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FIRST PRE-BOARD EXAMINATION CPA Review February 19, 20 & 21, 2023

1. Madtack Company's beginning and ending inventories a. Flexible budget.

for the month of November are: b. Zero-based budget.
c. Static budget.
Nov. 1 Nov. 30 d. Strategic budget.
Direct materials P 67,000 P 62,000
Work-in-process 145,000 171,000 Use the following information for the next two questions.
Finished goods 85,000 78,000 Nanjones Company manufactures a line of products
distributed nationally through wholesalers. Presented below
Production data for the month of November follows. are planned manufacturing data for 2023 and actual data
Direct labor, P200,000 for November 2023. The company applies overhead based
Actual factory overhead, 132,000 on planned machine hours using a predetermined annual
Direct materials purchased, 163,000 rate.
Transportation in, 4,000
Purchase returns and allowances, 2,000 2023 Planning Date
Annual November
Madtack uses one factory overhead control account and Fixed overhead P1,200,000 P100,000
charges factory overhead to production at 70 percent of Variable overhead 2,400,000 220,000
direct labor cost. The company does not formally Direct labor hours 48,000 4,000
recognize over/underapplied overhead until year-end. Machine hours 240,000 22,000

Madtack Company's net charge to factory overhead Data for November 2023
control for the month of November is: Direct labor hours (actual) 4,200
a. P8,000 debit, overapplied. Direct labor hours (plan based on 4,000
b. P8,000 debit, underapplied. output)
c. P8,000 credit, overapplied. Machine hours (actual) 21,600
d. P8,000 credit, underapplied. Machine hours (plan based on output) 21,000
Fixed overhead P101,000
2. Which of the following terms represents the residual Variable overhead P214,000
income that remains after the cost of all capital,
including equity capital, has been deducted? 6. The variable overhead spending variance for November
a. Free cash flow. 2023 was:
b. Market value-added. a. P2,000 favorable. c. P6,000 unfavorable.
c. Economic value-added. b. P6,000 favorable. d. P2,000 unfavorable.
d. Net operating capital.
7. The fixed overhead volume variance for November
3. Spring Co. had two divisions, A and B. Division A 2023 was:
created Product X, which could be sold on the outside a. P1,200 unfavorable. c. P5,000 favorable.
market for P25 and used variable costs of P15. Division b. P5,000 unfavorable. d. P1,200 favorable.
B could take Product X and apply additional variable
costs of P40 to create Product Y, which could be sold for 8. Although there is no single format for the balanced
P100. Division B received a special order for a large scorecard, the report generally includes a variety of
amount of Product Y. If Division A were operating at full measurements associated with objectives classified by
capacity, which of the following prices should Division A critical success factors. Critical success factors often
charge Division B for the Product X needed to fill the include:
special order? a. Sales, net income, cash flow, and return on
a. P15 c. P25 investment performance.
b. P20 d. P40 b. Shareholder satisfaction, customer satisfaction,
vendor satisfaction and employee satisfaction
4. Superior Industries, sales budget shows quarterly sales issues.
for the next year as follows. c. Financial, internal business process, customer
Quarter Units and human resource considerations.
1 10,000 d. Throughput and lifecycle times.
2 8,000
3 12,000 9. Responsibility accounting defines an operating center
4 14,000 that is responsible for revenue and costs as a(n):
The company policy is to have a finished goods a. Profit center. c. Operating unit.
inventory at the end of each quarter equal to 20 b. Revenue center. d. Investment center.
percent of the next quarter's sales. Budgeted
production for the second quarter of the next year 10. Using regression analysis, Fairfield Co. graphed the
would be: relationship of its cheapest product line's sales with its
a. 7,200 units. c. 8,400 units. customers' income levels. If there is a strong statistical
b. 8,800 units. d. 10,400 units. relationship between the sales and customers' income
levels, which of the following numbers best represents
5. The use of standard costs in the budgeting process the correlation coefficient for this relationship?
signifies that an organization has most likely a. - 9.00 c. +0.93
implemented a: b. - 0.93 d. +9.00

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Using the absorption costing method, the peso value of

