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THEORY 4. All of the following are elements of responsibility accounting except

Basic concepts
1. Richmond Enterprises is reviewing its policies and procedures in an effort to enhance goal
congruence throughout the organization. The processes that are most likely to encourage this
behavior are
A. Reciprocal cost allocation, zero-base budgeting, and standard costing.
B. Cost-based transfer pricing, imposed budgeting, and activity-based costing. 5. Cost centers are
C. Cost-based transfer pricing, management-by-objective performance evaluation, and
participatory budgeting.
D. Participatory budgeting, reciprocal cost allocation, and management-by-objective
performance evaluation.
A. Control reports.
B. Chart of accounts classification.
C. Responsibility center definition.
D. Planning systems and systemic approaches.
A. Amounts of expenditure attributable to various activities.
B. Units of product or service for which costs are ascertained.
C. Functions or locations for which costs are ascertained for control purposes.
D. A section of an organization for which budgets are prepared and control exercised.

2. An effective management by objectives (MBO) program can increase organizational 6. Which of the following types of responsibility centers has accountability for revenues?
effectiveness. Which of the following contributes to an effective MBO program? A. Cost centers and investment centers. C. Expense and investment centers.
A. Emphasis on "should do" rather than "must do" objectives. B. Cost centers and profit centers. D. Profit centers and investment centers.
B. Objectives that are quantified, clearly measurable, and state target dates for completion.
C. Managers who hold their subordinates strictly accountable for achieving their objectives 7. A formal report in responsibility accounting is covered by the guideline of
precisely as they have been written. A. GAAP C. PICPA
D. All of the answers are correct. B. Management D. SEC

3. Which of these assertions refer to responsibility accounting? Responsibility reporting system

1. Costs and revenues are identified with individuals for better control and performance 8. A responsibility reporting system
appraisal. A. Does not permit comparative evaluation of responsibility centers.
2. Performance reports under this concept includes variances of actual amounts versus plan. B. Does not permit management by exception at each level of responsibility.
3. Third parties who are external users are the main recipients of information. C. Begins with the highest level of responsibility and moves downward to the lowest level.
4. Only expenses which are directly under the control of managers should ideally be charged D. Involves the preparation of a report for each level of responsibility shown in the company’s
to them. organization chart.
A. Assertions 1 and 2 only. C. Assertions 1, 2 and 4 only.
B. Assertions 1 and 4 only. D. All four assertions. 9. Which of these are among the qualities of a good report under the concept of responsibility
accounting?
1. It should be consistent in form and content for each issue.

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2. It should be prompt, timely and regularly issued. cannot influence, and seeks to arrest risks and sensitivity factors.
3. It should easily be understood by users as to the contents, their significance and how to
use them. 13. The following costs may be controllable at certain levels within a manufacturing concern,
4. It should be able to pinpoint who is to blame as a pre-requisite to explain variances. except:
5. It should highlight efficiencies and inefficiencies. A. Insurance costs of plant and equipment.
6. It should be comparative and analytical. B. Power rates imposed by government agency.
7. It should be comprehensive as to include all details that can possibly be contained in the C. Basic salary of permanent manufacturing personnel.
report. D. Monthly maintenance cost of equipment covered by an annual contract.
A. All except 4 and 7. C. Statements 1, 2, 3, 4 and 7 only.
B. All except 4, 5 and 6. D. All seven statements. 14. Managers are most likely to accept allocations of common costs based on
A. Ability to bear. C. Cause and effect.
10. In responsibility accounting, there are two (2) types of reports distinguished as to goals and B. Benefits received. D. Fairness.
objectives
A. Horizontal reporting and vertical reporting. Performance evaluation
B. Trends analysis reporting and comparative reporting. 15. This practice is irrelevant in evaluating performance of an activity
C. Operations reporting and financial condition reporting. A. Planning for future activities
D. Responsibility performance reporting and information reporting. B. Fixed budgets for mixed costs
C. Flexible budget for mixed costs
11. Which of the following items of cost would be least likely to appear in a performance report D. Difference between planned cost and actual
based on responsibility accounting technique for the supervisor of an assembly line in a large
manufacturing situation? 16. The following information pertains to Bala Co. for the year ended December 31, 1991:
A. Direct labor. C. Repairs and maintenance. Sales $600,000
B. Materials. D. Supervisor’s salary. Income 100,000
Capital investment 400,000
12. Among the management accounting concepts is controllability which means (3) Which of the following equations should be used to compute Bala’s return on investment?
A. Accounting information must be of such quality that confidence can be placed in it. A. (4/6) x (1/6) = ROI C. (6/4) x (1/6) = ROI
B. Management accounting must ensure that flexibility is maintained in assembling and B. (4/6) x (6/1) = ROI D. (6/4) x (6/1) = ROI
interpreting information.
C. It is necessary at all times to identify the responsibilities and key result areas of the 17. Maplewood Industries wants its division managers to concentrate on improving profitability.
individuals within the organization. The performance evaluation measures that are most likely to encourage this behavior are
D. Management accounting identified elements or activities which management can or A. Dividends per share, return on equity, and times interest earned.

