CONCEPCION HOLY CROSS COLLEGE

Minane, Concepcion, Tarlac

STRATEGIC COST MANAGEMENT

Midterm Examination
1st Semester AY 2022 – 2023

Name: FELICIANO, Bryan M, Score: _________________

Class Schedule: __Sat: 10 AM – 1 PM_ Course/Year/Section _BSA/3rd Year/3A___
Instructor: Nicole D. Sanguyu Date:

GENERAL INSTRUCTION: Provide your answers below each item. Submit your answers in
both Word and PDF format to nsanguyuofficial@gmail.com with the file name MIDTERM_LAST
NAME_FIRST NAME and email subject AC8_MIDTERM EXAM_LAST NAME_FIRST NAME.

You may opt to write your answers in yellow paper or bond paper, have a clear photo, and
attach it in your word file. Write clearly and legibly.

1. In your own understanding, explain the primary objective of using a balanced scorecard
(3 PTS)
The primary objective of the balanced scorecard will be so useful because it
gives you the information you need to operated your organization better
then before.
2. Balanced scorecard differs from company to company. Explain. (3 PTS)
Not every company has the same goal or happenings inside their company
even though they are using the same method that’s why it differs from
company to company.
3. Explain how cost management practices change over the product’s sales life cycle.
(3 PTS)
In practice of cost management it can change the product’s sale life cycle
because with the help of cost management you can minimize the cost of the product or it
can improve the marketing of the product.
4. Aragon Manufacturing Corporation has the following information:

Move time 0.3 days

Inspection time 0.7 days
Process time 3 days
Queue time 4 days
Wait time 9 days
a. Compute the throughput time or velocity of production. (2 PTS)
3 days + 0.7 days + 0.3days + 4 days = 8 days
b. Compute the manufacturing cycle efficiency. (2 PTS)
3days/8 days = 0.37%
c. What percentage of the production time is spent in non-value-added activities?
(2 PTS) 0.63% since the MCE is 0.37%
d. Compute the delivery cycle time. (2 PTS)
9 days + 8 days = 17 days
5. High-Tech Corporation manufactures a device called Machine X that is used in the
electronics industry. High-Tech designed the machine for 2025 to be distinct compared
to its competitors. High-Tech Corporation presents the following for 2024 and 2025:

2024 2025
Units of Machine X produced and sold 550 570
Selling price P 60,000 P 61,000
Direct materials (in kg) 420,000 432,000
Direct materials cost per kg P 10.50 P 12
Manufacturing capacity in units 600 600
Total conversion costs P 7,200,000 P 7,320,000
Conversion costs per unit of capacity P 12,000 P12,200
Selling and customer service capacity 300 customers 285 customers
Total selling and customer service costs P 4,500,000 P 4,104,000
Selling and customer service capacity per customer P 15,000 P 14,400
Design staff 25 25
Total design costs P 4,950,000 P 5,000,000
Design costs per employee P 198,000 P 200,000
No defective machines have been produced, and direct materials costs per unit of Machine X
are targeted to be reduced. Selling and customer service costs depend on the number of
customers that can be supported, and not the actual number of customers served. 225
customers are served in 2024 while 242 customers in 2025. The design staff and costs have no
direct relationships with the quantity of machines produced or to the number of customers to
whom Machine X is sold.

a. Calculate the operating income of High-Tech Corporation in 2024 and 2025. (8 PTS)
2024 2025
Revenue(60k*550)(61k*570) 33,000,000 34,770,000
Costs
Direct Material cost (10.50*420k)(12*432K) 4,410,000 5,184,000
Manufacturing Cost (12k*600)(12,200*600) 7,200,000 7,320,000
Selling & Customer Service cost
(15k*300)(14,400*285) 4,500,000 4,104,000
Design Cost (198k*25)(200k*25) 4,950,000 5,000,000

Total Cost 21,060,000 21,608,000

Operating Income 11,940,000 13,162,000

Change in operating Income 1,222,000

b. Calculate the growth components that explain the change in operating income from 2024
to 2025. (12 PTS)
Revenue effect ( actual units of output sold in 2025 - Actual sold in 2024)
(570 - 550) * 60k = 1,200,000 F

The cost effect of growth components are :

Direct material cost (435,272.72 - 420k)* 10.50 =160,363.56
Manu Cost 0
Selling and customer service costs 0
Design costs 0
Cost effect of growth component 160,363.56

Summary
Revenue effect of growth component 1,200,000F
Cost effect of growth component 160,363.56
Increase in operating income due to growth component 1,039,636.56
 c. Calculate the price-recovery components that explain the change in operating income
from 2024 to 2025. (12 PTS)

(61k - 60k)*570 = 570,000

Direct Material Cost (12-10.50)*435,272.72 = 652,909.08

Manu conversion (12,200-12,000)*600 = 120,000
Selling and customer service costs (14,400-15,000)*300 = (180K)
Design cost (200k-198k)*25 = 50,000
Total cost effect of price recovery (72,929.05)
d. Calculate the productivity components that explain the change in operating income from
2024 to 2025. (6 PTS)
Direct Material (432k-435272.72)*12 =-39272.04
Manu Cost (570-570)*12200 =0
Selling and Customer Service (285-300)*14,400=-216,000
Design Cost (25-25)*200k = 0
Total -255,272

e. Illustrate the growth, price-recovery, and productivity components that explain the
change in operating income from 2024 to 2025. (4 PTS)

Revenue 33,000,000 1,200,000 570,000 34,770,000

Costs 21,060,000 15,272.72 642,909.08 -255,272 12,796,546.2
OI 11,940,000 1,184,727.28 -72,909.08 -255,272 21,973,453
6. What is the difference between the delivery cycle time and the throughput time? What
four elements make up the throughput time? Into what classes can these four elements
be placed? (3 PTS)
The difference between the 2 is in delivery time where the time starts after the item is
shipped to the time the products is delivered, where in throughput time where the
time it counts is turning the raw mateiral is in to product.

7. How would you interpret a manufacturing cycle efficiency of 0.40? (3 PTS)

In the 0.40 MCE means that 96% is being spent on activities that do not add value
to the product .
8. Identify the corresponding sales life-cycle phase/stage for each of the market
characteristics below: (1 PT EACH)
a. Decline in sales – Maturity
b. Advertising – Product Introduction
c. Boost in production – Maturity
d. Stabilized profits – Maturity
e. Competitor’s entrance into market – Product Introduction
f. Market research – Product Introduction
g. Market saturation – Maturity
h. Start production – Product Introduction
i. Termination of product – Maturity
j. Large increase in sales – Growth

Prepared by: Reviewed by:

NICOLE D. SANGUYU, LPT MR. JONATHAN PACIFICO

Subject Instructor Program Chair

Noted by:

DR. LYLANI S. CLARO

College Dean