,000 units
7. How many units would have to be sold each month to earn a minimum
target profit of P18,000? (2-45)
a. 14,500 c. 14,000
b. 12,000 d. 14,700
8. What is the company’s margin of safety in percentage form? (2-45)
a. 15% c. 25%
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b. 20% d. 16%
9. If monthly sales increase by P80,000 and there is no charge in
fixed expenses, by now how much would you expect monthly net
operating income to increase? (2-45)
a. P20,000 c. P24,000
b. P24,500 d. P42,000

Fluffy Inc.’s income statement for the year 2016 on production and
sales of 200,000 units is as follows:
Revenue P 2,600,000
Cost of goods sold 1,600,000
Gross margin 1,000,000
Marketing and distribution costs 1,150,000
Operating income (loss) (150,000)
Fluffy’s fixed manufacturing costs were P500,000, and variable

marketing and distribution costs were P4 per unit
10. What is Fluffy’s variable manufacturing costs per unit in 2016?

(2-47)
a. P5.50 c. P5.75
b. P4.00 d. P9.00
11. What is Fluffy’s fixed marketing and distribution costs in 2016?
(2-47)
a. P550,000 c. P350,000
b. P800,000 d. P500,000
12. The break-even point for the year 2016 in units is (2-47)
a. 242,858 c. 68,965
b. 55,555 d. 142,857

Given the following income statement for Jeffrey Company for 2016:
Sales (30,000 units) P 600,000
Less operating expenses:
Variable P390,000
Fixed 140,000 530,000
Net income 70,000
13. The break-even point for 2016 is (2-55)

a. 26,000 units c. 460,000 units
b. 17,500 units d. 400,000 units
14. The company’s degree of operating leverage is (2-55)
a. 3 c. 4.28
b. 2 d. 8.57
15. The Company’s degree of safety (rounded to the nearest whole
percentage) is (2-55)
a. 33% c. 12%
b. 50% d. 67%

Super Men’s Clothing’s revenues and cost data for 2016 are:
Revenues P 500,000
Costs of goods sold (40% of sales) 200,000
Gross P 300,000
Operating costs:
Salaries fixed P 150,000
Sales commissions (10% of sales) 50,000
Depreciation of equipment and fixtures 12,000
Store rent (4,000 per month) 48,000
Other operating cost 50,000 310,000
Operating income (loss) P 10,000
Mr. Super, the owner of the store, is unhappy with the operating
results. As analysis of other operating costs reveals that it includes
P40,000 variable costs, which vary with the sales volume, and P10,000
(fixed) costs
16. What is the contribution margin of Super Men’s Clothing? (2-58)

a. P300,000 c. P210,000
b. P260,000 d. P200,000
17. What is the contribution margin percentage? (2-58)
a. 42% c. 52%
b. 60% d. 40%
18. Mr. Super estimates that he can increase revenues by 20% by
incurring additional advertising costs of P10,000. As a result, how
much would Super Men’s Clothing’s operating income be? (2-58)
a. P 32,000 c. P 40,000
b. P 22,000 d. P 50,000

The Miguel Company has three product lines of belts – A, B and C – with
contribution margins of P3, P2 and P1, respectively. The president
foresees sales of 20,000 units of A, 100,000 units of B, and 80,000
units of C. The company’s fixed costs for the period are P225,000
19. What is the company’s break-even point in units, assuming that

the given sales mix is maintained? (2-60)
a. P90,000 c. P120,000
b. P150,000 d. P75,000
20. If the sales mix is maintained, what is the total contribution
margin when 200,000 units are sold? (2-60)
a. P200,000 c. P340,000
b. P260,000 d. P300,000
21. If the sales mix is maintained, what is the operating income?
(2-60)
a. P115,000 c. P75,000
b. P120,000 d. P85,000
22. What would operating income be if 20,000 units of A, 80,000 units
of B and 100,000 units of C were sold? (2-60)
a. P320,000 c. P240,000
b. P200,000 d. P360,000
23. Referring to additional information in the previous questions,
what is the new break-even point in units if these relationships
persist in the next period? (2-60)
a. 159,380 c. 138,095
b. P125,000 d. P 65,000
The following information applies to questions 24 through 27.

Global Corporation manufactured 100,000 buckets during February. The
Overhead actual allocation base is P5.00 per machine-hour. The
following variable overhead data pertain to February.
Actual Budgeted
Production 100,000 units
100,000 units
Machine-hours 9,800 hours
10,000 hours
Variable overhead cost per machine hour P5.25
P5.00
24. What is the actual variable overhead cost? (2-72)

a. P 49,000 c. P 51,450
b. P 50,000 d. None of the above
25. What is the flexible-budget amount? (2-72)
a. P 49,000 c. P 51,450
b. P 50,000 d. None of the above
26. What is the variable overhead spending variance? (2-72)
a. P1,000 favorable c. P2,450 unfavorable
b. P1,450 unfavorable d. None of the above
27. What is the variable efficiency variance? (2-72)
b. P1,450 unfavorable d. None of the above
The following information applies to questions 28 through 32
Production
Variances Spending Efficiency
Volume
Variable manufacturing Overhead P 4,500F P15,000U
(B)
Fixed manufacturing overhead P 10,000U (A)
P40,000U
28. Above is a (2-73)

a. 4-variance analysis c. 2-variance analysis
b. 3-variance analysis d. 1-variance analysis
29. In the above chart the amounts for (A) an (B) respectively are:
(2-73)
a. P10,500U ; P55,000U c. Zero ; P55,500U
b. P10,500U ; Zero d. Zero ; Zero
30. In a 3-variance analysis, the spending variance should be: (2-73)
a. P4,500F c. P55,500U
b. P10,000U d. P10,500U
31. In a 2-variance analysis the flexible-budget variance and the
production volume variance should be, respectively. (2-74)
a. P5,500U ; P55,000U c. P10,500U ; P50,000U
b. P20,500U ; P40,000U d. P60,500U ; Zero
32. In a variance analysis, the total overhead variance should be
(2-74)
a. P20,500U c. P121,000U
b. P60,500U d. None of the above
The following information applies to questions 33 through 37

