Taccaban, Karen Joy R.
Section 2
Managerial Accounting Mid -term Examination
Answer the following questions:
1. Peter and Senen Co. sell the same product in a competitive industry. Thus, the selling price of the
product for each company is the same. Other data about the two companies are as follows:
Peter
Senen
Fixed Costs
P50,000
P70,000
Contribution margin ratio
40%
52%
What are the companies’ break event points?
PETER
= 50,000/40%
=P125,000
SENEN
= 70,000/52%
=P134,615
Data for questions No. 2 through 13
Ethel Corp. produces and sells a single product. The selling price is P25a and the variable cost is P15 per
unit. The corporation’s fixed costs is P100,000 per month. Average monthly sales are 11,000 units.
2. What is the corporation’s contribution margin per unit and as a percent of sales (CMR)?
Sales- VC=CM
25-15 =10 per unit; 40%
3. What is the corporation’s break- even point?
Be units = 100,000/10= 10,000
or
Be sales = 100,000/40%= 250,000
4. If the corporation desires to earn profit of P20, 000 before tax, it must generate sales of how much?
=(100,000+20,000)/10
= 12,000 units* 25/unit
= P300,000
5. If the corporation pays corporate income tax at the rate of 30%, and it desires to earn after-tax profit
of P21, 000, it must generate sales of how much?
=P325,000
6. How much sales in pesos must be generated to earn profit that is 8% of such sales?
=P312,500
7. How many units must be sold to earn profit of P2 per unit?
= 12,500 units
Taccaban, Karen Joy R.
Section 2
8. With average monthly sales of 11,000 units, what is the corporation’s margin of safety?
= (11,000*25)-250,000
=275,000-250,000
=25,000
9. What is the Corporation Margin of safety ratio and the break-even sales ratio?
Margin of safety ratio=25,000/275,000=9.1%
Be sales ratio= 250,000/275,000= 90.91%
10. At the present average monthly sales level of 11,000 units, the corporation’s operating leverage
factor is what?
DOL= 110,000/10,000
= 11
Sales
VC
CM
FC
OE
275,000
165,00
110,00
(100,000)
10,000
11. If fixed costs will increase by P20, 000, the Break-even point in units will increase (decrease) by how
much?
@100,000FC= 100,000/10
=10,000 units
@120,000 FC= 120,000/10
= 12,000 units
12,000-10,000= 2,000 units increase
12. If variable costs per unit will go up by P5, the peso breakeven sales will increase (decrease) to?
Be sales= 100,000/20%
= 500,000
VC @15= 100,000/40%
= 250,000
500,000-250,000= P250,000 increase
13. If selling price will increase to P30, the break -even point in units will increase (decrease) by how
much?
13. Be units= 100,000/15
= 6,666.66 or 66,667 units
10,000-6,667= 3,333 decrease in units
14. If sales increase from P800,000 to P900,000, and if the degree of operating leverage is 5, one could
expect profit to increase by how many percent?
14. Percentage change in OI= 5*12.5%
= 62.5%
% of change in sales=900,000/800,000
= 12.5%
Taccaban, Karen Joy R.
Section 2
15. A company has an operating leverage factor of 4. When its sales increased to P500,000, its profit
before tax increased by 100%.Its variable cost ratio is 40%. How much is the company’s fixed costs?
15. =P350,000
Data for questions No. 16 through 24
JYD Corporation uses an absorption costing system for internal reporting purposes. At present, however,
it is considering to use the variable costing system.
Following are some data regarding JYD Corporation’s budgeted and actual operations for the calendar
year 2018.
Costs
Materials
Labor
Variable Factory Overhead
Fixed Factory Overhead
Variable Selling Expenses
Fixed Selling Expenses
Variable Administrative Expenses
Fixed Administrative Expenses
Total
Budgeted
P25,200
18,480
8,400
10,640
16,800
14,700
4,200
6,300
P104,720
Actual
P23,400
17,160
7,800
10,000
15,000
14,700
3,750
6,375
P98,185
Finished goods inventory beginning
Production
Sales
Budgeted
(Units)
280
1,120
1,120
Actual
(Units)
280
1,040
1,000
The budgeted costs were computed based on the budgeted production and sales of 1,120 units, the
company’s normal capacity level. The Corporation uses a predetermined factory overhead rate for
applying manufacturing overhead costs to its product. The denominator level used in developing the
predetermined rate is the firm’s normal capacity. Any over or under applied factory overhead cost is
closed to cost of goods sold at the end of the year.
There is no work in process inventories at either the beginning or end of the year. The actual selling
price was the same as the amount planned, P130 per unit.
