BSA 3102- MANAGERIAL ACCOUNTING

PRELIMINARY DEPARTMENTAL EXAM REVIEWER

TOPIC COVERAGE:
 Introduction to Management Accounting
 Review of Cost Concepts, Classifications and Behavior
 Cost/Volume/Profit Analysis with Target Costing
 Variable and Absorption Costing
THEORIES

1. Which of the following statements are true regarding financial and managerial accounting?
I. Both are mandatory.
II. Both rely on the same underlying financial data.
III. Both emphasize the segments of an organization, rather than just looking at the
organization as a whole.
IV. Both are geared to the future, rather than to the past.

a. I, II, III, and IV c. Only II and III

b. Only II, III and IV d. Only II

2. Obtaining feedback is generally identified most directly with which of the functions of
management?
a. Planning c. Controlling
b. Directing and motivating d. Decision making

3. A successful JIT system is based upon which of the following concepts?

a. The company must rely upon a large number of suppliers to ensure frequent deliveries of
small lots.
b. The company should always choose those suppliers offering the lowest prices.
c. The company should avoid long-term contracts with suppliers so as to exert pressure on
suppliers to make prompt and frequent deliveries.
d. A small number of suppliers make frequent deliveries of specific quantities thus avoiding
the buildup of large inventories of materials on hand.

4. Which statement about the degree of detail in a report is true?

a. It depends on the level of the manager receiving the report.

b. It may depend on the frequency of the report.
c. It depends on the type of manager receiving the report.
d. All of the above.
5. Which activity is NOT normally performed by managerial accountants?

a. Assisting managers to interpret data in managerial accounting reports.

b. Designing systems to provide information for internal and external reports.
c. Gathering data from sources other than the accounting system.
d. Deciding the best level of inventory to be maintained.

6. Which of the following statements about managerial accountants is false?

a. Managerial accountants more and more are considered “business partners.”

b. Managerial accountants often are part of cross-functional terms.
c. An increasing number of organizations are segregating managerial accountants in
separate managerial-accounting departments.
d. In a number of companies, managerial accountants make significant business decisions
and resolve operating problems.

7. Conventional and just-in-time manufacturers differ in that the conventional manufacturer is

likely to

a. be a new entrant into its industry.

b. need less storage space than its JIT competitors.
c. give less credibility to management accounting reports.
d. have a longer production cycle than its JIT competitors.

8. Planning is a function that involves

a. hiring the right people for a particular job.

b. coordinating the accounting information system.
c. setting goals and objectives for an entity.
d. analyzing financial statements.

9. Which of the following best describes the role of a staff position in an organization?
a. It relates directly to the carrying out of the basic objectives of the organization.
b. It is supportive in nature, providing service and assistance to other parts of the
organization.
c. It is superior in authority to a line position.
d. It receives assistance from other parts of organization It relates directly to achieve the
basic objectives of organization embedded in them and it is superior in authority to a line
position.
10. As volume increases,

a. Total fixed costs remain constant and per-unit fixed costs remain constant.
b. Total fixed costs increase and per-unit fixed costs increase.
c. Total fixed costs remain constant and per-unit costs increase
d. Total fixed costs remain constant and per-unit costs decrease

11. An opportunity cost is:

a. the difference in total costs which results from selecting one alternative instead of another.
b. the benefit forgone by selecting one alternative instead of another.
c. a cost which may be saved by not adopting an alternative.
d. a cost which may be shifted to the future with little or no effect on current operations.

12. The cost of rent for a manufacturing plant is generally considered to be a:

Prime cost Product cost
a. No Yes
b. No No
c. Yes No
d. Yes Yes

13. Which one of the following statements is true?

a. When production exceeds sales, a manufacturing company´s variable costing net

operating income will usually be greater than its absorption costing net operating income.
b. The variable costing method is usually not used for external reporting purposes.
c. The absorption costing method treats fixed production costs as period costs.
d. All of these.