The MA Appliance Manufacturing Corporation manufactures two vacuum
cleaners, the Standard and the Super. The following information was
gathered about the two products.
Standard Super
Budgeted sales in units 3,200 800
Budgeted selling price P300
P850
Budgeted distribution margin per unit P210
P550
Actual sales in units 3,500
1,500
Actual selling price P325 P840
33. What is the budgeted sales mix percentage for the Standard and
the
Super vacuum cleaners respectively: (2-75)
a. 0.80 and 0.20 c. 0.20 and 0.80
b. 0.70 and 0.30 d. 0.30 and 0.70
34. What is the total sales-volume variance in terms of the
contribution margin (2-75)
a. P108,000 unfavorable c. P278,000 favorable
b. P108,000 favorable d. P448,000 favorable
35. What is the total sales-quantity variance in terms of the
contribution margin? (2-75)
36. What is the total sales-mix variance of the contribution margin?
(2-75)
37. The sales-mix variance will be unfavorable when (2-75)
a. The actual sales-mix shifts toward the less profitable units.
b. The composite unit for the actual mix is greater than for the
budgeted mix.
c. Actual unit sales are less than the budgeted unit sales
d. The actual contribution margin is greater than the static-budget
contribution margin.
The following data apply to items 38 through 42

Tony Company employs a standard absorption system for product costing.
The standard cost of its product is as follows:
Raw materials
P14.50
Direct labor 2DLH@P8 P16.00
Manufacturing overhead 2DLH@P11
22.00
Total standard cost
P52.50
The manufacturing overhead rate is based upon a normal activity
level of 600,000 direct labor hours. Tony planned to produce 25,000
units each month during 2016. The budgeted manufacturing overhead for
2016 is as follows.
Variable P3,600,000
Fixed P3,000,000
P6,600,000
During November 2016, Tony Corporation produced 26,000 units. Tony
used 53,500 direct labor hours in November at a cost of P433,350.
Actual manufacturing overhead for the month was P260,000 fixed and
P315,000 variable. The total manufacturing overhead applied during
November was P572,000.
38. The variable manufacturing overhead spending variance for

November is (2-76)
a. P9,000 unfavorable c. P11,350 unfavorable
b. P4,000 unfavorable d. P6,000 favorable
39. The variable manufacturing overhead efficiency variance for
November is (2-77)
a. P3,000 unfavorable c. P1000 favorable
b. P9,000 unfavorable d. P12,000 unfavorable
40. The fixed manufacturing overhead spending (budget) variance for
November (2-77)
a. P10,000 favorable c. P6,000 favorable
41. The fixed manufacturing overhead volume variance for November is
(2-77)
42. The total variance related to efficiency of the manufacturing
operation for November is (2-77)
43. Each finished unit of product ET-25 has 60 pounds of raw material.
The manufacturing process must provide for a 20 percent waste
allowance. The raw material can be purchased for P2.50 a pound under
terms of 2/10, n/30. The company takes all cash discounts. The
standard direct material cost for each unit of product ET-25 is (2-78)
a. P180 c. P183.75
b. P187.50 d. P176.40
44. Each unit of product MN-46 requires three direct labor hours.
Employee benefit costs are treated as direct labor costs. Data on
direct labor are as follows. (2-78)
Number of direct employees 25
Weekly productive hours per employee 35
Estimated weekly wages per employee P245
Employee benefits (related to weekly wages) 25 %
The standard direct labor cost per unit of Product MN-46 is

a. P21.00 c. P29.40
b. P26.25 d. P36.75
The following data applies to items 45 through 48

Tina Industries employs a standard cost system in which direct
materials inventory is carried at standard cost of one unit of product.
Standard Standard
Standard
Quantity Price
Cost
Direct materials 8 pounds P1.80 per pound
P14.40
Direct labor 0.25 hour P8.00 per hour
2.00
P16.40
45. The direct material purchase price variance for May is (2-79)
46. The direct material usage (quantity) variance for May is (2-79)
47. The direct labor price (rate) variance for May is (2-79)
48. The direct labor usage (efficiency) variance for May is (2-79)
49. Gibbs Castings is a job order chop that uses a full absorption
standard cost system to account for its production costs. The
overhead costs are applied as a direct labor hour basis. A
production volume variance will exist for Gibbs in a month where (2-
80)
a. production volume differs from sales volume
b. actual direct labor hours differ from standard allowed direct
labor hours
c. there is a budget variance in fixed factory overhead costs.
d. the fixed factory overhead applied on the basis of standard
allowed direct labor hours differ from the budgeted fixed factory
overhead.
50. Which of the following is not an advantage of using a standard

cost system: (2-80)
a. Eliminates the need for analysis of variances
b. Facilitates establishing an effective system of responsibility
accounting
c. Requires an analysis of all aspects of operation
d. Helps management control costs
51. Under the standard cost procedures, any differences between

actual costs and standard costs are: (2-81)
a. added to or subtracted from the standard cost amount
b. treated as extraordinary production gains or losses
c. ignored until the end of the fiscal period, when they are shown
in footnotes in the income statement.
d. recorded in variance accounts
52. If fewer units are produced than had been estimated when standard
unit costs were determined, there would normally be: (2-81)
a. a favourable usage variance
b. an unfavourable volume variance
c. a favourable material quantity variance
d. an unfavourable controllable overhead variance.
53. Gilbert Company has a union contract which calls for an 8% cost
of living increase in wages paid to all factory workers as of July 1,
of the current year. This suggests that : (2-81)
a. the labor rate variance for July will be unfavourable
b. the labor rate variances during the first half of the current
year have been favourable
c. the standard labor cost per unit should be revised as of July 1
d. the labor quantity variance for July will be unfavourable.
54. A labor usage variance is most likely to occur if (2-82)

a. employees are paid at an overtime wage rate
b. employees are inefficient and units must be reworked
c. labor cost per unit exceeds material costs per unit
d. employee turnover rates are low
55. A large favourable variance from standard costs ate the end of
the year should be: (2-82)
a. carried forward to the next fiscal year
b. showed as other income in the income statement
c. added to cost of goods sold in the income statement
d. allocated between ending inventories and cost of goods sold.
56. Which of the following unfavourable cost variances would be the

least relevant in evaluating the performance of a production
supervisor. (2-82)
a. Material price variance
b. Labor usage variance
c. Controllable overhead variance
d. Material quantity variance
57. An unfavorable volume variance in a factory is generally: (2-82)

a. the responsibility of the production manager
b. viewed as an idle capacity loss
c. the result of actual volume exceeding normal volume
d. treated as part of the controllable factory overhead variance.
Patience Co. uses a standard costing system in the manufacture of its
single product. The 35,000 units of raw materials in the inventory were
purchased for P105,000, and two units of raw materials are required to
produce one unit of final product. In November, the company produced
12,000 units of product. The standard allowed for material was P60,000,
and there was an unfavorable quantity variance of P2,500.
58. Patience’s standard price for one unit of material is (2-92)
a. P2.00 c. P3.00
b. P2.50 d. P5.00
59. The units of materials used to produce November output (2-92)
a. 12,500 units c. 23,000 units
b. 12,500 units d. 25,000 units
60. The material price variance for the units used in November was
(2-92)

