UNIVERSITY OF BAGUIO

School of Business and Administration

Graduate Program

MBA ADM3: Managerial Accounting

Midterm Examination

Essay: Explain the following questions briefly but concise with illustration/diagrams and
explanations whenever fit or possible.

1. What is the relationship among Financial, Cost and managerial Accounting? How
would one differentiate Financial Accounting from Management Accounting? Explain.
(20 points)

2. How are accounting data used for planning and controlling purposes? Why would
some say that accounting is a language of business? Explain. (20 points)

3. How are cost classified and differentiated from each? Why is there a need to
differentiate the cost acquired by management? Explain and illustrate your answer.
(20 points)

4. Green thumb makes a small plant stand that sells P25 each. The company’s annual
level of production and sales is 120,000 units. In addition to P430,500 of fixed
manufacturing overhead and P159,050 of fixed administrative expenses, the following
per-unit cost have been determined for each plant stand. Direct materials - P6.00,
direct labor – P3.00, variable manufacturing overhead P0.80, variable selling expense
– P2.20. Is there a need to determine the breakeven, margin of safety and degree of
operating leverage for green thumb? Explain why and why not and support your
answers. (20 points)

GREEN THUMB
Number
120,000
of Units:

Total Per Unit

Sales (units) ₱3,000,000.00 ₱25.00

Cost of goods sold ₱1,080,000.00 ₱9.00

Selling expenses ₱264,000.00 ₱2.20

Manufacturing overhead ₱96,000.00 ₱0.80

Variable expenses ₱1,440,000.00 ₱12.00

Contribution margin ₱1,560,000.00 ₱13.00

 Administrative expenses ₱159,050.00

Manufacturing overhead expenses ₱430,500.00

Fixed Expenses ₱589,550.00

Net income ₱970,450.00

Contribution Margin Ratio 52%

Variable Margin Ratio 48%

Break-even sales ₱1,133,750.92

Break-even point 45350

Margin of Safety ₱1,866,249.08

Margin of Safety Percentage 62.21%

Degree of Operating Leverage (DOL) 1.61

Yes, (kaw na maglagay, basta ang gist is lagay mo benefits ng knowing the
breakeven and margin of safety eme)

5. Illustrate how your knowledge/experience how incremental analysis for decision is

being used in business. How will the knowledge and capability of incremental analysis
make you better? Explain. (20 points)

Prepared by: Dr. Candido M. Perez, CPA

Professor in charge