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B. Turnover of operating assets, gross profit margin, and return on equity. B. increase sales and expenses by the same percentage
C. Return on operating assets, the current ratio, and the debts-to-equity ratio. C. decrease sales and expenses by the same percentage
D. Turnover of operating assets, dividends per share, and times interest earned. D. increase sales dollars by the same amount as total assets
18. Compared to a jewelry store, a supermarket has E. decrease sales and expenses by the same dollar amount
A. Higher margin and higher turnover. C. Lower margin and higher turnover.
B. Higher margin and lower turnover. D. Lower margin and lower turnover. 23. ABC Corp. is composed of three operating divisions. Overall, the ABC Corp. has a return on
investment of 20 percent. Division A has a return on investment of 25 percent. If ABC Corp.
19. Presently, the Alligator Division of Animal Crackers Co. has a profit margin of 30 percent. If evaluates its managers on the basis of return on investment, how would the Division A
total sales rise by $100,000, both the numerator and the denominator of the profit margin will manager and the ABC Corp. president react to a new investment that has an estimated return
increase. The net result will be on investment of 23 percent?
A. no change in the profit margin ratio. A. B. C. D.
B. a decrease in the profit margin ratio to below 30 percent. Division A manager Accept Accept Reject Reject
C. an increase in the profit margin ratio to above 30 percent. ABC Corp. president Accept Reject Accept Reject
D. a change in the profit margin ratio that cannot be determined from this information.
24. Residual income is a better measure for performance evaluation of an investment center
20. A subunit of an organization is evaluated on the basis of its ROI. If this subunit's sales and manager than return on investment because
expenses both increase by $30,000, how will the following measures be affected? A. Returns do not increase as assets are depreciated.
A. B. C. D. B. Only the gross book value of assets needs to be calculated.
ROI Increase Indeterminate No change No change C. The problems associated with measuring the asset base are eliminated.
Asset turnover Increase Increase Increase Decrease D. Desirable investment decisions will not be neglected by high return divisions.
Profit margin Increase Decrease Decrease No change
25. Delmar Corporation is considering the use of residual income as a measure of the
performance of its divisions. What major disadvantage of this method should the company
21. Which combination of changes in asset turnover and income as a percentage of sales will
consider before deciding to institute it?
maximize the return on investment?
A. opportunities may be undertaken which will decrease the overall return on investment.
A. B. C. D. B. this method does not make allowance for difference in the size of compared divisions.
Asset turnover Increase Increase Decrease Decrease C. residual income does not measure how effectively the division manager controls costs.
Income as a percentage of sales Increase Decrease Increase Decrease D. the minimum required rate of return may eliminate desirable opportunities from
consideration.
22. Which of the following changes would NOT change return on investment (ROI)?
A. increase total assets 26. Power Corporation has two divisions, X and Y, Division X is evaluating a project that will earn a