Antarctica Enterprises uses a standard cost system in its small
appliance division. The standard cost of manufacturing one unit of PIX
is as follows:
Materials – 60 pounds at P1.50 per pound P 90
Labor – 3 hours at P12.00 per hour 36
Factory overhead – 3hours a P8 per hour 24
Total standard cost per unit P 150
The budgeted variable factory overhead rate is P3 per labor hour,
and the budgeted fixed factory overhead is P27,000 per month. During
May Antarctica produced 1,650 units of PIX compared with the normal
capacity of 1,800 units. The actual cost per unit was as follows:
Materials (purchased and used) – 58 pounds at P1.65 per pound P
95.70
Labor – 3.1 hours at P12.00 per hour 37.20
Factory overhead – P39,930 per 1,650 units
24.20
Total actual cost per unit P 157.10
61. The total material quantity variance for May is (2-98)

a. P14,355 favorable c. P 4,950 favorable
b. P14,355 unfavorable d. P 4,950 unfavorable
62. The total material price variance for May is(2-98)
63. The labor rate variance for May is (2-99)
b. P 0 d. P4,950 favorable
64. The flexible budget overhead variance for May is (2-99)

Aqua Control, Inc. manufactures water pumps and uses a standard cost
system. The standard factory overhead costs per water pump are based on
direct labor hours and are as follows:
Variable overhead (4 hours at P8/hour) P32
Fixed overhead (4 hours at P5*/hour) 20
Total overhead cost per unit P52
*Based on a capacity of 100,000 direct labor hours per month.
The following additional information is available for the month of
November:
 22,000 pumps were produced although 25,000 had been scheduled for
production.
 94,000 direct labor hours were worked at a total cost of P940,000.
 The standard direct labor rate is P9 per hour.
 The standard direct labor time per unit is 4 hours.
 Variable overhead costs were P740,000.
 Fixed overhead costs were P540,000.
65. The fixed overhead spending variance for November was (2-101)
a. P40,000 unfavorable c. P460,000
unfavorable
b. P70,000 unfavorable d. P240,000
unfavorable
66. The variable overhead spending variance for November was (2-101)
a. P60,000 favorable c. P 48,000 unfavorable
b. P12,000 favorable d. P 40,000 unfavorable
67. The variable overhead efficiency variance for November was (2-101)
a. P48,000 unfavorable c. P 96,000
unfavorable
b. P60,000 favorable d. P200,000 unfavorable
68. The direct labor price variance for November was (2-101)
a. P54,000 unfavorable c. P 60,000 favorable
b. P94,000 unfavorable d. P148,000
unfavorable
69. The direct labor efficiency variance for November was (2-101)
a. P108,000 favorable c. P 60,000 favorable
b. P120,000 favorable d. P 54,000
unfavorable

Paige's Pillows produces and sells a decorative pillow for P75.00 per
unit. In the first month of operation, 2,000 units were produced and
1,750 units were sold. Actual fixed costs are the same as the amount
budgeted for the month. Other information for the month includes:
Variable manufacturing costs P20.00 per unit
Variable marketing costs P 3.00 per unit
Fixed manufacturing costs P 7.00 per unit
Administrative expenses, all fixed P15.00 per unit
Ending inventories:
Direct materials 0
Work in Process 0
Finished goods 250 units
70. What is cost of goods sold per unit using variable costing? (2-
115)
a. P20 c. P30
b. P23 d. P45
71. What is cost of goods sold using variable costing? (2-115)
a. P35,000 c. P47,250
b. P40,000 d. P54,000
72. What is contribution margin using variable costing? (2-115)
a. P96,250 c. P104,000
b. P91,000 d. P110,000
73. What is operating income using variable costing? (2-115)
a. P52,250 c. P 65,750
b. P78,750 d. P 47,000

Kacey Corporation incurred fixed manufacturing costs of P6,000 during
2016. Other information for 2016 includes:
The budgeted denominator level is 1,000 units
Units produced totalled 750 units
Units sold total 600 units
Beginning inventory was zero
The company uses absorption costing and the fixed manufacturing cost
rate is based on the budgeted denominator level. Manufacturing
variances are closed to cost of goods sold.
74. Fixed manufacturing cost expensed in the income statement
(excluding adjustments for variances) total (2-117)
a. P 3,600 c. P 6,000
b. P 4,800 d. zero
75. Fixed manufacturing cost included in ending inventory total (2-
117)
c. P 1,200 c. P 900
d. P 1,500 d. zero
76. The production volume variance is (2-117)
a. P 2,000 c. P 2,400
b. P 1,500 d. zero
77. Operating income using absorption costing will be _____ than the
operating income f using variable costing. (2-117)
a. P 2,400 higher c. P 900 higher
b. P 2,400 lower d. P 3,600 lower

Miggy Corporation incurred fixed manufacturing cost of 7,200 during
2016. Other information for 2016 includes:
The budgeted denominator level is 800 units.
Units produced total 1,000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted
denominator level manufacturing variances are closed to cost of goods
sold.
78. Under absorption costing fixed a manufacturing costs expensed on

the income statement (excluding adjustments for variances) total (2-
118)
a. P 8,550 c. P 7,200
b. P 9,000 d. zero
79. Under absorption costing the production- volume variance is (2-
119)
a. P 450 c. P1,800
b. P1,350 d. zero
80. Under variable costing, the fixed manufacturing costs expense on
the income statement (excluding adjustments for variances) total (2-
119)
a. P8,550 c. P9,000
b. P7,200 d. zero
81. Operating income using absorption costing will be __operating
income if using absorption costing (2-119)
a. P 450 higher than c. P1,300 lower than
b. P 900 higher than d. the same as
The following data apply to items 82 to 85:

