Reference no: EM133113263

Questions -

Q1. Mangit Company is currently operating at a loss of P15,000. The sales manager has received a special order for 5,000 units of product, which normally sells for P35 per unit. Costs associated, P3; applied fixed overhead,P4; and variable selling expenses, P2. The special order would allow the use of a slightly lowergrade of direct material, thereby lowering the price per unit by P1.50 and selling expenses would be decreased by P1. If Mangit wants this special order to increase the total net income for the firm to P10,000, What sales price must be quoted for each of the 5,000 units?

a. P23.50 c. P27.50b. P24.50 d. P34.00

Q2. Wiley Company's master budget shows straight-line depreciation on factory equipment of P 258, 000. Themaster budget was prepared at an annual production volume of 103, 200 units of product. This production volume is expected to occur uniformly throughout the year. During September, Wiley Company produced 8,170units and the accounts reflected actual depreciation on factory equipment of P20, 500. The company controls manufacturing costs with a flexible budget. The flexible budget amount for depreciation on factory machinery for September would be

a. P 19, 475b. P 20, 425

c. P 20, 500d. P 21, 500

Q3. Dakdak is a well-known political analyst. He is the darling of the press. His attitude has left many an opponenton talk shows feeling run over by a ten-wheeler truck.

RPI Publishers is negotiating to publish Dakdak's Manifesto, a new book that promises to be an instantbest seller. The fixed costs of producing and marketing the book will be P500, 000. The variable costs of producing and marketing will be P4.00 per copy sold. These costs are before any payment to Dakdak. Dakdak negotiates an up-front payment of P3 million, plus 15% royalty rate on the net sales price of each book. The net sales price is the listed book price of P30, minus the margin paid to the bookstore to sellthe book. The normal bookstore margin of 30% of the listed bookstore price is expected to apply.

How many copies must RPI publisher sell to earn a target operating income of P2 million?

a. P397, 112

b. P240, 700

c. P252, 707.58

d. P397,111.92

Q4. Assume a portion of a firm's long-term funds includes either debt or preferred stock. Which of the following statements is correct?

a. The firm must possess operating leverage, which means that a change in net income will result in a greater percentage change in earnings before interest and taxes (EBIT)

b. The firm has financial leverage, which means that a change in sales will result in a greater percentage change in EBIT

c. The firm has financial leverage, which means that a change in EBIT will result in a greater percentage change in earnings per share (EPS)

d. The firm doesn't have leverage, because leverage is created through the use of common equity financing only.

Q5. Last year's asset turnover ratio for Luzon Airlines was 2.5. This year, sales increased by 20% and average total assets increased by 10%. What is the asset turnover ratio for the current year?

a. 2.50 c. 2.73

b. 2.59 d. 3.00

Q6. ABC Manufacturing Corporation has the following information:

Moving time 8 days Processing time 10 days

Inspection time 2 days Storage time 30 days

What is the manufacturing cycle efficiency (MCE)?

a. 20%

b. 25%

c. 60%

d. 80

Q7. Budgets are essential management tools for planning and controlling. Determine the most accurate statement regarding budgets.

a. All organizations are required to budget.

b. All organizations have the same set of budgets.

c. Budgets should never be used to evaluate performance.

d. Budgets are a quantitative expression of an organization's goals and objectives.

Q8. If the required direct materials purchases are 8,000 pounds and the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct material in pounds?

a. 20,000 c. 12,000

b. 4,000 d. 32,000

Q9. Gideon Company has been offered credit terms of 3/10, net 30. Using a 365-day year, what is the nominal cost of not taking advantage of the discount if the firm pays on the 35th day after the purchase?

a. 14.2% c. 37.6%

b. 32.2% d. 8.75%

Q10. Which of the following non-value-added costs associated with manufactured work-in-process inventory is most significant?

a. The cost of labor that cannot be traced to any individual product

b. The cost of moving, handling, and storing any individual product

c. The cost of materials that cannot be traced to any individual product

d. The cost of additional resources consumed to produce any individual product

Q11. ABC Company's budgeted sales for the coming year are P 40, 500, 000 of which, 80% are expected to be credit sales at terms of n/30. ABC estimates that a proposed relaxation of credit standards would increase credit sales by 20% and increase in an average collection period from 30 days to 40 days. Cost of money is 15%. Based on a 360-days year, how much opportunity cost is involved with the proposed relaxation of credit standards?

a. P 243, 000

b. P 540, 000

c. P 900, 000

d. P 1, 620, 000

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Selling price P85

Units in beginning inventory 0

Units produced 2,900

Units sold 2,700

Units in ending inventory 200

Variable costs per unit:

Direct materials P22

Direct labor P13

Variable manufacturing overhead P3

Variable selling and administrative P5

Fixed costs:

Fixed manufacturing overhead P46,400

Fixed selling and administrative P51,300

Q12. What is the net operating income for the month under variable costing?

