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QUEZON CITY POLYTECHNIC UNIVERSITY

673 Quirino Highway, San Bartolome, Novaliches, Quezon City

FINAL EXAM IN MANAGERIAL ACCOUNTING

NAME ____________________ Year and Section______ TEST 1 - FILL IN THE BLANKS (20 points)

1. _________________ Are costs that will not be incurred if an activity is suspended. 2.

_________________ Are the activities that result in changes in the size and compositionof thecontributed
equity and borrowings of the entity.
3. _________________ Is the study of relevant costs that are associated with a decision amongpossible courses of
action so that the most appropriate alternative may be selected. 4. _________________ The excess of current
assets over current liabilities 5. _________________ Costs that tend to remain uniform per unit but which vary in
total indirect proportion to changes in level of activity or sales.
6. _________________ Are expected future costs that will differ among alternatives. 7. _________________
Measures the number of years to recover the amount of investment. 8. _________________ Measures ability
to meet currently maturing obligations existing fromcurrent assets.
9. _________________ Are the entity’s acquisition and disposal of security investments, non- current
assets, etc.
10. ________________ Is the difference in cost between two alternatives.
11. ________________ The additional relevant financial information that follow the statements which comprise a
summary of significant accounting policies and other explanatory inputs. 12. ________________ Are costs
required for immediate or near future cash outlays. 13. ________________ That tend to remain constant in total
within a given period of time andover a wide range of activity.
14. ________________ The excess of actual or budgeted sales over break-even sales. 15. ________________
Are historical (past) costs incurred as a result of past decisions andnot relevant in current decision making.
16. ________________ Excess of sales over variable costs or sales revenue minus variable costs. 17.
________________ Are hypothetical costs representing the cost or value of a resource measured by its use value.
This cost does not involve cash outlay and are not recorded inthebook but relevant in decision making.
18. ________________ Are the foregone benefits from an alternative not selected. This does not require an
actual cash outlay.
19. ________________ Is a measure of how sensitive net operating income is to percentagechanges in
sales. It acts as a multiplier.
20. ________________ Provides a more severe test of immediate solvency. Measures ability todischarge
currently maturing obligations based on most liquid assets.
TEST II – MULTIPLE CHOICE : (2 pts each = TOTAL 22)

Write the letter of the correct answer before the number.Show your computations (NOERASURES)

1. During October 2020, Adam Company had sales of P5,000,000 variable costs of P3,000,000andfixed costs
amounting to P1,500,000 for product M. Assume that cost behaviour and unit sellingprice unchanged during
November 2020. In order for Adam to realize operating income of P300,000 from product M for November,
sales would be
a) P3,750,000
b) P4,050,000
c) P4,500,000
 d) P4,800,000
2. Wilson Company prepared the following preliminary forecast concerning product Gfor 2021assuming no
expenditures for advertising;
Selling price per unit P10.00 Variable costs 600,000 Unit sales 100,000 Fixed costs
300,000

Based on a market study in December 2020, Wilson estimated that it could increase the unit selling price by
15% and increase the unit sales by 10% if P100,000 were spent on advertising. Assuming that Wilson
incorporates these changes in its 2021 forecast, what should be theoperating income from product G?
a) P175,000
b) P190,000
c) P205,000
d) P365,000
3. Singer, Inc. Sells product R for P5 per unit. The fixed costs amount to P210,000 and the variablecosts are 60% of
the selling price. What would be the amount of sales if Singer is to realizeaprofit of 10% of sales?
a) P700,000
b) P525,000
c) P472,500
d) P420,000
4. Lindsay Corporation reported the following results from sales of 5,000 units of product Afor themonth of
September 2020:
Sales P200,000 Fixed costs P60,000 Variable costs 120,000 Operating income 20,000

Assume that Lindsay increases the selling price of product A by 10% on October 1, 2021. Howmany units of
product A would have to be sold on October 2021 in order to generate anoperating income of P20,000?
a) 4,000
b) 4,300
c) 4,500
d) 5,000

