Professional Documents
Culture Documents
1. At a breakeven point of 5000 units sold, variable expenses were P10000 and fixed expenses were
P50000. The profit from the 5001st unit would be?
A. 12
B. 15
C. 10
D. 50
2. Pooh Company earned P50000 on sales of P400000. It earned P70000 on sales of P450000. The
amount of total fixed costs for Pooh Company is:
A. 0
B. 100000
C. 110000
D.120000
3. Based on the following, compute for the variable selling and administrative expense:
A. 3750000
B.2026667
C. 4750000
D. 1312500
4. YG Company sells albums. The company breaks even at an annual sales volume of 75000 units. Actual
annual sales volume was 100000 units and the company reported a profit of P200000.
The annual fixed cost for YG Company is
A. P800000
B. P600000
C. P200000
D. P150000
Variable Expenses:
Sales Commission 140
Invoice Cost 360
Fixed Expenses:
Rent 1600000
Advertising 3000000
Salaries 1400000
7. If the company would pay the manager P50 commission on each pair of shoes sold in excess
of the breakeven point, how many pairs of shoes are required to earn P900000 profit?
8. The company is considering eliminating sales commissions entirely in its stores and increasing
fixed salaries by P2142000 annually. If this change is made, what will be the number of pairs of
shoes to be sold by Baguio outlet to be indifferent to commission basis?
Variable and Absorption
9. In its first year of operations, Little Mix Company had the following costs when its produced
100000 and sold 80000 units of its only product
Manufacturing:
Fixed P180000
Variable P 160000
How much lower would Little Mix’s net income be if it used variable costing instead of full
absorption costing?
A. P36000
B. P54000
C. P68000
D. P94000
10. Seventeen Company reported the following costs for the year just ended:
If Seventeen uses throughput costing and had sales revenues for the period of P950,000, which
of the following choices correctly depicts the company's cost of goods sold and net income?
Cost of Net
Goods Income
Sold
A. P180,000 P 45,000
B. P 180,000 P 645,000
C. P 305,000 P 45,000
D. P 305,000 P 645,000
11. Malaya reported P65,000 of net income for the year by using absorption costing. The
company had no beginning inventory, planned and actual production of 20,000 units, and sales
of 18,000 units. Standard variable manufacturing costs were P20 per unit, and total budgeted
fixed manufacturing overhead was P100,000. If there were no variances, net income under
variable costing would be:
A. P15,000.
B. P55,000.
C. P65,000.
D. P75,000.
E. P115,000.
What is the value of ending inventory using the variable costing method?
A. P155000
B. P125000
C. P100000
D. P195000
14. How much fixed manufacturing overhead did the company apply to each unit produced?
16. How much variable cost did the company attach to each unit manufactured?
17. Taylor, a division of Ed Enterprises, currently performs computer services for various
departments of the firm. One of the services has created a number of operating problems, and
management is exploring whether to outsource the service to a consultant. Traceable variable
and fixed operating costs total P80,000 and P25,000, respectively, in addition to P18,000 of
corporate administrative overhead allocated from Ed. If Taylor were to use the outside
consultant, fixed operating costs would be reduced by 70%. The irrelevant costs in Taylor's
outsourcing decision total:
A. P17,500.
B. P18,000.
C. P25,000.
D. P25,500.
18. MAMAMOO Inc., which has excess capacity, received a special order for 4,000 units at a
price of P15 per unit. Currently, production and sales are budgeted for 10,000 units without
considering the special order. Budget information for the current year follows.
Sales P190,000
Cost of goods sold P145,000
Gross margin P 45,000
Cost of goods sold includes P30,000 of fixed manufacturing cost. If the special order is
accepted, the company's income will:
A. increase by P2,000.
B. decrease by P2,000.
C. increase by P14,000.
D. decrease by P14,000.
19. In early July, V purchased a P70 ticket to the December 15 game of the Chicago Titans.
(The Titans belong to the Midwest Football League and play their games outdoors on the shore
of Lake Michigan.) Parking for the game was expected to cost approximately P22, and V would
probably spend another P15 for a souvenir program and food. It is now December 14. The
Titans were having a miserable season and the temperature was expected to peak at 5 degrees on
game day. V therefore decided to skip the game and took his wife to the movies, with tickets
and dinner costing P50. The sunk cost associated with this decision situation is:
A. P20.
B. P50.
C. P70.
D. P107
20. AKMU Manufacturing has 31,000 labor hours available for producing A and U. Consider
the following information:
Product A Product
U
Required labor time per unit (hours) 2 3
Maximum demand (units) 6,500 8,000
Contribution margin per unit P5.00 P5.70
Contribution margin per labor hour P2.50 P1.90
21. Paramore Corporation has P200,000 of joint processing costs and is studying whether to
process H and W beyond the split-off point. Information about H and W follows.
Product Product W
H
Tons produced 25,000 15,000
Separable variable processing costs beyond split- P64,00 P100,00
off 0 0
Selling price per ton at split-off 15 52
Selling price per ton after additional processing 21 58
If Paramore desires to maximize total company income, what should the firm do with regard to
Products H and W?
Product H Product W
A. Sell at split-off Sell at split-off
B. Sell at split-off Process beyond split-off
C. Process beyond split-off Sell at split-off
D. Process beyond split-off Process beyond split-off
22. Goose House, a manufacturer of computer peripherals, has excess capacity. The company's
Tigger plant has the following per-unit cost structure for item no. 89:
The traceable fixed administrative cost was incurred at the Tigger plant; in contrast, the allocated
administrative cost represents a "fair share" of Goose House' corporate overhead. Tigger has
been presented with a special order of 5,000 units of item no. 89 on which no selling cost will be
incurred. The proper relevant cost in deciding whether to accept this special order would be:
A. P40.
B. P59.
C. P61.
D. P80.
Fixed manufacturing costs included in cost of goods sold amount to P3 per unit for Regular and
P20 per unit for Super. Variable selling expenses are P4 per unit for Regular and P20 per unit
for Super; remaining selling amounts are fixed.
23. Silent Sanctuary wants to drop the Regular product line. If the line is dropped, company-
wide fixed manufacturing costs would fall by 10% because there is no alternative use of the
facilities. What would be the impact on operating income if Regular is discontinued?
A. P0.
B. P10,400 increase.
C. P20,000 increase.
D. P39,600 decrease.
24. Disregard the information in the previous question. If Silent Sanctuary eliminates Regular
and uses the available capacity to produce and sell an additional 1,500 units of Super, what
would be the impact on operating income?
A. P28,000 increase
B. P45,000 increase
C. P55,000 increase
D. P85,000 increase.
ANSWERS:
1. C 9. A 17. D
2. C 10. A 18. C
3. D 11. B 19. C
4. B 12. C 20. C
5. 20000 pairs 13. 47000 21. C
6. (6000) 14. 3 22. A
7. 23600 pairs 15. 560000 23. D
8. 15300 pairs 16. 13 24. C