The previous year’s planned per unit manufacturing costs were the same as the current planned unit
manufacturing cost. The beginning inventory of finished goods for absorption costing purposes was
valued at such per- unit manufacturing cost.
Taccaban, Karen Joy R.
Section 2
16. What is the standard product costs per unit under Absorption Costing and Variable Costing?
DM
DL
VMOH
FMOH
Product cost
Absorption
22.5
16.5.
7.5
9.5
56
Variable
22.5
16.5
7.5
46.5
17. What are the manufacturing cost variances for Variable Manufacturing Cost and Fixed
Manufacturing cost?
Budgeted Variable Cost= 25,200+18,480+8,400
= 52,080
Budgeted Fixed cost= 10,640
actual variable cost= 10,000
Actual Variable Cost= 23,400+ 17,160+7,800
= 48,360
VOH= 52,080-48,360= 3,720
FMOH= 10,640- 10,000= 640
18. What is the Corporation’s operating income (loss) under both the absorption and variable costing
methods?
ABSORPTION
Sales(1000x130)
Variable Manufacturing cost(46.5x1,000)
Fixed Manufacturing cost(9.62x1000)
Variable Non-Manufacturing cost expense(15,000+3,750)
Fixed Non-Manufacturing cost expense(14,700+6,375)
Operating Income
VARIABLE
Sales(1000x130)
Variable Manufacturing cost(46.5x1,000)
Fixed Manufacturing cost
Variable Non-Manufacturing cost expense(15,000+3,750)
Fixed Non-Manufacturing cost expense(14,700+6,375)
Operating Income
130,000
46,500
9,620
18,750
21,075
(95,945)
34,055
130,000
46,500
10,000
18,750
21,075
(96,325)
33,675
19. What were the values of the company’s actual ending finished goods inventory under the absorption
and variable costing methods?
ABSORPTION
Ending FG Inventory= 40x56 or 56.12
= 2,240 or 2,245
VARIABLE
Ending FG Inventory= 40x46.5
= 1,860
20. What were the Corporation’s total fixed costs expensed this year on both absorption and variable
costing methods?
ABSORPTION
Total FC Expensed= (9.62x1,000)+ 21,075
= 30, 695
VARIABLE
Total FC Expensed = 10,000+21,075
= 31,075
Taccaban, Karen Joy R.
Section 2
21. What was the Corporation’s actual manufacturing contribution margin for the year calculated on the
variable costing basis?
Sales
DM
DL
VMOH
130,000=. 1,000X 130
(22,500)= 1,000X22.5
(16,500)= 1000X16.5
(7500)= 1000X7.5
83,500
22. What was the Corporation’s actual contribution margin for the year calculated on the variable
costing method?
Actual CM under Variable Costing =83,500- 18,750
= 64,750
23. What were the total variable costs expensed currently by the corporation under the absorption and
variable costing bases?
ABSORPTION
Total VC= (46.5x1,000)+ 18,750
= 62,250
VARIABLE
Total VC = 46.5x1,000)+ 18,750
= 62,250
24. The difference between the Corporations’ operating income calculated on the absorption costing
basis and that on the variable costing basis was how much?
Absorption
Variable
P34,055
P33,675
P 380
Data for Questions 25 through 35
Petesy Corporation is preparing its Master Budget for 2019. Budget information is as follows:
2019
2020
Sales Production CostOperating Expenses
1st Quarter
P280,000
P192,000
2nd Quarter
320,000
200,000
3rd Quarter
360,000
224,000
4th Quarter
352,000
200,000
1st Quarter
320,000
224,000
The budgeted Finished Goods Inventories are:
2018 March 31
P56,000
P64,000
68,000
72,000
76,000
72,000
Taccaban, Karen Joy R.
Section 2
June 30
52,000
September 30 60,000
December 31
48,000
The company uses the JIT system on its purchase of materials. It buys materials on cash basis.
Included in the production cost each quarter is P44, 000 in depreciation. The operating expenses include
depreciation of P12,000 per quarter. All production costs and operating expenses, with the exemption of
depreciation are to be paid during the quarter of incurrence.
Collections on sales are planned at 60% during the quarter of sales, the balance during the
quarter following the sale. Dividends of P20,000 is to be paid in June and again in December if covered
by sufficient profits. No dividends will be paid if the net profit is less than P120,000.Income Tax is equal
to 32 of the quarter’s income before tax and is paid in the following quarter.