Samar Company began operations on January 3, 2017. Standard costs were
established in early January assuming a normal production volume of
160,000 units. However, Samar produced only 140,000 units of products
and sold 100,000 units at a selling price of P180 per unit during 2017.
Variable costs totalled P7,000,000 of which 60 percent were
manufacturing and 40 percent were selling fixed costs totalled
P11,200,000 of which 50 percent were manufacturing and 50 percent were
selling. Samar had no raw materials of work in process inventories at
December 31, 2016. Actual input price per unit of product and actual
input quantities per unit of product were equal to standard
82. Samar’s cost of goods sold at standard cost of 2017 using full
absorption cost is (2-123)
a. P8,200,000 c. 6,500,000
b. P7,200,000 d. 7,000,000
83. the value assigned to Samar’s December 31, 2017 inventory using
variable (direct) costing is (2-123)
a. P2,800,000 c. P2,000,000
b. P1,200,000 d. P3,000,000
84. Samar’s manufacturing overhead volume variance in 2017 using full
absorption costing is (2-123)
85. Samar’s 2017 income from operation using variable (direct)
costing is (2-123)
a. P3,400,000 c. 2,600,000
b. P1,800,000 d. 1,000,000
The following information pertains to questions 86 through 88:

Leyte Company manufactures a single product. Assume the following data
for 2016: Variable cost per unit
Selling and Administrative P 1
Production P 4
Fixed cost in total:
Production P12,000
Selling and Administrative P 8,000
During 2017, 4,000 units were produced and 3,500 units were sold.
86. Under direct costing, the cost of one unit product would be (2-
125)
a. P4 c. P7
b. P5 d. P8
87. The inventory carrying value of finished goods under direct
costing would be: (2-125)
a. the same as under absorption costing.
b. P1,500 higher than under absorption costing.
c. P2,000 higher than under absorption costing.
d. P1,500 less than under absorption costing.
88. Under absorption costing, the cost of goods sold for 2017 would
be (2-125)
a. P28,000 c. P17,500
b. P24,500 d. P14,000
The following information pertains to 89 and 90

Kimmy company has identified the following overhead cost pools and cost
drivers:
Cost Pools Activity Costs Cost Drivers
Machine setup P180,000 1,500 setup hours
Materials handling 50,000 12,500 pound of
materials
Electric power 20,000 20,000
kilowatts-hours
The following cost information pertains to the production of products
X and Y: X Y
Number of units produced 4,000 20,000
Direct materials cost (P) P20,000 P25,000
Direct labor cost (P) P12,000
P20,000
Number of setup hours 100 120
Pounds of materials used 500 1,500
Kilowatts 1,000 2,000
89. The unit cost for product X (2-164)

a. P11.00 c. 10.00
b. P11.75 d. 10.50
90. The unit cost for product Y is (2-164)

a. P3.75 c. P4.27
b. P4.30 d. P3.50
The following information pertains to questions 91 and 92:

The Randolph Company uses activity based costing and provides this
information:
Manufacturing Cost Driver Used as Conversion cost per

Activity area Application Base Unit of Base
1. Materials Handling Number of parts P 0.45
2. Machinery Machine-hours 51.00
3. Assembly Numbers of parts 2.85
4. Inspection Number of finished units 30.00
Assume that 75 units of a component for packaging machines have been

manufactured. Each unit required 105 parts and 3 machine-hours. Direct
materials cost P600 per finished unit. All other manufacturing costs
are classified into one category, conversion costs.
91. Total manufacturing costs is (2-165)

a. P87,412.50 c. P84,712.50
b. P78,412.50 d. P82,712.50
92. The unit cost of the 75 unit is (2-166)
a. P1,219.50 c. P 912.50
b. P1,219.50 d. P1,050.00
The Pangasinan plant of the Pilipinas Company manufactures cash

registers. It plans to implement an activity-based costing system. The
controller has prepared the following estimates regarding cost pools
and activity levels for the next year:
Cost pool Activity costs Activity driver levels

Electricity P100,000 40,000 kwh
Machine setups 300,000 1,500 setup hours
Material moves 80,000 40,000 moves
Quality inspection 120,000 30,000
inspections
Total P600,000
The plant’s present cost accounting system allocates manufacturing

overhead to jobs a plant-wide overhead rate based on machine hours. The
total machine hours for the coming year are estimated to be 100,000
hours.
The company received a request for a bid to deliver 2,000 units

of its cash register model MAI. The following estimates pertain to the
production of 2,000 units of MAI:
Direct materials cost P30,000

Direct labor (P10/hour) P15,000
Machine hours 2,000
Setup hours 50
Electricity (kwh) 2,000
Number of quality inspections 500
Number of material moves 200
93. What are the estimated manufacturing costs per unit of MAI if the
activity based costing system is implemented? (2-167)
a. P22.50 c. P28.50
b. P31.20 d. P26.80
KG Company has established the following two cost pools for the month
of November 2016:
Committed costs Cost driver committed level
Materials moves P 60,000 number of moves 600
Machine maintenance 180,000 machine hours 20,000
The following information pertains to Job KG101 completed during the

first week of November 2016:
Direct materials cost P25,000

Direct labor cost P40,000
Number of material moves 150
Machine hours 4,000
94. The total manufacturing costs for Job KG101 using activity-based
costing is (2-167)
a. P116,000 c. P125,000
b. P 75,000 d. P 86,000
K-Mart Stores Corporation has established the following selling and

distribution overhead activity cost pools and their corresponding
activity drivers for November 2016. (2-168)
L-
Activity level Activity cost Activity driver
Marketing management P30,000 P500,000 of sales
Customer service 10,000 5,000 customer
Order execution 5,000 100 orders
Warehousing 5,000 5,000 sq. feet
95. The overhead rate for the marketing management activity is

a. P0.10 c. P0.90
b. P0.06 d. P0.12
The following pertains to questions 96 through 98:
Anya, Inc. manufactures two models of high-pressure steam valves, the

ABC model and the XYZ model. Data regarding the two products follows:
Product Direct annual total direct

Labor hours production Labor hours
ABC 0.2 DLHs per unit 20,000 units 4,000 DLHs
XYZ Total 0.4 DLHs per unit 40,000 units 16,000 DLHs
20,000 DLHs
Additional information about the company follows:
a. Product ABC requires P35 in direct materials per unit, and product
XYZ requires P25.
b. The direct labor rate is P20 per hour.
c. The company has always used direct labor hours as the base for
applying manufacturing overhead cost to products. Manufacturing
overhead totals P1,480,000 per year.
d. Product ABC is more complex to manufacture than product XYZ and
requires the use of special milling machine.
e. Because of the special work required in (d) above, the company is
considering the use of activity-based costing to apply overhead cost
to the products. Three activity cost pools have been identified and
the first stage allocations have been completed. Data concerning
these activity cost pool appear below:
Activity Activity Total Total Activity .