14. The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial
Management states that significant ethical issues should be discussed first with an immediate
superior unless the superior is involved. If satisfactory resolution cannot be achieved when
the problem is initially presented, then the issues should be:
a. submitted to the next higher managerial level.
b. submitted to the chief executive officer of the firm.
c. submitted to the audit committee, executive committee, board of directors, or owners.
d. submitted to outside legal counsel
15. Within the relevant range, the difference between variable costs and fixed costs is:

a. variable costs per unit fluctuate and fixed costs per unit remain constant.
b. variable costs per unit are constant and fixed costs per unit fluctuate.
c. both total variable costs and total fixed costs are constant.
d. both total variable costs and total fixed costs fluctuate.

16. Which one of the following costs should NOT be considered a direct cost of serving a particular
customer who orders a customized personal computer by phone directly from the
manufacturer?

a. the cost of the hard disk drive installed in the computer.

b. the cost of shipping the computer to the customer.
c. the cost of leasing a machine on a monthly basis that automatically tests hard disk drives
before they are installed in computers.
d. the cost of packaging the computer for shipment.

17. The cost of fire insurance for a manufacturing plant is generally considered to be a:

a. product cost. c. variable cost.

b. period cost. d. all of the above.

18. Which of the following would be considered a product cost for external financial reporting
purposes?

a. Cost of a warehouse used to store finished goods.

b. Cost of guided public tours through the company's facilities.
c. Cost of travel necessary to sell the manufactured product.
d. Cost of sand spread on the factory floor to absorb oil from manufacturing machines.

19. Once the break-even point is reached:

a. the total contribution margin changes from negative to positive.
b. net income will increase by the unit contribution margin for each additional item sold.
c. variable expenses will remain constant in total.
d. the contribution margin ratio begins to decrease.
Use the figure for answering question 20.

20. Which of the graphs in Figure 20-1 illustrates the behavior of a total fixed cost?
a. Graph 2
b. Graph 3
c. Graph 4
d. Graph 1
21. Which of the following costs is a mixed cost?

a. Salary of a factory supervisor

b. Electricity costs of 2 per kilowatt-hour
c. Rental costs of 5,000 per month plus 0.30 per machine hour of use
d. Straight-line depreciation on factory equipment

22. Which of the following is NOT an example of a cost that varies in total as the number of units
produced changes?

a. Electricity per KWH to operate factory equipment

b. Direct materials cost
c. Straight-line depreciation on factory equipment
d. Wages of assembly worker
23. Which of the following is not a plausible explanation of why variable costs often behave in a
curvilinear fashion?

a. Labor specialization
b. Overtime wages
c. Total variable costs are constant within the relevant range
d. Availability of quantity discounts

24. Cost behavior analysis is a study of how a firm's costs

a. relate to competitors' costs.

b. relate to general price level changes.
c. respond to changes in the level of business activity.
d. respond to changes in the gross national product.

25. Cost-volume-profit analysis is the study of the effects of

a. changes in costs and volume on a company’s profit.

b. cost, volume, and profit on the cash budget.
c. cost, volume, and profit on various ratios.
d. changes in costs and volume on a company’s profitability ratios.

26. Montgomery Company has a variable selling cost. If sales volume increases, how will the total
variable cost and the variable cost per unit behave?
Total Variable Cost Variable Cost Per Unit

a. Increase Increase.
b. Increase Remain constant
c. Increase Decrease.
d. Remain Constant Decrease

27. Which of the following statements is true regarding fixed and variable costs?

a. Both costs are constant when considered on a per unit basis.

b. Both costs are constant when considered on a total basis.
c. Fixed costs are fixed in total, and variable costs are fixed per unit.
d. Variable costs are fixed in total, and fixed costs vary in total.
28. If fixed costs increased and variable costs per unit decreased, the break-even point would:

a. increase
b. decrease
c. remain the same
d. increase, decrease, or remain the same, depending upon the amounts of increase in fixed
cost and decrease in variable cost.