a. P 8,100 c. P18,900

b. P15,700 d. P 3,200

Q13. The Salvage Co. is considering the purchase of a new ocean-going vessel that could potentially reduce labor costs of its operation by a considerable margin. The new ship would cost P500,000 and would be fully depreciated by the straight-line method over 10 years. At the end of 10 years, the ship will have no value and will be sunk in some already polluted harbor. The Salvage Co.'s cost of capital is 12 percent, and its marginal tax rate is 40 percent. What is the present value of the depreciation tax benefit of the new ship? (Round to the nearest peso.)

a. P113,004 b. P282,510 c. P169,506 d. P200,000

Q14. Atkinson Landscaping applies variance overhead base on direct labor hours. At the beginning of the current year, Atkinson had estimated the following:

Estimated variable overhead P56, 000

Estimated units of productions 10, 000 units

Standard direct labor hours per unit 2.5 hours

During the year, 11,000 units were produced using a total of 27, 200 direct labor hours and actual variable costs were P60,000.

Atkinson's variable overhead efficiency variance for the year was:

a. P 672 F

b. P4,000 U

c. P 928 F

d. P145U

Q15. Wheeling Company produces and sells bikes. It expects to sell 20,000 bikes in April 2018 and had 1,200 bikes in finished goods inventory at the end of March 2018. Wheeling Company would like to completed operations in April with at least 1,500 completed bikes in inventory. The bikes sell for P100 each. How many bikes would be produced in April 2018?

a. 20,000 bikes c. 19,000 bikes

b. 20,300 bikes d. 18,000 bikes

USE THE FOLLOWING FOR NUMBER 16 & 17

Robot Toy Company manufacturers two products, X-O-Tron and Mechoman. Robot's overhead costs consist of setting up machines, P400,000; machining, P900,000; and inspecting, P300,000.

Information on the two products is:

X-O-Tron Mechoman

Direct labor hours 15,000 25,000

Machine setups 600 400

Machine hours 24,000 26,000

Inspections 800 700

Q16. Overhead applied to X-O-Tron using traditional costing is

a. P600,000 c. P832,000

b. P768,000 d. P960,000

Q17. Overhead applied to Mechoman using activity-based costing is

a. P640,000 c. P832,000

b. P768,000 d. P1,000,000

Q18. When a firm prepares financial reports by using absorption costing

a. Profits will likely increase with increase in sales

b. Profits will always decrease with decreases in sales

c. Profits may decrease with increased sales even if there is no change in selling prices and costs

d. Decreased output and constant sales result in increased profits

Q19. At a sales level of P365,000, Ricky Company's gross margin is P20,000 less than its contribution margin, its net operating income is P70,000 and its selling and administrative expenses total P130,000. At this sales level, its contribution margin would be:

a. P295,000 c. P220,000

b. P180,000 d. P200,000

Q20. BON Company manufactures a single product. Unit variable production costs are P 20 and fixed production costs are P 150, 000. BON uses a normal activity of 10, 000 units to set its standard costs. BON began the year with no inventory, produced 11, 000 units, and sold 10,500 units. Ending inventory under absorption costing amounts to:

a. P10, 000

b. P15, 000

c. P17, 500

d. P20, 000

Q21. Harith Company manufactures a single product. In the prior year, the company had sales of P90,000, variable cost of P50,000, and fixed costs of P30,000. Harith expects its cost structure and sales price per unit to remain the same in the current year, however total sales are expected to increase by 20 percent. If the current year projections are realized, net income should exceed the prior year's net income by:

a. 100%

b. 80%

c. 20%

d. 50%

Q22. In microeconomics, market shortage comes from (A) and results in (B).

a. (A) Price floor set above the equilibrium

(B) Decrease in price in the short run

b. (A) Price ceiling set above the equilibrium price

(B) Increase in price in the short run

c. (A) Price floor set below the equilibrium price

(B) Decrease in price in the long run

d. (A) Price ceiling set below the equilibrium price

(B) Increase in price in the long run

Q23. Without prejudice to preceding questions, assume that Davao estimates that the per ton selling price will decline 10% next year. Variable costs will increase P40 per ton and the fixed costs will not change. What sales volume in pesos will be required to earn an after-tax net income of P94,500 next year?

a. P1,140,000 c. P1,500,000

b. b. P825,000 d. P1,350,000

Q24. A retail company determines its selling price by making up variable costs 60%. In addition, the company uses frequent selling price markdown to stimulate sales. If the markdowns average 10%, what is the company's contribution margin ratio?

a. 27.5% c. 30.6%

b. 33.3% d. 41.7%

Q25. When 10,000 units are produced, fixed costs are P14 per unit. Therefore, when 20,000 units are produced fixed costs will:

a. Increase to P28 per unit c. decrease to P7 per unit

b. remain at P14 per unit d. total P280,000