The Statement of Financial Position as of December 31, 2018 is as follows:
Petesy Corporation
Statement of Financial Position
December 31, 2018
Assets
Equities
Cash
P76,000
Income tax payable
P 12,000
Accounts Receivable
120,000
Inventory
44,000
Share Capital
640,000
Plant and Equipment 580,000
Retained Earnings
168,000
Total
820,000
Total
P820,000
25. How much was the actual sales during the last quarter of 2018?
AR at the end of 2018
Bal. Received in the following quarter
Sale last quarter of 2018
120,000
40%
300,000
26. What is the total budgeted cost of goods sold for the year 2019?
192,000+ 200,000+240,000+220,000= P816,000
27. How much dividends will be paid in 2019? P0 or none
28. What is the total budgeted cash disbursements for production costs and operating expenses for the
year 2019?
200,000+212,000+240,000+220,000= P872,000
29. What is the budgeted cash balance on December 31, 2019?P455,200
30. What is the expected balance of accounts receivable as of December 31, 2019?
Expected Cash Balance
1st Qtr
2nd Qtr.
3rd Qtr
4th Qtr
Full Year
Taccaban, Karen Joy R.
Opening Balance
Sales
Receieved from Current
Qtr. Sale
Received from Previous
Qtr. Sale
Total Received
Accounts Receivable
Accounts Receivable,
End
Section 2
120,00 112,000
0
280,00 320,000
0
168,00 192,000
0
120,00 112,000
0
288,00 314,000
0
112,00 128,000
0
P140, 800
128,000
144,000
120,000
360,000
352,000
1,312,000
216,000
211,200
787,200
128,000
144,000
504,000
344,000
355,200
1,291,200
144,000
140,800
140,800
31. What is the budgeted balance of raw materials inventory as of December 31, 2019?
Raw Materials = 0
Finished Goods = P48,000
32. What is the expected balance of Income tax payable as of December 31, 2019? P20,480
33. What is the budgeted balance of Retained Earnings as of December 31, 2019?
Budgeted Balance of Retained Earnings
Opening Balance
168,000
During the year
109,600
P277,600
34. What is the expected balance of the plant and equipment account as of December 31, 2019?
Balance of Plant and Equipment
Opening Balance
During the year
580,000
(224,000)
P356,000
35. If a budgeted statement of financial position as at December 31, 2019 is to be prepared, total assets
will be how much?
Petesy Corporation
Statement of Financial Position
December 31, 2019
Assets
Cash
Accounts Receivable.
Amount
393,280
140,800
Liabilities
Income tax Payable
Share Capital.
Amount
20,480
640,000
Taccaban, Karen Joy R.
Inventory.
Plant and equipment.
Total
Section 2
48,000
356,000
938,080
Retained Earnings
277,600
938,080
Data for Questions 36 through 38
The accountant of JYD Corporation prepared the following cost analysis report on direct labor costs
for the jobs completed during the previous months:
Job
Actual Hrs. at Actual RatesActual Hrs. at Standard Rates Standard Hrs. at Standard Rates
105
P2,270
P2,590
P2,170
110
10,740
10,970
10,500
117
4,730
4,900
4,620
120
13,850
13,600
13,480
Total P31,590
P32,060
P30,770
36. What is the total direct labor variance for the jobs completed?
Job
105
110
117
120
Total
Actual Hrs. at Actual Rates
P2,270
10,740
4,730
13,850
P31,590
Standard Hrs. at Standard Rates
P2,170
10,500
4,620
13,480
P30,770
31,590- 30,770 = 820 unfavorable or -820
37. What is the labor rate variance?
32,060-31,590= 470 Unfavorable
38. What is the labor efficiency variance?
30,770 – 32, 060 = -1,290 or 1,290 unfavorable
Data for Questions 39 through
The following information pertains to Peter Senen Company’s production on a one unit of Product A:
Quantity
Price
Cost per Unit
Materials-standard
7.5 kgs
P0.30/kg
P2.25/unit
Labor –standard
.6 hr.
10.00/hr.
6.00/unit
During the period, the company produced 15,000 units of Product A. It purchased 140,000 kgs. of
materials at P0.25 per kilo. It incurred direct labor cost of P90,780 at P10.20 per labor hour used. At the
end of the period, the company’s inventory of materials increased by 25,000 kgs. The company
recognizes the material price variance when materials are purchased.
39. How much was the company’s material price variance?
= (Standard rate- Actual rate)x Actual material purchased
= (0.30 – 0.25)x 140,000
= 0.05x 140,000
= 7000 favorable
Taccaban, Karen Joy R.
Section 2
40. What was the company’s materials quantity variance?
Standard Quantity= 7.5 x 15,000 = 112, 500kg
Actual Quantity= 140,000 – 25,000 = 115,000kg
Material Quantity Variance= (112,500 – 115,000) x 0.30
= -2500 x 0.30
= -750 or 750 unfavorable
End of the Examination. Good Luck!