29. The point where the total costs line intersects the left-hand vertical axis on the cost-volume-
profit chart represents:

a. the minimum possible operating loss

b. the maximum possible operating income
c. the total fixed costs
d. the break-even point

30. All of the following costs are included in inventory under absorption costing except:

a. Direct materials c. Fixed selling expenses

b. Direct labor d. Fixed factory overhead

31. The manufacturing cost per unit for absorption costing is

a. usually, but not always, higher than manufacturing cost per unit for variable costing.
b. usually, but not always, lower than manufacturing cost per unit for variable costing.
c. always higher than manufacturing cost per unit for variable costing.
d. always lower than manufacturing cost per unit for variable costing.

32. The one primary difference between variable and absorption costing is that under

a. variable costing, companies charge the fixed manufacturing overhead as an expense in

the current period.
b. absorption costing, companies charge the fixed manufacturing overhead as an expense
in the current period.
c. variable costing, companies charge the variable manufacturing overhead as an expense
in the current period.
d. absorption costing, companies charge the variable manufacturing overhead as an
expense in the current period.
33. Net income under absorption costing is higher than net income under variable costing

a. when units produced exceed units sold.

b. when units produced equal units sold.
c. when units produced are less than units sold.
d. regardless of the relationship between units produced and units sold.

34. Some fixed manufacturing overhead costs of the current period are deferred to future periods
under

a. absorption costing.
b. variable costing.
c. both absorption and variable costing.
d. neither absorption nor variable costing.

35. Management may be tempted to overproduce when using

a. variable costing, in order to increase net income.

b. variable costing, in order to decrease net income.
c. absorption costing, in order to increase net income.
d. absorption costing, in order to decrease net income.

36. Gleason sells a single product at P14 per unit. The firm´s most recent income statement
revealed unit sales of 80,000 variable costs of P800,000, and fixed costs of P560,000.
Management believes that a P3 drop in selling price will boost unit sales volume by 20%.
Which of the following correctly depicts how these to changes will affect the company´s break-
even point?
Drop in Sales Price Increase in Sales Volume

a. Increase Increase.
b. Increase Remain constant
c. Increase Decrease.
d. Remain Constant Decrease

37. The contribution-margin ratio is:

a. the difference between the selling price and the variable cost per unit.
b. fixed cost per unit divided by variable cost per unit.
c. variable cost per unit divided by the selling price.
d. unit contribution margin divided by the selling price
38. Which combination of object of cost and classification of cost is most reasonable?
OBJECT OF COST CLASSIFICATION OF COST
a. Materials used to make products Discretionary fixed cost
b. Advertising cost Discretionary fixed cost
c. Straight-line Depreciation Variable cost
d. President’s salary Avoidable fixed cost

39. A multiproduct company

a. Cannot use CVP analysis

b. Must use a separate CVP graph for each of its products.
c. Can use CVP analysis only if the contribution margin percentages on each product are
the same
d. Could earn a higher-than-expected profit even though the total number of units sold was
less than expected.

40. A valid assumption for cost-volume-profit analysis is:

a. An increase in fixed costs will cause the break-even point to rise

b. Demand is constant regardless of price
c. A decrease in variable cost per unit will lower the break-even point
d. Variable costs per-unit are assumed to remain constant within the range of activity
analyzed
Use the following information for items 41 to 43
Charlene company wants to analyze behavior of its selling costs for budgeting purposes. Cost
drivers (activity measures) and costs incurred in the first quarter and the first month of the second
quarter are as follows:
January February March April
Selling costs:
Sales salaries P 42,500 P 42,500 P 42,500 P 51,000
Commissions 15,000 17,500 14,000 16,000
Shipping costs 34,000 38,000 32,400 35,600
Advertising 20,000 20,000 25,000 20,000
Cost drivers:
Peso sales P 300,000 P 350,000 P 280,000 P 320,000
Sales in units 30,000 35,000 28,000 32,000
Sales orders 150 175 140 160

The sales staff are paid monthly salaries plus commission. Advertising expenses are charged
subject to the discretion of management. The increase in sales salaries in April is due to the
increase in the sales staff, from five to six persons.
41. In relation to the appropriate cost drivers, how should the company’s selling costs be
classified?
Sales salaries Commissions Shipping costs Advertising
a. Variable Variable Variable Variable
b. Fixed Variable Variable Fixed
c. Fixed Variable Mixed Fixed
d. Mixed Variable Mixed Fixed

