Answer sheet

1. D
2. B
3. B
4. A
5. B
6. B
7. C
8. C
Solution:

Direct materials P5,000

Indirect materials 2,000
Direct labor 6,000
Indirect labor 1,000
Factory utilities 4,000
Overtime pay – factory workers 1,500
Rework cost on defective products 2,500
TOTAL PRODUCT COST P22,000

9. B
Solution:

Advertising costs P8,000

Sales commissions 12,000
Depreciation of administrative building 3,000
Depreciation – delivery equipment 2,000
Salaries of administrative personnel 20,000
TOTAL PERIOD COST P45,000

10. D
11. C
12. B
13. C
14. A
15. B
16. B
17. A
Solution:
CM/u = P25 – P15 = P10 per unit
CMR = P10 / P25 = 40%
18. C
Solution:
BEPu = P100,000/10 = 10,000 units
BEPP = P100,000/40% = P250,000
19. C
20. A
21. A
22. D
23. D
Solution:

Quantity Price Total

Actual 6,900 P13.00 P89,700
Standard 6,300 P12.50 78,750
Variance 600 U P0.50 U P10,950 unfavorable

24. B
Solution:
Efficiency or Usage Variance = Difference in Quantity x Standard price
= 600 unfavorable x P12.50
= P7,500 unfavorable
25. A
Solution:
Spending or Price Variance = Difference in Price x Actual Quantity
= P0.50 unfavorable x 6,900 units
= P3,450 unfavorable
26. D
27. D
28. D
29. C
Solution:
Total whole-life cost per unit
(P5,600,000 / 160,000 units) P35.00
x 130%
Unit selling price P45.50
30. A
31. A
Solution:

Prime costs P400,000

Straight-line depreciation of factory 60,000
equipment
Straight-line depreciation of factory building 40,000
Janitor’s salaries for cleaning factory premises 12,000
Inventoriable cost P512,000

32. A
Solution:
 Sales P15,000
Less variable costs:
Manufacturing
(600 boxes x P10.50) P6,300
Selling and administrative
(600 x P1.80) 1,080 7,380
Contribution margin P7,620
Less fixed costs:
Manufacturing overhead P4,125
Selling and administrative 1,320 5,445
Income – variable costing P2,175

33. C
34. A
35. D
36. A
37. D
38. C
Solution:

Sales (135,000 units x P13.50) P1,822,500

Less: Variable costs (135,000 x P8.20) 1,107,000
Contribution margin 715,500
Less: Fixed costs 335,000
Operating income – variable costing P380,500
39. D
Solution:

Sales (135,000 units x P13.50) P1,882,500

Less: COGS (135,000 x P8.30*) 1,120,500
Gross income 702,000
Less selling and administrative expenses:
Variable (135,000 x P1.20) P162,000
Fixed 140,000 302,000
Operating income – absorption costing P400,000
*Product cost per unit:
Materials P3.50
Labor 2.50
Variable FOH 1.00
Fixed FOH (P195,000 / 150,000 units) 1.30
TOTAL P8.30
40. A
Solution:

Absorption Costing Variable Costing

Materials P3.50 P3.50
Labor 2.50 2.50
 Variable factory overhead 1.00 1.00
Fixed factory overhead 1.30 ------
Product cost per unit P8.30 P7.00
x Units in the ending
inventory
(Productions – Sales)
(150,000 – 135,000) 15,000 15,000
Cost of ending inventory P124,500 P105,000

41. A
42. C
43. A
44. C
45. A
46. D
47. A
48. B
49. C
50. D
51. C

Solution:

Cost ofgoods sold

Merchandise inventory turnover =
Average inventory
P 80,0000
¿
( P 24,000∗+ P 16,000)÷ 2
¿ 4.0׿

* Computation on beginning inventory:

COGS P80,000

Add: Ending inventory 16,000

Total P96,000

Less: Purchases 72,000

Beginning inventory P24,000

52. A
Solution:
 Current assets
Current ratio=
Current liabilities
Current assets
3.5=
P 150,000
Current asset=P 150,000 x 3.5=P 525,000

Quick assets
Quick ratio=
Current liabilities

Current assets
3=
P 150,000

Quick assets=P 150,000 x 3=P 450,000

Current assets P525,000

Less: Quick assets 450,000
Inventory, end P 75,000

53. D
Solution:
Cost ofgoods sold
Inventory turnover =
Average inventory
Cost ofgoods sold
8=
(P125,000 ∗+ P 75,000∗ ∗) ÷ 2

COGS=P 100,000 x 8=P 800,000

54. A
55. A
Solution:
In 2022 the price level index increased from 300 to 320. Sales must increase to 320,000 to achieve a zero
real growth rate.
Thus, to achieve a 30% real growth rate, the sales must be:
320,000 x 130% = 416,000

56. A
Solution:
DOL = Contribution margin / (CM - fixed costs)
= P10M/(P10M - P6M)
= P10M/P4M
= 2.5

57. D
Solution:
DFL = EBIT / (EBIT - Interest)
= P4M / (P4M - P1M)
= P4M/P3M
= 1.33

58. B
Solution:
DTL = DOL x DFL
= 2.5 x 1.33
= 3.325

59. C
Solution:
Initial investment is 420,000.

Cash inflows:
Year 1-6 (50k x 6) 300,000
Year 7-8 (60k x 2) 120,000
Total 420,000

Therefore, the payback period is 8 years.

60. B
Solution:
Average daily credit sales P 5,000
Multiply by: Average collection period 20 days
Average A/R balance P100,000

61. D
Solution:

Operating expenses P204,800

Prepaid expenses, Jan. 1, 2021 (12,000)
Accrued expenses payable, Jan. 1, 2021 33,600
Prepaid expenses, Dec. 31, 2021 16,800
Accrued expenses payable, Dec. 31, 2021 (28,000)
Cash payment for OE P215,200

62. A
Solution:

EOQ=
√ 2 aD
k
=
√
2(P 38.40)(24,000)
P 11.25
=400 units
63. C
64. D
65. A
66. D
67. D
68. C
69. B
70. A