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return which is more than the imputed interest charged for the invested capital, but less than A. the lowest outside price for the good.
the division’s historical return on invested capital. Division Y is considering a project that will B. incremental costs in the selling division.
earn a rate of return which is greater than the division’s historical return on invested capital, C. the extent of idle capacity in the buying division.
but less than the imputed interest charge for invested capital. If the corporate objective is to D. negotiations between the buying and selling division.
maximize residual income, the division should decide as follows:
A. Y accept and X accept. C. Y reject and X accept.
B. Y accept and X reject. D. Y reject and X reject.
27. A prospective project under consideration by P Division of C Co. has an estimated residual
income of a negative $20,000. If the project requires an investment of $400,000, the
A. company's target rate is 15 percent.
B. project's return on investment is zero.
C. project generates a negative return on investment.
D. project's return on investment is 5 percent less than the company's target rate.

28. Suppose a manager is to be measured by residual income. Which of the following will not result
in an increase in the residual income figure for this manager, assuming other factors remain
constant?
A. An increase in sales.
B. A decrease in expenses.
C. A decrease in operating assets.
D. An increase in the minimum required rate of return.

Transfer pricing
29. In a decentralized company in which divisions may buy goods from one another, the
transfer-pricing system should be designed primarily to
A. Increase in the consolidated value of inventory.
B. Allow division managers to buy from outsiders.
C. Minimize the degree of autonomy of division managers.
D. Aid in the appraisal and motivation of managerial performance.

30. The minimum potential transfer price is determined by

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31. The maximum of the transfer price negotiation range is

A. set by the selling division. PROBLEMS
B. determined by the buying division. Segmented Income Statement
C. influenced only by internal cost factors. 1. Mr. Jun Iglesias is the manager of Profit Center #5. His unit reported the following the period
D. negotiated by the buying and selling division. just ended:
Contribution margin: P350,000
32. The optimal transfer price from the viewpoint of the corporation is Period expenses:
A. variable cost Manager’s salary P100,000
B. absorption cost plus markup Depreciation expense 40,000
C. variable cost plus opportunity cost Allocated administrative costs 25,000 165,000
D. absorption cost plus opportunity cost Profit center # 5 income P185,000
E. absorption cost plus selling expenses Of the foregoing, in all likelihood, Mr. Iglesias controls
A. P100,000 C. P185,000
33. To avoid waste and maximize efficiency when transferring products among divisions in a B. P165,000 D. P350,000
competitive economy, a large diversified corporation should base transfer prices on
A. full cost. C. production cost. 2. The receipt of raw materials used in the manufacture of products and the shipping of finished
B. market price. D. variable cost. goods to customers is under the control of the warehouse supervisor, whose time is spent
approximately 60% on receiving and 40% on shipping activities. Separate staffs for these
Gross profit analysis operations are employed. The labor-related costs for the warehousing function are as follows:
34. In gross profit analysis, if the cost price variance is zero, such variance indicates that (3) Warehouse supervisor’s salary $ 40,000
A. Manufacturing management was able to control production costs at budgeted costs. Receiving clerk’s wages 75,000
B. Manufacturing management was unable to keep production costs at budgeted costs. Shipping clerk’s wages 55,000
C. Manufacturing management was able to control production cost below budgeted costs. Employee benefit costs (30% of wage and salary costs) 51,000
D. Manufacturing management was not able to control production at budgeted costs but
$221,000
purchasing was able to keep at budgeted price.
The company employs a responsibility accounting system for performance reporting purposes.
35. If a company has favorable sales volume variance, its Costs are classified as period or product costs. What is the total of labor-related costs
A. Income will be positive. reported as product costs under the control of the warehouse supervisor?
B. Sales price variance is also favorable. A. $97,500 C. $130,000
C. Total contribution margin will be more than planned. B. $128,700 D. $169,000
D. Total contribution margin might be less than planned.