42. Using the high-low method an d the algebraic equation y= a + bx (where y= total shipping
costs; a= total fixed costs; b=variable shipping cost per unit; and x= number of units sold), the
cost formula for the shipping costs may be expressed as:

a. y= 10,000 + 0.80x c. y= 10,000 + 0.80

b. y= 0.80 + 10,000x d. y= 10,000 + 5,600

43. If the company plans to sell 36,000 units in May and fixed costs will remain at the April level,
the total selling costs for May would be:
a. P122,600 c. P127,800
b. P125,800 d. P 81,000

Use the following information for items 44 to 46

Belle Company produces and sells rattan baskets. The number of units produced and the
corresponding total production costs for six months, which are representatives for the year, are
as follows:
Production
Month Units Produced
Costs
April 500 P4,000
May 700 8,000
June 900 6,000
July 600 7,500
August 800 8,500
September 550 7,250

44. Using the least-squares method, the variable production cost per unit is approximately

a. P 5 c. P0.27
b. P10 d. P3.74
45. Using the least-squares method, the monthly fixed production cost is approximately

a. P 1,500 c. P 4,350
b. P18,000 d. P52,200

46. If the high-low points method is used, the results when compared with those under the method
of least-squares, are
Variable Cost Per Unit Total Fixed Costs
a. Equal Equal
b. Higher by P1.26 Lower by P2,850
c. Lower by P1.26 Higher by P2,850
d. Higher by P5 Lower by P1,500

47. Graham Corp sells two products. Product A sells for P200 per unit, and has unit variable costs
of P150. Product B sells for P50 per unit, and has unit variable costs of P20. Currently,
Graham sells three units of product B for every two units of product A sold. Graham has fixed
costs of P760,000. What is Graham's break-even point in units?

a. 20,000 units of A and 20,000 units of B

b. 12,000 units of A and 8,000 units of B
c. 8,000 units of A and 12,000 units of B
d. 10,000 units of A and 10,000 units of B

48. Scorpio Company's activity for the first three months of 2020 are as follows:
Machine Hours Electrical Cost
January 2,100 P2,400
February 2,600 P2,900
March 2,900 P3,200

Using the high-low method, how much is the cost per machine hour?
a. P1.00 c. P1.13
b. P1.50 d. P0.89

49. Harry’s Seafood used high-low data from June and July to determine its variable cost of P15
per unit. Additional information follows:
Month Units produced Total costs
June 2,000 P40,000
July 1,000 25,000
 If Harry’s produces 2,300 units in August, how much is its total cost expected to be?
a. P10,000 c. P34,500
b. P49,500 d. P44,500
Use the following information for questions 50-52.

Month Miles Total Cost

January 80,000 P 96,000
February 50,000 80,000
March 70,000 94,000
April 90,000 130,000
50. In applying the high-low method, which months are relevant?

a. January and February

b. January and April
c. February and April
d. February and March

51. In applying the high-low method, what is the unit variable cost?

a. P1.44
b. P1.25
c. P1.60
d. Cannot be determined from the information given.

52. In applying the high-low method, what is the fixed cost?

a. P17,500 c. P14,000
b. P36,000 d. P50,000

Use the following information of Mayberry Corporation in answering questions 53-55:

Beginning inventory 1,000 units
Ending Inventory 6,000 units
Direct labor per unit P40
Direct materials per unit 20
Variable overhead per unit 10
Fixed overhead per unit 30
Variable selling and admin, costs per unit 6
Fixed selling and admin costs per unit 14

53. What is the value of the ending inventory using the absorption costing method?
a. P240,000 c. P600,000
b. P360,000 d. P420,000
54. Absorption costing income would be ____ variable costing income

a. P150,000 greater than c. P240,000 less than

b. P150,000 less than d. P240,000 greater than

55. What is the value of the ending inventory using the variable costing method?

a. P240,000 c. P350,000
b. P360,000 d. P420,000

56. Clarizza Company produces two products X and Y, which account for 60% and 40%,
respectively, of total sales. Contribution margin ratios are 50% for X and 25% for Y. Total fixed
costs are P120,000. What is Patricia´s break-even point in sales.

a. P300,000 c. P342,856
b. P328,767 d. P375,000

57. FLYHIGH Corporation produces a single product. The company manufactured 700 units last
year. The ending inventory consisted of 100 units. There was no beginning inventory. Variable
manufacturing costs were Php6.00 per unit and manufacturing costs were Php2.00 per unit.