Cost Cool Measure Cost ABC XYZ Total
Machine setups Number of setups P 180,000 150 100 250
Special milling Machine-hours 300,000 1,000 0 1,000
General factory Direct-labor hours 1,000,000 4,000 16,000 20,000
96. Assume that the company continues to use direct labor-hours as

the basis for applying overhead cost to products. The unit cost for
product ABC would be(2-172)
a. P53.80 c. P38.60
b. P44.20 d. P58.00
97. Assume that the company decides to use activity-based costing to

apply overhead cost to products. The unit cost of product ABC would
be(2-172)
a. P39.40 c. P46.70
b. P56.70 d. P69.40
98. Assume that the company decides to use activity-based costing to

apply overhead cost to products. The unit cost of product XYZ would
be (2-172)
a. P68.20 c. P45.20
b. P54.80 d. P64.80
Peluso Company, a manufacturer of snowmobiles, is operating at 70

percent of plant capacity. Peluso's plant manager is considering making
the headlights now being purchased for P11.00 each, a price expected to
change in the near future. The Peluso plant has the equipment and labor
force required to manufacture the headlights. The design engineer
estimates that each headlight requires P4.00 of direct material and
P3.00 of direct labor. Peluso's plant overhead rate is 200 percent of
direct labor pesos, and 40 percent of the overhead is fixed cost.
99. A decision Peluso Company to manufacture the headlights will

result in a gain (loss) for each headlight of (P. 4-65)
a. P(2.00) c. P0.40
b. P1.60 d. P2.80

Elly Industries is a multi-product company that currently manufactures
30,000 units of Part MR24 each month for use in production. The
facilities now being used to produce Part MR24 have fixed monthly cost
of P150,000 and a capacity to produce 84,000 units per month. If Elly
were to buy Part MR24 from an outside supplier, the facilities would be
idle, but its fixed costs would continue at 40 percent of their present
amount. The variable production costs of Part MR24 are P11 per unit.
100. If Elly Industries continues to use 30,000 units of Part

MR24 each month, it would realize a net benefit by purchasing Part
MR24 from an outside supplier only if the supplier's unit price is
less than (P. 4-65)
a. P14.00 c. P16.00
b. P11.00 d. P13.00
101. If Elly Industries is able to obtain Part MR24 from an

outside supplier at a unit purchase price of P12.875, the monthly
usage at which it will be indifferent between purchasing and making
Part MR24 is (P. 4-66)
a. 30,000 units c. 80,000 units
b. 32,000 units d. 48,000 units
102. Which factor is not relevant in deciding whether or not to

accept a special order? (4-68)
a. Incremental revenue that will be earned.
b. Additional costs that will be incurred.
c. The effect that the order will have on the company’s regular
sales volume and selling price.
d. The average cost of production if the special order accepted.
103. Accepting a special order is profitable whenever the

revenue from special order exceeds(4-68)
a. The average unit cost of production multiplied by the number of
units in the order.
b. The incremental cost of producing the order
c. The materials and direct labor costs of producing the order.
d. The fixed manufacturing costs for the period.
104. Consider the decision facing a firm of either accepting or

not accepting a special offer for one of its products. A cost that is
not relevant to a decision of this type is. (4-68)
a. Direct materials
b. Direct labor
c. Variable factory overhead
d. Fixed factory overhead that will continue even if the special
offer is not accepted
Given the following target selling price for a unit of product:

Direct materials P18
Direct labor 7
Overhead (20%) Variable 15*
Cost of manufacture 40
Desired markup – 30% 12
Target selling price per unit P 52
*Based on 25,000 units produced each year.
A foreign distributor has offered to purchase 5,000 units at a

special price of P38 per unit. The company is selling only 20,000 per
year through regular channels and so it’s idle capacity. Variable
selling costs associated with the special order would be P2 per unit.
105. If the special order is accepted, the company’s overall net

income will (4-69)
a. Increase by P40,000 c. Increase by 50,000

b. Decrease by P10,000 d. Decrease by P70,000

The Flint Fan Company is considering the addition of a new model fan,
the F-27, to its current product lines. The expected cost and revenue
data for the F-27 fan are as follows:
Annual sales 4,000 units

Unit selling price P 58
Unit variable costs:
Production P 34
Selling P 4
Avoidable direct fixed costs per year:
Production P 20,000
Selling P 30,000
If the F-27 model is added as a new product line, it is expected

that the contribution margin of other product lines at Flint will drop
by P7,000 per year.
106. If the F-27 product line is added next year, the change in
net income resulting from this decision would be. (4-70)
a. P30,000 increase c. P23,000 increase
b. P5,000 decrease d. P15,000 increase
107. What is the lowest unit selling price that could be charged
for the F-27 model and still make it economically desirable for Flint
to add the new product line? (4-70)
a. P52.25 c. P55.75
b. P50.50 d. P49.00
Landor Appliance Company makes and sells electric fans. Each fan
regularly sells for P42. The following cost data per fan is based on a
full capacity of 150,000 fans produced each period. (4-70)
Direct materials P 8
Direct Labor 9
Factory overhead (70% variable and 30% unavoidable fixed) 10
A special order has been received by Landor for a sale of 25,000 fans
to an overseas customer. The only selling costs that would be P4 per
fan for shipping. Landor is now selling 120,000 fans through regular
channels each period.
108. What should Landor use as a minimum selling price per fan
in negotiating a price for this special order? (4-70)
a. P28 c. 31
b. P27 d. 24
Sunflower Company operates a cafeteria for its employees. The

operation-of the cafeteria requires fixed costs of P4,700 per month and
variable costs of 40 percent of sales. Cafeteria sales are currently
averaging P12,000 per month.
Sunflower has an opportunity to replace the cafeteria with vending
machines. Gross customer spending at the vending machines is estimated
to be 40 percent greater than the current sales because the machines
are available at all hours. By replacing the cafeteria with vending
machines Sunflower would receive 16 percent of the gross customer
spending and avoid all cafeteria costs.
109. A decision by Sunflower Company to replace the cafeteria

with vending machines will result in a monthly increase (decrease) in
operating income of (4-71)
a. P (580) c. P2,588
b. P1,820 d. P 188
Evergreen Farms is a local grocery store that is currently open only

Monday through Saturday. Evergreen is considering opening on Sundays.
The annual incremental costs of Sunday openings are estimated at
P24.960. Evergreen Farms' gross margin on sales is 20 percent.
Evergreen estimates that 60 percent of its Sunday sales to customer
would be made on other days if stores were not open on Sundays.
110. The one-day volume of Sunday sales that would be necessary

for Evergreen Farms to attain the same weekly operating income as the
current six-day week is (4-71)
a. P5,850 c. P3,900
b. P6,000 d. P4,000
The operating results of Valor Company by division for the current year
are summarized below. Unavoidable company headquarters' costs of
1,540,000 included in the total costs have been distributed to the
divisions on the basis of sales revenue. The remaining portions of the
total costs have been incurred at the divisional level and can be
avoided if a division is shut down. (4-72)
Valor Company
Operating Results
For the Year Ended November 30, 2016
(P000 omitted)
Divisions .
Total North South East West
Sales revenue P6,600 P 990 P2,640 P 990 P1,980
Total costs 6,226 572 2,090 1,276 2,288
Profit (loss) P 374 P418 P550 P (286) P (308)
111. The division(s) of Valor Company that should be shut down

due to failure to cover divisional costs is (are) (4-72)
a. South, East and West c. South and West
b. East and West d. East
The following data apply to items 112 through 114.