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3. Hatch Company has two divisions, O and E. During the year just ended, Division O had a the year just ended a contribution margin of $50,000 for Plant A. Plant B had sales of
segment margin of $9,000 and variable costs equal to 70% of sales. Traceable fixed costs for $200,000 and a contribution margin ratio of 30%. Net income for the company was $20,000
Division E were $19,000. Hatch Company as a whole had a contribution margin of 40%, a and traceable fixed costs for the two plants totaled $50,000. Johnson Company's common
segment margin of $25,000, and sales of $200,000. Given this data, the sales for Division E fixed costs for last year were:
for last year were: A. $40,000. C. $70,000.
A. $50,000. C. $116,667. B. $50,000. D. $90,000.
B. $87,500. D. $150,000.
8. Denner Company has two divisions, A and B, that reported the following results for October:
4. Leis Retail Company has two Stores, M and N. Store N had sales of $180,000 during March, Division A Division B
a segment margin of 30%, and traceable fixed expenses of $26,000. The company as a whole Sales $90,000 $150,000
had a contribution margin ratio of 25% and $120,000 in total contribution margin. Based on this Variable expenses as a percentage of sales 70% 60%
information, total variable expenses in Store M for the month must have been: Segment margin $ 2,000 $ 23,000
A. $140,000. C. $300,000. If common fixed expenses were $31,000, total fixed expenses must have been:
B. $260,000. D. $360,000. A. $31,000. C. $62,000.
B. $52,000. D. $93,000.
5. Reardon Retail Company consists of two stores, A and B. Store A had sales of $80,000
during March, a contribution margin ratio of 30%, and a segment margin of $11,000. The 9. A firm prepared a segmented income statement that included the following data for its
company as a whole had sales of $200,000, a contribution margin ratio of 36%, and segment suburban marketing segment:
margins for the two stores totaling $31,000. If net income for the company was $15,000 for the Fixed costs controllable by the suburban marketing segment manager $150,000
month, the traceable fixed expenses in Store B must have been: Fixed suburban marketing costs controllable by corporate management $250,000
A. $16,000. C. $28,000. Fixed manufacturing costs allocated to the suburban marketing segment $110,000
B. $20,000. D. $31,000. Variable manufacturing costs $200,000
Variable selling costs $100,000
6. More Company has two divisions, L and M. During July, the contribution margin in Division L Variable administrative costs $130,000
was $60,000. The contribution margin ratio in Division M was 40% and its sales were Net sales $950,000
$250,000. Division M's segment margin was $60,000. The common fixed expenses were
The best measure of the economic performance of the suburban marketing segment is:
$50,000 and the company net income was $20,000. The segment margin for Division L was:
A. $10,000 C. $370,000
A. $0. C. $50,000.
B. $120,000 D. $520,000
B. $10,000. D. $60,000.
Performance evaluation
7. Johnson Company operates two plants, Plant A and Plant B. Johnson Company reported for

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10. JLC Inc. has these selected data: B. 7.50% D. 15.00%