What would be the change in the dollar amount of ending inventory if variable costing was
used instead of absorption costing?
a. Php800 decrease c. Php 0
b. Php200 decrease d. Php200 increase

Questions 61-62:
The following information has been provided by the Evans Retail Stores, Inc., for the first quarter
of the year:

Sales............................. P350,000
Variable selling expense......... . 35,000
Fixed selling expenses............ 25,000
Cost of goods sold................ 160,000
Fixed administrative expenses... 55,000
Variable administrative expenses 15,000

58. The gross margin of Evans Retail Stores, Inc. for the first quarter is:
a. P210,000. c. P220,000.
b. P140,000. d. P190,000.
59. The contribution margin of Evans Retail Stores, Inc. for the first quarter is:
a. P300,000. c. P210,000.
b. P140,000. d. P190,000.

60. For the most recent year, Atlantic Company's net income computed by the absorption costing
method was P7,400, and its net income computed by the variable costing method was
P10,100. The company's unit product cost was P17 under variable costing and P22 under
absorption costing. If the ending inventory consisted of 1,460 units, the beginning inventory
must have been:
a. 920 units. c. 2,000 units.
b. 1,460 units. d. 12,700 units.

61. Last year, Silver Company's variable production costs totaled P7,500 and its fixed
manufacturing overhead costs totaled P4,500. The company produced 3,000 units during
the year and sold 2,400 units. There were no units in the beginning inventory. Which of the
following statements is true?

a. Under variable costing, the units in the ending inventory will be costed at $4 each.
b. The net income under absorption costing for the year will be $900 lower than the net
income under variable costing.
c. The ending inventory under variable costing will be $900 lower than the ending inventory
under absorption costing.
d. Under absorption costing, the units in ending inventory will be costed at $2.50 each.

62. Indiana Corporation produces a single product that it sells for P9 per unit. During the first year
of operations, 100,000 units were produced and 90,000 units were sold. Manufacturing costs
and selling and administrative expenses for the year were as follows:

Fixed Costs Variable Costs

Raw materials ............ -- P1.75 per unit produced
Direct labor ............. -- 1.25 per unit produced
Factory overhead ......... P100,000 0.50 per unit produced
Selling and administrative 70,000 0.60 per unit sold

What was Indiana Corporation's net income for the year using variable costing?

a. P181,000. c. P281,000.
b. P271,000. d. P371,000.
63. Cay Company's fixed manufacturing overhead costs totaled P100,000, and variable selling
costs totaled P80,000. Under variable costing, how should these costs be classified?
Period costs Product costs
a. P0 P180,000
b. P80,000 P100,000
c. P100,000 P 80,000
d. P180,000 P 0

Jarvix Company, which has only one product, has provided the following data concerning its
most recent month of operations:

Selling price ............................ P111

Units in beginning inventory ............. 400
Units produced ........................... 8,800
Units sold ............................... 8,900
Units in ending inventory ................ 300

Variable costs per unit:

Direct materials ....................... P34
Direct labor ........................... 37
Variable manufacturing overhead ........ 3
Variable selling and administrative .... 9

Fixed costs:
Fixed manufacturing overhead ........... P 61,600
Fixed selling and administrative ....... 169,100

The company produces the same number of units every month, although the sales in units vary
from month to month. The company's variable costs per unit and total fixed costs have been
constant from month to month.