5. Warfield Company is planning to sell 100,000 units of Product T for P12 a unit. The fixed costs amount to
P280,000. In order to realize a profit of P200,000 what would be the variable costs?a) P480,000
b) P720,000
c) P900,000
d) P920,000
6. Anthony Company has projected costs of goods sold of P4,000,000 including fixed costs of P800,000.
Variable costs are exppected to be 75% of net sales. What will be the projectedsales?a) P4,266.667
b) P4,800,000
c) P5,333,333
d) P6,400,000
7. Day Company is a medium sized manufacturer of lamps. During 2020 a new line called ‘Twilight” was made
available to Day’s customers. The break even point for the sales of Twilight is P400,000 with a contribution
margin of 40%. Assuming that the operating profit for theTwilight line for 2020 amounted to P200,000, total
sales for 2020 amounted to? a) P600,000
b) P840,000
c) P900,000
 d) P950,000
Item 8, 9 and 10 are based on the following information:

FULTON COMPANY
Financial Project for Product X
For the year ended, December 31, 2020
Sales ( 100 units at P100) P10,000
Manufacturing Costs
Direct Labor P1,500
Direct Materials 1,400
Variable Factory overhead 1,000
Fixed factory overhead 500 4,400
Selling Expenses:
Variable P 600
Fixed 1,000
Administrative Expenses
Variable 500
Fixed 1,000 3,100
Operating Income P 2,500
8. How many units of Product X would have to be sold to break even? a) 50
b) 58
c) 68
d) 75
9. What would be the operating income be if sales increased by 25% a) P3,125
b) P3,750
c) P4,000
d) P5,000
10. What woud be the sales at the break even point if fixed factory overhead increases by P1,700a) P6,700
b) P8,400
c) P6,667
d) P9,200
11. At the break even point of 400 units sold, the variable costs were P400 and the fixed costs wereP200. What
will the 401
st
unit sold contribute to profit before income taxes?
a) P0.50
b) P1.00
c) P1.50
d) P2.00
PROBLEM 1 - Special Order (10 points)
Sport Company produces a ball bearing used in bantam cars. Each ball bearing sells for P45 and thecompany sells
approximately 500,000 ball bearings each year. Unit cost data for 2020 given below: Fixed Variable Fixed Variable Direct
material - P12.00 Factory overhead P8.00 P4.00 Direct labor - 10.00 Distribution costs 2.00 4.00 Sport has received an
offer from a foreign buyer to purchase 50,000 ball bearings. Domestic sales wouldnot be disturbed by this transaction.
The offer price is P37.00. If the offer is accepted, variable distribution costs will increased P2.00 per ball bearing for
shipping, insurance and import duties. TheCompany has idle capacity to produce the offer.
REQUIRED:
 1. What is the relevant unit cost to this special order? (5 pts)
2. Determine the net effect of the special order. (5 pts)

PROBLEM 2 (MAKE OR BUY) (15 PTS)

Makebuy company has 15,000 hours of idle capacity. They need 20,000 units of a component part usedin its
products lines It is estimated that each unit will take one half machine hour for production. Thefollowing
information is available:
Cost to make the parts
Materials P14
Direct labor 18
Factory overhead (75% of direct labor cost per unit)
Variable factory overhead (40% of factory overhead per unit)

Cost to buy the parts per unit from the supplier P45

If Makebuy Company buts the parts rather than producing them, it will save 60% of fixed overheadcost per unit.
REQUIRED:
1. Determine the relevant unit costs
2. Determine the relevant total costs and differential costs
3. Should Makebuy Company manufacture the parts, or should it buy them fromthe outsidesupplier?
PROBLEM 3 (SELL OR PROCESS) 15 pts

Selpro company uses a joint process to produce Products A, B, and C. Joint production costs for 2020were
P200,000 and are allocated using the relative-sales value at split off method.

Each product may be sold at its split-off point or processed further. Additional processing costs areentirely
variable. Relevant data are given below.
Sales Value Additional Final
At split off processing costs Sales Value
Product
A P100,000 P40,000 P200,000 B 200,000 50,000 240,000 C 40,000 60,000 80,000 P340,000 P150,000
P520,000
REQUIRED:

1. To maximize profit, which product or products should be sold at split-off point and whichproduct or products
should be processed further?
2. If the alternative were either to sell all at split-off point or to process further all the products., which
alternative would you recommend?