Units to be sold 25,000
Total cost of the units P 500,000 14. Sales and average operating assets for Company P and Company Q are given below:
Fixed capital investment 1,000,000 Sales Average Operating Assets
Variable capital on sales 20% Company P $20,000 $ 8,000
Company Q $50,000 $10,000
What should be the unit selling price to have a 20% return on investment?
A. P28.00 C. P30.80 What is the margin that each company will have to earn in order to generate a return on
B. P29.17 D. None of these investment of 20%?
A. 2.5% and 5%. C. 12% and 16%.
11. The Valve Division of Fidelity Company produces a small valve that is used by various B. 8% and 4%. D. 50% and 100%.
companies as a component part in their products. Fidelity Company operates its divisions as
autonomous units, giving its divisional manager great discretion in pricing and other decisions. 15. Reed Company's sales last year totaled $150,000 and its return on investment (ROI) was
Each division is expected to generate a rate of return of at least 14% on its operating assets. 12%. If the company's turnover was 3, then its net income for the year must have been:
The Valve Division has average operating assets of P700,000. The valves are sold for P5. A. $2,000. C. $12,000
Variable costs are P3 per valve, and fixed costs total P462,000 per year. The Division has a B. $6,000. D. $18,000.
capacity of 300,000 units.
How many valves must the Valve Division sell each year to generate the desired rate of return 16. A company had the following results last year: sales, $700,000; return on investment, 28%;
on its assets? and margin, 8%. The average operating assets last year were:
A. 255,885 C. 280,000 A. $200,000. C. $2,450,000.
B. 265,000 D. 350,000 B. $540,000. D. $2,500,000.

12. If Division C has a 10% return on sales, income of $5,000, and an investment turnover of 4 17. If the operating asset turnover increased by 50 percent and the operating income margin
times, its ROI is increased by 50 percent, the ROI would increase by
A. 10% C. 100% A. 25% C. 125%
B. 40% D. 500% B. 50% D. 225%

13. Largo Company recorded for the past year sales of $750,000 and average operating assets of 18. If the operating asset turnover increased by 30 percent and the operating income margin
$375,000. What is the margin that Largo Company needed to earn in order to achieve an ROI decreased by 30 percent, the ROI would
of 15%? A. stay the same D. increase by 69 percent
A. 2.00% C. 9.99%

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B. decrease by 9 percent E. increase by 91 percent B. $3,000,000. D. $3,333,333.

C. increase by 30 percent.
23. The average operating assets for Year 2 were:
19. Howe Company increased its ROI from 20% to 25%. Net operating income and sales A. $1,000,000. C. $1,200,000.
remained at their previous levels of $40,000 and $1,000,000 respectively. The increase in ROI B. $1,080,000. D. $1,388,889.
was attributed to a reduction in operating assets brought about by the sale of obsolete
24. Kim Co.’s profit center Zee had 1991 operating income of $200,000 before a $50,000 imputed
inventory at cost (the proceeds from the sale were used to reduce bank loans). By how much
interest charge for using Kim’s assets. Kim’s aggregate net income from all of its profit centers
was inventory reduced?
was $2,000,000. During 1991, Kim declared and paid dividends of $30,000 and $70,000 on its
A. $8,000. C. $20,000
preferred and common stock, respectively. Zee’s 1991 residual income was
B. $10,000. D. $40,000.
A. $140,000 C. $147,000
Questions 20 thru 23 are based on the following information.
B. $143,000 D. $150,000
The Millard Division's operating data for the past two years are provided below:
25. The Bullwhip Division of Leather Products Co. is considering an investment in a new project.
Year 1 Year 2 The project has an estimated cost of $1,000,000. If Leather Products Co. has a target rate of
Return on investment 12% 36% return of 12 percent, how large does the return on investment on this project need to be to
Stockholders' equity $ 800,000 $ 500,000 generate $150,000 of residual income?
Net operating income ? 360,000 A. 12% C. 25%
Turnover ? 3 B. 15% D. 27%
Margin ? ?
Sales 3,200,000 ? 26. A Corp. has a target return of 15 percent. If a prospective investment has an estimated return
Millard Division's margin in Year 2 was 150% of the margin in Year 1. on investment of 20 percent, and a residual income of $10,000, what is the estimated cost of
the investment?
20. The net operating income for Year 1 was: A. $50,000 C. $100,000
A. $240,000. C. $384,000. B. $66,667 D. $200,000
B. $256,000. D. $768,000.
27. James Webb is the general manager of the Industrial Park Division, and his performance is
21. The turnover for Year 1 was: measured using the residual income method. Webb is reviewing the following forecasted
A. 1.2. C. 3.0. information for the division for next year.
B. 1.5. D. 4.0. Category Amount (thousands)
Working capital $ 1,800
22. The sales for Year 2 were: Revenue 30,000
A. $1.200,000. C. $3,200,000.