Condensed monthly operating income data for Cosmo Inc. for November
2016 is presented below. Additional information regarding Cosmo’s
operations follows the statement. (4-73)
Total Mall store Town store
Sales P 200,000 P 80,000 P 120,000
Less variable costs 116,000 32,000 84,000
Contribution Margin P 84,000 P 48,000 P 36,000
Less direct fixed expenses 60,000 20,000 40,000
Store segment margin P 24,000 P 28,000 P (4,000)
Less common fixed expenses 10,000 4,000 6,000
Operating income P 14,000 P 24, 000 P (10,000)
• One-fourth of each store’s direct fixed expenses would continue

through December 31, 2017, if either store were closed
• Cosmo allocates common fixed expenses to each store on the basis
of sales pesos.
• Management estimates that closing the Town Store would result in
a ten percent decrease in Mall Store sales, while closing Mall Store
would not affect Town store sales.
• The operating results for November 2016 are representative of all
months.
112. A decision bay Cosmo Inc. to close the Town Store would
result in a monthly increase (decrease) in Cosmo’s operating income
during 2017 of (4-73)
a. P 4,000 c. P( 800)
b. P(10,800) d. P(6,000) (CMA adapted)
113. Cosmo is considering a promotional campaign at the Town

Store that would not affect the Mall Store. Increasing annual
promotional expenses at the Town Store by P60,000 in order to
increase Town Store sales by ten percent would result in a monthly
increase (decrease) in Cosmo’s operating income during 2017 of (4-73)
a. P(16,800) c. P 7,000
b. P 3,400) d. P(1,400)
114. One-half of Town Store’s peso sales are from items sold at
variable cost to attract customers to the store. Cosmo is considering
the deletion of these items, a move that would reduce the Town
Store’s direct fixed expenses by 15 percent and result in the loss of
20% of the remaining Town Store’s sales volume. This change would not
affect the Mall Store. A decision by Cosmo to eliminate the items
sold at cost would result in a monthly increase (decrease) in Cosmo’s
operating income during 2017 of (4-74)
a. P(6,000) c. P2,600
b. P(1,200) d. P2,400
In a sell or process further decision, consider the following costs:

I.A variable production cost incurred prior to split-off
II.A variable production cost incurred after split-off
III.An avoidable fixed production cost incurred after split-off
115. Which of the above costs is (are) not relevant in a

decision regarding whether the product should be processed further?
(4-75)
a. Only I c. Only I and II
b. Only III d. Only I and III
Computer City manufactured 100 personal computers at a cost of P65,000.

It can sell them as is for P100,000 or install hard disks in them and
sell them for P140,000.
116. The P65,000 original manufacturing cost is: (4-75)

a. An out-of-pocket cost because it has already been paid
b. A sunk cost because it is not relevant to the decision
c. An incremental cost because it is relevant to the decision
d. A fixed cost because it will remain the same no matter which
action is taken.
The Garey Company has 3,000 circuit boards (all alike) which are out of
date and are carried in inventory at a total cost of P216,000. The
circuit boards can be reworked and upgraded at the total cost of
P63,000 and then sold for P110,000. As an alternative, the company can
sell these circuit boards to an outside buyer for P48,000.
117. If Garey chooses to upgrade the circuit boards rather than

sell them to the outside buyer, the opportunity cost to Garey is (4-
75)
a. P48,000 c. P 27,000
b. P 1,000 d. P116,000
The following data apply to items 118 through 120.
The Tolar Company has 400 obsolete desk calculator 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 selling price
of P30,000. As an alternative, the calculators can be sold in their
present condition for P11,200.
118. The sunk cost in this situation is (4-76)

a. P10,000 c. P11,200
b. P26,000 d. P 0
119. What is the net advantage or disadvantage to the company

from upgrading and selling the calculators?(4-76)
a. P8,800 advantage c. 20,000 advantage
b. P18,000 disadvantage d. 8,000 disadvantage
120. Assume that Tolar decides to upgrade the calculators. At

what selling price per unit would the company be as well off as if it
just sold the calculators in their present condition? (4-76)
a. P8 c. P53
b. P30 d. P67
Wallace Company Produces 15,000 pounds of Product A and 30,000 pounds

of Product B each week by incurring a common variable cost of P400,000.
These two products can be sold as is or processed further. Further
processing of either product does not delay the production of
subsequent batches of the joint product. Data regarding these two
products are as follows:
Product A Product B
Selling price per pound without further processing P 12.00 P 9.00
Selling price per pound with further processing P 15.00 P11.00
Total separate weekly variable cost of further processing P50,000 P45,000
121. To maximize Wallace Company’s manufacturing contribution

margin, the total separate variable costs of further processing that
should be incurred each week are (4-77)
a. 45,000 c. 95,000
b. 50,000 d. zero
Hollie Company produces three products, with costs and selling prices
as shown below:
___ Products ________________
A B C
Selling price per unit P30 100% P20 100% P15 100%
Variable costs per unit 18 60 15 75 6 40
Contribution margin per unit P12 40% P 5 25% P 9 60%
A particular machine is a bottleneck. On that machine, 3 machine hours

are required to produce each unit of Product A, 1 hour is required to
produce each unit of Product B, and 2 hours are required to produce
Product C.
122. In which order should it produce it products?