64. What is the unit product cost for the month under variable costing?
a. P83 c. P90
b. P74 d. P81

65. What is the unit product cost for the month under absorption costing?
a. P90 c. P81
b. P74 d. P83

66. What is the net income for the month under variable costing?
a. P25,900 c. P17,800
b. P 2,100 d. P18,500
67. What is the net income for the month under absorption costing?
a. P 2,100 c. P18,500
b. P25,900 d. P17,800

Use the following information for items 68 to 70:

Your classmates elected you as the chairman of the Reviewees Social Organization. One of the
major activities under your direction is the After-Board Dinner and Dance for your class. Renting
the hall at the nearby four-star hotel will cost P3,000. The hall will seat up to 300 people.
Decorations for the head table, which will seat 16 people, will cost P300. Decorations for each
table will cost P50, and each table will seat up to 8 people. For P350, you can hire the choir
director from one of the local high schools to play the piano and sing softly during the dinner. The
dance band (a prominent college student group) will cost P1,000. Typesetting and printing at least
300 copies of the program costs P410. The caterer offered a full-course meal for P200 per person,
but you must guarantee one week in advance. To help serve the meals, you have arranged for
the voluntary services of the review support staff. These people will be given a meal for their
trouble. You expect 25 people to help serve.
At the time the guarantee was required, you had 205 confirmed people attending the dinner,
including all non-reviewee special guests who will be seated on the head table, but not including
servers. You guarantee 224 people plus the servers. The servers will eat in an adjoining room,
which is furnished free of charge.
68. What is the estimated total cost of the After-Board Dinner and Dance for the number of people
guaranteed?

a. P56,260 c. P56,160
b. P51,100 d. P56,735

69. How much should each ticket be sold to recover the total costs, assuming that all seats will
be taken and that the non-reviewee special guests and servers will be given complimentary
tickets?
a. P250 c. P300
b. P270 d. P206.25

70. What selling price should be charged for each ticket if the group wants to earn a profit of
P19,760 that will be donated to the school for the acquisition and installation of a high-end
review equipment, considering the same assumption as in item 69?
a. P345 c. P301.25
b. P395 d. P365
SUGGESTED ANSWER KEY:
THEORIES
1. D. Only II
2. C. Controlling
3. D. A small number of suppliers make frequent deliveries of specific quantities thus avoiding
the buildup of large inventories of materials on hand.
4. D. All of the above
5. D. Deciding the best level of inventory to be maintained.
6. C. An increasing number of organizations are segregating managerial accountants in separate
managerial-accounting departments.
7. D. have a longer production cycle than its JIT competitors.
8. C. setting goals and objectives for an entity.
9. B. It is supportive in nature, providing service and assistance to other parts of the organization.
10. D. Total fixed costs remain constant and per-unit costs decrease
11. B. the benefit forgone by selecting one alternative instead of another.
12. A. Prime cost (NO), Product cost (YES)
13. B. The variable costing method is usually not used for external reporting purposes.
14. A. Submitted to the next higher managerial level
15. B. variable costs per unit are constant and fixed costs per unit fluctuate.
16. C. the cost of leasing a machine on a monthly basis that automatically tests hard disk
drives before they are installed in computers.
17. A. product cost
18. D. Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
19. B. net income will increase by the unit contribution margin for each additional item sold.
20. D. Graph 1
21. C. Rental costs of P5,000 per month plus P0.30 per machine hour of use
22. C. Straight-line depreciation on factory equipment
23. C. Total variable costs are constant within the relevant range
24. C. respond to changes in the level of business activity.
25. A. changes in costs and volume on a company’s profit.
26. B. Increase, Remain constant
27. C. Fixed costs are fixed in total, and variable costs are fixed per unit.
28. D. increase, decrease, or remain the same, depending upon the amounts of increase in
fixed cost and decrease in variable cost
29. C. the total fixed costs
30. C. fixed selling expenses.
31. C. always higher than manufacturing cost per unit for variable costing.
32. A. variable costing, companies charge the fixed manufacturing overhead as an expense
in the current period.
33. A. when units produced exceed units sold.
34. A. absorption costing
35. C. absorption costing, in order to increase net income.
 36. C. Increase , Decrease.
37. D. unit contribution margin divided by the selling price
38. B. Advertising cost, Discretionary fixed cost
39. D. Could earn a higher-than-expected profit even though the total number of units sold
was less than expected.
40. B. Demand is constant regardless of price
PROBLEMS
41. C. Fixed, Variable Mixed, Fixed
42. A. y= P10,000 + 0.80x
Shipping cost Sales in units
High (February) P38,000 35,000
Low (March) 32,400 28,000
Difference P5,600 7,000
Variable cost per unit = P5,600/7,000= P0.80
February March
Total cost P38,000 P32,400
Less variable cost
(Units sold x P0.80) 28,000 22,400
Fixed cost P10,000 P10,000
Cost function: y= P10,000 + 0.80x
43. C. P127,800
Sales salaries P51,000
Commissions (36,000 units x P10 x 5%) 18,000
Shipping costs (P10,000 +0.80[36,000]) 38,800
Advertising 20,000
Total selling costs in May P127,800
44. D. P3.74
Units produced (x) Total cost (y) xy 𝑥2
500 P4,000 P2,000,000 250,000
700 8,000 5,600,000 490,000
900 6,000 5,400,000 810,000
600 7,500 4,500,000 360,000
800 8,500 6,800,000 640,000
550 7,250 3,987,500 302,500
∑x= 4,050 ∑y= P41,250 ∑xy= P28,287,500 2
∑𝑥 = 2,852,500
n=6
∑y= na + b∑x ∑xy= a∑x + b∑𝑥 2
41,250= 6a + 4,050b 28,287,500= 4,050a +2,852,500b
(41,250= 6a + 4,050b) * 4050/6  - 27,843,750= 4,050a + 2,733,750b
443,750= 118,750b
b= 3.74
45. C. P4,350
∑y= na + b∑x
41,250= 6a + 4,050 (3.74)
41,250= 6a + 15,147
6a= 26,103
a= 4,350