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Plant and equipment 17,200 The long-term debt has an interest rate of 8%, and its fair value equaled its book value at year-end.
If the imputed interest charge is 15% and Webb wants to achieve a residual income target of The fair value of the equity capital is $2 million greater than its book value. Dzyubenko’s income tax
$2,000,000, what will costs have to be in order to achieve the target? rate is 25%, and its cost of equity capital is 10%.
A. $9,000,000 C. $25,150,000
B. $10,800,000 D. $25,690,000 30. What is the weighted-average cost of capital (WACC) to be used in the economic value added
(EVA) calculation?
Questions 28 and 29 are based on the following information. A. 8.0% C. 9%
T Division of the Alphabet Co. has the following statistics for its 2002 operations: B. 8.89% D. 10%
Assets available for use $2,000,000
T Division's return on investment 25% 31. The EVA is
T Division's residual income 200,000 A. $1,380,000 C. $1,830,000
Return on investment (entire Alphabet Co.) 20% B. $1,620,000 D. $3,000,000

28. What is the target rate of return for Alphabet Co.?

A. 10% C. 20%
B. 15% D. 25% Questions 32 & 33 are based on the following information.
The following data are available for the South Division of Redride Products, Inc. and the single
29. If Alphabet Co. evaluates its managers on the basis of return on investment, the manager of T product it makes:
Division would invest in a project costing $100,000 only if it increased net segment income by Unit selling price $20
at least Variable cost per unit $12
A. $10,000. C. $20,000. Annual fixed costs $280,000
B. $15,000. D. $25,000. Average operating assets $1,500,000

Questions 30 and 31 are based on the following information. 32. How many units must South sell each year to have an ROI of 16%?
Dzyubenko Co. reported these data at year-end: A. 52,000. C. 240,000.
Pre-tax operating income $4,000,000 B. 65,000. D. 1,300,000.
Current assets 4,000,000
Long-term assets 16,000,000 33. If South wants a residual income of $50,000 and the minimum required rate of return is 10%,
Current liabilities 2,000,000 the annual turnover will have to be:
Long-term liabilities 5,000,000 A. 0.32. C. 1.25.
B. 0.80. D. 1.50.