a. C, A, B
b. A, C, B
c. B, C, A
d. The order of production doesn’t matter

Farley Company incurs the following costs in producing and selling
5,000 units of product Y each year:
Production costs:
Variable (materials, labor, and overhead) P 7
Fixed (based on 5,000 units produced) 3
Selling and administrative costs
Variable 1
Fixed (based on 5,000 units produced) 2
123. Assume the company uses the absorption approach to cost-

plus pricing and desires a markup of 40 percent. The target selling
price would be (4-78)
a. P16 c. 16.80
b. P14 d. 18.20
124. Assume that the company uses the contribution approach to
cost-plus pricing and desires a markup of 75%. The target price would
be. (4-79)
a. 17.50 c. 15.75
b. 12.25 d. 14.00
Sauer Company produces and sells 25,000 units of product X each year.
The company incurs the following unit costs at the 25,000-unit level of
activity:
Direct materials P 16
Direct Labor 10
Variable overhead 4
Fixed overhead 13
Variable selling and administrative expense 6
Fixed selling and administrative expense 8
125. The “floor” below which the company should not go, even in
special pricing decisions, is: (4-79)
a. P26 c. P44
b. P36 d. P48
Minden Company estimates that the following costs and activity would be
associated with the manufacture and sale of Product A
Number of unit sold annually 40,000
Required investment in assets P 800,000
Cost to manufacture one unit 25
Selling and administrative expenses (annual) 600,000
126. If the company uses the absorption approach to cost-plus

pricing and desires a 15 percent ROI, the required mark-up for
Product would be: (4-79)
a. 12% c. 60%
b. 15% d. 72%
Miter Company, a manufacturer of household products, wants to introduce

a new hand-operated food blender. To complete effectively, the blender
could not be priced at more than P30. The company requires a 25 percent
return on investment on all new products. In order to produce and sell
40,000 blenders each year, the company would need to make an investment
of 600,000. Selling and administrative expenses would total 400,000 per
year.
127. The target cost to manufacture one blender would be. (4-80)
a. P10.00 c. 16.25
b. P20.00 d. 23.25
Roberts Company is planning to introduce a new product line. The

following information has been assembled:
Expected annual sales in units 60,000
Investment required 750,000
Production costs:
Variable (materials, labor, and overhead) 12
Fixed overhead (total) 480,000
Selling and administrative costs:
Variable (freight and commissions) 3
Fixed (total) 420,000
The company requires a 20% return on investments on all product

lines.
128. Assuming that the company uses the absorption approach to

cost-plus pricing, the mark-up needed to achieve the desired ROI
would be (to the nearest tenth of a percent) (4-80)
a. 12.5% c. 50.0%
b. 20.0% d. 62.5%
Baker Company manufactures and sells 20,000 units of Product X per

month. Each unit of Product X sells for P15 and has a contribution
margin of P4. If Product X is discontinued, P56,000 in fixed monthly
overhead of Baker Company’s other products.
129. If Product X is disconnected, Baker Company’s monthly

income before taxes should: (4-81)
a. Increase by 80,000 c. Decrease by P80,000
b. Increase by 24,000 d. Decrease by P24,000
130. Accepting a special Order is profitable whenever the

revenue from the special order exceeds: (4-81)
a. the average unit cost of production multiplied by the number of
units in the order.
b. the incremental cost of producing the order.
c. the materials and direct labor costs for the period.
d. the fixed manufacturing costs for the period.
On December 31,2016 the balance sheet of Belle Co. disclosed total

assets of P8,000,000 current liabilities of P1,500,000 and long-term
debt of P2,400,000. Ordinary shares outstanding amounted to 500,000
shares. The retained earnings account indicated a deficit balance of
P2,000,000.
131. Bell’s book value per ordinary share as of December 31,2016

is (6-56)
a. P 16.00 c. P 12.20
b. P 6.20 d. P 8.20 (PhilCPA adapted)
132. A high quality of earning is indicated by: (6-56)

a. Earnings derived largely from newly introduced products
b. Declaration of both cash dividends and share dividends
c. Use of FIFO method of inventory during sustained inflation
d. A history of increasing earning and conservative accounting
methods
133. Dividend yield on ordinary shares owned by an investor is

computed by: (6-56)
a. Dividing annual dividend per share by current market price per
share
b. Dividing annual dividend per share by investor’s average cost per
share
c. Dividing annual dividend per share by the lower of investor’s
cost or current market price per share
d. Dividing annual dividend per share by the price-earnings ratio
Nell, Inc. earns a rate of return on ordinary shareholder’s equity of

16%.
134. Which of the following will cause the rate of return to

increase? (6-56)
a. Issuing 12% bond and investing the proceeds to earn 14%
b. Increasing the size of the cash dividend paid on ordinary shares
c. An increase in the company’s price-earnings ratio
d. An increase in the market price of the company’s shares
135. Extensive use of leverage is usually associated with: (6-57)

a. A low equity ratio c. A low debt ratio
b. A high current ratio d. High quality of earnings
136. The times interest earned ratio is computed by dividing:

(6-57)
a. Operating income before interest and income taxes by annual
interest expense
b. Net income by annual interest expense
c. Carrying value of bond by cash interest payments
d. Earnings per share by the prime rate of interest
137. The yield of investors in bonds: (6-57)

a. Is the effective interest rate that can be earned by buying bonds
at their current market price and holding them to maturity
b. Is measured by the debt ratio
c. Is measured by the number of times interest requirements are
earned
d. Increases as market prices of bonds increase
138. From the viewpoint of short-term creditors, which of the

following relationships would be the least meaningful? (6-57)
a. Short-term notes payable as a percentage of accounts payable
b. The amount of working capital
c. The accounts receivable turnover
d. Quick assets as a percentage of current liabilities
139. At the end of the Year 10, Brave Corporation has a current
ratio of 2 to 1. Which of the following transactions will decrease
the current ratio? (6-57)
a. Issuance of long-term bonds at a premium
b. Sale of merchandise on open account at a price above cost
c. Sale of plant assets for less than book value
d. Declaration of a cash dividend on ordinary share
140. In evaluating a company’s ability to repay a 60-day loan, a

creditor would probably be most interested in which of the following
ratios (6-58)
a. The debt ratio c. The quick ratio
b. The price-earnings ratio d. The number of times interest
earned
141. Which of the following events is most likely to increase