46. B. Higher by P1.26 Lower by P2,850

Total cost units
High P6,000 900
Low 4,000 500
Difference P2,000 400
Variable cost per unit = P2,000/400= P5
High Low
Total cost P6,000 P4,000
Less variable cost
(Units sold x P5) 4,500 2,500
Fixed cost P1,500 P1,500
Comparison of results:
High-Low Least-squares Remarks
High-low result is higher
Variable cost per unit P5 P3.74
by P1.26
High-low result is lower
Fixed cost P1,500 P4,350
by P2,850

47. C. 8,000 units of A and 12,000 units of B

- Sol: The weighted average unit CM is [(P200 - P150) × 2/5] + [(P50 - P20) × 3/5] = P38.
Break-even point is P760,000/P38 = 20,000 units: 20,000 × 2/5 = 8,000 of product A, and
20,000 × 3/5 = 12,000 of product B.
48. A. P1.00
49. D. P44,500
50. C. February and April
51. B. P1.25
52. A. P17,500
53. C. P600,000
54. A. P150,000 greater than
55. D. P420,000
56. A. P300,000
57. B. Php200 decrease
58. D. P190,000
59. B. P140,000
60. C. 2,000 units
61. C. The ending inventory under variable costing will be $900 lower than the ending
inventory under absorption costing.
62. B. P271,000.
63. D. P180,000, P0
64. B. P74
65. C. P81
66. D. P18,500
67. D. P17,800
68. C. P56,160
Fixed costs:
Rent- hall P3,000
Decoration- head table 300
Singer 350
Dance band 1,000
Program printing cost 410 P5,060
Variable costs
Decoration tables:
Number of persons guaranteed 224
Less non-reviewee special guests 16
Divide by number of persons to occupy tables 208
Number of persons per table 8
Number of tables 26
Multiply Décor cost per table P50 P1,300
Meals P49,800 51,100
Total costs P56,160
69. B. P270
Total costs P56,160
Divide by paying guests:
Number of persons guaranteed 224
Less non-reviewee special guests 16 208
Selling price to break-even P270
70. D. P365
Total cost P56,160
Add desired profit 19,760
Total sales 75,920
Divide by number of paying guests 208
Selling price P365