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B. $225,000. D. $750,000.
Transfer pricing
34. The First Division of Furrow Company produces Part 1 that is used by OEN’s as a key part in Gross profit variance analysis
their products. Costs and sales data of Part 1 are as follows: 37. Casablanca Inc. has a practical production capacity of two million units. The current year’s
Selling price per unit P100 budget was based on the production and sales of 1.4 million units during the current year.
Variable cost per unit 60 Actual statistics came out to be production of 1.44 million units and sales of 1.2 million units.
Fixed cost per unit (Based on 40,000 units capacity per annum) 24 Selling price is at P20 each and the contribution margin ratio is 30%. The peso value that best
Furrow Company’s Second Division is introducing a new product that will use Part 1. An quantifies the marketing division’s failure to achieve budgeted performance for the year is
outside supplier has quoted Second Division a price of P96 per unit. This represents the usual A. P4,000,000 unfavorable. C. P1,200,000 unfavorable.
P100 price less a quantity discount due to the large number of Second Division’s requirement. B. P4,800,000 unfavorable. D. P1,440,000 unfavorable.
If the Second Division would buy 15,000 units of Part 1 from the First Division, the effect on the
corporate profits would be 38. The income data of Penny Corporation for the years 1984 and 1985 are as follows:
A. Reduce by P60,000. C. Increase by P240,000. (in P000s)
B. Increase by P210,000. D. Increase by P1,500,000. 1985 1984 Increase
Net Sales 6,900 5,100 1,800
35. Division A of Harkin Company has the capacity for making 3,000 motors per month and Cost of Goods Sold 3,795 3,060 735
regularly sells 1,950 motors each month to outside customers at a contribution margin of $62 Gross Profit 3.105 2,040 1,065
per motor. Division B of Harkin Company would like to obtain 1,400 motors each month from If the sales prices in 1985 are approximately 20% higher than those of 1984, the P1,800,000
Division A. What should be the lowest acceptable transfer price from the perspective of increase in net sales is accounted for as follows:
Division A? Increase(Decrease) A. B. C. D.
A. $15.50 C. $35.70 Sales Price P 650,000 P 800,000 P1,000,000 P1,150,000
B. $26.57 D. $62.00 Sales Volume P1,150,000 P1,000,000 P 800,000 P 650,000
36. Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and 39. The budgeted sales of product YUM in August were 2,400 units. Beechcrafters, the company
regularly sells 60,000 each year on the outside market. The regular sales price is $100 per that manufactures YUM, uses a standard costing system, and the standard cost per unit of
wheel set, and the variable production cost per unit is $65. Division Q of Turbo Corporation product YUM is P21.00. The company recorded the following variances for the month:
currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside
Sales price variance P300 adverse
supplier at a price of $90 per wheel set. If Division Q were to buy the 30,000 wheel sets it
Sales volume profit variance P1,200 favorable
needs annually from Division P at $87 per wheel set, the change in annual net operating
income for the company as a whole, compared to what it is currently, would be: During August, 2700 units of product YUM were actually sold. What was the budgeted profit
A. $135,000. C. $600,000. for product YUM in August?

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A. P6,300 C. P9,600 ANSWER KEY

B. P7,200 D. P10,800 THEORY PROBLEM
1. C 19. A 1. D 19. D 37. C
Questions 40 through 43 are based on the following information. 2. B 20. C 2. A 20. B 38. D
Brown Co. is a manufacturer of three consumer products, X, Y, and Z. Sales and other information 3. C 21. A 3. A 21. B 39. C
related to the said products are as follows: 4. D 22. E 4. B 22. B 40. A
1979 Units Unit Price Total Sales Cost of Sales 5. C 23. C 5. C 23. A 41. B
Product X 15,000 P10 P 150,000 P120,000 6. D 24. D 6. B 24. D 42. C
Y 20,000 8 160,000 140,000 7. B 25. B 7. A 25. D 43. C
Z 5,000 6 30,000 22,500 8. D 26. C 8. D 26. D
1980 9. A 27. D 9. B 27. C
Product X 20,000 P12 P 240,000 P180,000
10. D 28. D 10. B 28. B
Y 20,000 9 180,000 150,000
11. D 29. D 11. C 29. D
Z 4,000 5 20,000 16,000
12. D 30. B 12. B 30. C
Based on the above information, an analysis of the gross profit would show the following changes:
13. B 31. B 13. B 31. A
40. The sales price factor shows a variance of 14. C 32. C 14. B 32. B
A. P56,000 fav C. P100,000 fav 15. B 33. B 15. B 33. B
B. P56,000 unfav D. P100,ooo unfav 16. C 34. A 16. A 34. A
41. The cost price factor shows a variance of 17. B 35. D 17. C 35. A
A. P28,000 fav C. P63,500 fav 18. C 18. B 36. B
B. P28,000 unfav D. P63,500 unfav

42. The quantity factor shows a variance of

A. P4,000 fav C. P5,750 fav
B. P4,000 unfav D. P5,750 unfav

43. The sales mix factor shows a variance of

A. P2,500 fav C. P2,750 fav
B. P2,500 unfav D. P2,750 unfav

MSQ-04 – RESPONSIBILITY ACCOUNTING, TRANSFER PRICING & GROSS PROFIT VARIATION ANALYSIS Page 11 of 11