the accounts receivable turnover? (6-58)
a. Sales decrease
b. Accounts receivable are collected more quickly
c. Sales increase
d. Accounts receivable are collected less quickly
The per share market price of Far Eastern Co. shares on January 1, 2016
was P60 and on December 31, 2016 was P72. Net income for 2016 was
P48,000. Dividends to the preference shareholders for the year totaled
P12,000, and dividends of P2.50 per share were paid on the 6,000
ordinary shares outstanding during the year.
142. The price-earnings ratio for Far Eastern Co. at year end
was (6-59)
a. 10 to 1 c. 11 to 1
b. 6 to 1 d. 12 to 1
Ryan Company had 20,000 ordinary shares outstanding through 2016. These
shares were originally issued at a price of P15 per share. The book
value on December 31, 2016 was P25 per share and the market value on
December 31, 2016 was P30 per share. The dividend on ordinary shares on
total for 2016 was P45,000.
143. The dividend yield ratio for Ryan Company for 2016 was: (6-
61)
a. 9.0% c. 15.0%
b. 7.5% d. 10.0%
JunJun & Co. has debt ratio of 0.50, a total assets turnover of 0.25,
and a profit margin of 10%. The president is unhappy with the current
return on equity, and he thinks it could be doubled. This could be
accomplished (1) by increasing the profit margin to 14% and (2) by
increasing debt utilization. Total assets turnover will not change.
144. What new debt ratio, along with the 14% profit margin, is
required to double the return on equity? (6-61)
a. 0.75 c. 0.65
b. 0.70 d. 0.55
Alessandra Company has P10 billion in total assets. Its statement of

financial position shows P1 billion in current liabilities P3 billion
in long term-debt, and P6 billion in common equity. It has 800 million
shares of common stock outstanding, and its stock price is P32 per
share.
145. The Company’s market/book ratio is (6-63)
a. 4.2667 c. 4.627
b. 4 d. 4.29
Mindanao Mining has P6 million in sales; its ROE is 12%, and its total
assets turnover is 3.2 x. The company is 50% equity financed, and it
has no preferred stock outstanding.
146. The net income of Mindanao Mining is (6-63)
a. P112,450 c. P212,500
b. P150,112 d. P112,500
Consider the following simplified financial statements for the Phillips
Corporation assuming no income taxes.
Income Statement Statement of Financial Position

Sales P23,000 Asset P15,800 Debt P 5,200
Cost 16,700 Equity 10,600
Net income P 6,300 Total P15,800 Total P15,800
Phillips has predicted a sales increase of 15 percent. It has

predicted that every item on the statement of financial position will
increase by 15 percent as well. Create the pro forma statements and
reconcile them.
147. What is the additional financing needed here? (6-63)

a. P6,555 c. P5,555
b. P5,655 d. P6,666
The most recent financial statements for Gospel Company are shown here.
Income Statement Statement of Financial Position

Sales P 42,000 Current
Cost 28,500 assets P 21,000 Debt P 51,000
Taxable Fixed Equity 56,000
Income P 13,500 assets 86,000
Taxes(34%) 4,590
Total P107,000 Total P107,000
Net income P 8,910
Assets and costs are proportional to sales. The company maintains

a constant 30 percent dividend payout ratio and a constant debt-equity
ratio.
148. The maximum increase in sales that can be sustained

assuming no new equity is issued is (6-65)
a. P5,263 c. P2,562
b. P5,632 d. P5,264

At year-end 2016, total assets for Geneva Corporation were P1.2 million
and accounts payable were P375,000. Sales, which in 2016 were P2.5
million, are expected to increase by 25 percent in 2017. Total assets
and accounts payable are proportional to sales and that relationship
will be maintained. Geneva typically uses no current liabilities other
than accounts payable. Common stock amounted to P425,000 in 2016 and
retained earnings were P295,000. Geneva plans to sell new common stock
in the amount of P75,000. The firm’s profit margin on sales is 6
percent; 40 percent of earnings will be paid out as dividends.
149. Total debt in 2016 was (6-67)

a. 420,000 c. 360,000
b. 480,000 d. 320,000
150. The new long-term debt financing that will be needed in

2017 is (6-68)
a. P480,000 c. P 85,000
b. P 75,000 d. P 18,750

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ACCOUNTING INTEGRATION PART 5

MANAGEMENT ADVISORY SERVICES MODULE RBR BACAY, CPA, MBA

The following information applies to questions 1 and 2.

Havana Village Association is planning another Riverboat Extravaganza.

The following information pertains to the questions 3 through 5

3. What is the company’s total contribution margin ratio? (2-43)

The following information pertains to the questions 6 through 9

6. What is the monthly break-even point in units sold? (2-45)

The following information pertains to the questions 10 through 12

Fluffy’s fixed manufacturing costs were P500,000, and variable

10. What is Fluffy’s variable manufacturing costs per unit in 2016?

The following information pertains to the questions 13 through 15

13. The break-even point for 2016 is (2-55)

The following information pertains to the questions 16 through 18

16. What is the contribution margin of Super Men’s Clothing? (2-58)

The following information pertains to the questions 19 through 23

19. What is the company’s break-even point in units, assuming that

The following information applies to questions 24 through 27.

24. What is the actual variable overhead cost? (2-72)

The following information applies to questions 28 through 32

28. Above is a (2-73)

The following information applies to questions 33 through 37

The following data apply to items 38 through 42

38. The variable manufacturing overhead spending variance for

The standard direct labor cost per unit of Product MN-46 is

The following data applies to items 45 through 48

50. Which of the following is not an advantage of using a standard

51. Under the standard cost procedures, any differences between

54. A labor usage variance is most likely to occur if (2-82)

56. Which of the following unfavourable cost variances would be the

57. An unfavorable volume variance in a factory is generally: (2-82)

The following information pertains to the questions 58 through 60

The following information pertains to the questions 61 through 64

61. The total material quantity variance for May is (2-98)

The following information pertains to the questions 65 through 69

The following information pertains to the questions 70 through 73

The following information pertains to the questions 74 through 77

The following information pertains to the questions 78 through 81

78. Under absorption costing fixed a manufacturing costs expensed on

The following data apply to items 82 to 85:

The following information pertains to questions 86 through 88:

The following information pertains to 89 and 90

89. The unit cost for product X (2-164)

90. The unit cost for product Y is (2-164)

The following information pertains to questions 91 and 92:

Manufacturing Cost Driver Used as Conversion cost per

Assume that 75 units of a component for packaging machines have been

91. Total manufacturing costs is (2-165)

The Pangasinan plant of the Pilipinas Company manufactures cash

Cost pool Activity costs Activity driver levels

The plant’s present cost accounting system allocates manufacturing

The company received a request for a bid to deliver 2,000 units

Direct materials cost P30,000

The following information pertains to Job KG101 completed during the

Direct materials cost P25,000

K-Mart Stores Corporation has established the following selling and

95. The overhead rate for the marketing management activity is

The following pertains to questions 96 through 98:

Anya, Inc. manufactures two models of high-pressure steam valves, the

Product Direct annual total direct

Activity Activity Total Total Activity .