11. Which of the following best describes the impact of the company’s inventory on August 31 and the
increasing the sales price? absorption income, respectively, would be
a. The increase in sales price increases contribution Inventory Value Absorption
margin per unit, causing net income to decrease. Income
b. The increase in sales price increases contribution a. P27,000 P35,000
margin per unit causing the break-even point to b. P27,000 P 5,000
decrease. c. P36,000 P 5,000
c. The increase in sales price means more units are d. P36,000 P35,000
sold.
d. The increase in sales price means an increase in 16. Alpine Company wants to earn a 6% return on sales
variable cost. after taxes. The company's effective income tax rate is
40%, and its contribution margin is 30%. If Alpine has
12. The process by which a company's products or services fixed costs of P240,000, the amount of sales required
are measured relative to the best possible levels of to earn the desired rate of return is:
performance is known as: a. P400,000 c. P1,000,000
a. efficiency c. a standard costing system b. P1,200,000 d. P375,000
b. benchmarking d. variance analysis
17. Pluto Company plans to discontinue a department that
13. Planet Manufacturing Corporation is using the following has a contribution margin of P24,000 and P48,000 in
flexible-budget formula for annual indirect labor cost: fixed costs. Of the fixed costs, P21,000 can be avoided.
The effect of this discontinuance on Pluto’s overall net
Total cost = P12,000 +P0.75 per machine hour operating income would be a(an)
a. decrease of P3,000 c. decrease of P24,000
For the month of June, the operating budget is based b. increase of P3,000 d. increase of P24,000
upon 10,000 hours of planned machine time. Indirect
labor costs included in this planning budget are 18. Green Company’s unit cost of manufacturing and selling
a. P7,500 c. P17,500 a given item at an activity level of 10,000 units per
b. P8,500 d. P19,500 month are:
Manufacturing costs
14. Simple regression differs from multiple regression in Direct materials P24
that: Direct labor 8
a. multiple regression uses all available data to
estimate the cost function, whereas simple Variable overhead 5
regression only uses simple data Fixed overhead 6
b. simple regression is limited to the use of only the Selling expenses
dependent variables and multiple regression can Variable 11
use both dependent and independent variables Fixed 8
c. simple regression uses only one independent
variable and multiple regression uses more than
The company has an inventory of 3,000 of this item
one independent variable
left over from last year’s model. These must be sold
d. simple regression uses only one dependent variable
through regular channels at reduced prices. The
and multiple regression uses more than one
inventory will be valueless unless sold this way. What
dependent variable
unit cost is relevant for establishing the minimum
selling price of these 3,000 units?
15. Apo Company’s variable costing income statement for
a. P11 c. P48
August appears below:
b. P37 d. P62
Sales (P15 per unit) P600,000
Less variable costs:
19. Information on Uranus’ direct material costs for May is
Variable cost of goods sold: as follows:
Beginning inventory P 72,000
Add variable cost of goods 315,000 Actual quantity of direct materials 30,000 lbs.
manufactured purchased and used
Goods available for sale 387,000 Actual cost of direct materials P84,000
Less ending inventory 27,000 Unfavorable direct materials usage P 3,000
Variable cost of goods sold 360,000 variance
Standard quantity of direct materials 29,000 lbs
Variable selling expenses 80,000
allowed for May production
Total variable costs 440,000
Contribution margin 160,000 For the month of May, Uranus’ direct materials price
Fixed costs: variance was:
Fixed manufacturing P105,000 a. P2,800 favorable c. P6,000 unfavorable
Fixed selling and administrative 35,000 b. P2,800 unfavorable d. P6,000 favorable
Total fixed costs 140,000
Net income P 20,000 20. Joker Company employs a standard absorption system
for product costing. The standard cost of its product is
The company produces 35,000 units each month. as follows:
Variable production costs per unit and total fixed costs Direct materials P14.50
have remained constant over the past several months. Direct labor (2 direct labor hours at P8) 16.00
Manufacturing overhead (2 DLH at P11) 22.00

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The manufacturing overhead rate is based upon a
normal activity level of 600,000 direct labor hours.
Joker planned to produce 25,000 units each month
during the year. The budgeted annual manufacturing
overhead is:
Variable P3,600,000
Fixed 3,000,000
During November, Joker produced 26,000 units.
Joker used 53,500 direct labor hours in November at
a cost of P433,350. Actual manufacturing overhead
for the month was P250,000 fixed and P325,000
variable.
The manufacturing overhead controllable variance for
November is
a. P13,000 unfavorable c. P3,000 favorable
b. P10,000 favorable d. P4,000 favorable
he watched the most recent batch of five balloons
floating into space, he thought surely, there must be
some way to avoid this waste.
Gibo has the opportunity to rent a helium canister that
would enable him to fill balloons while working in the
park. Renting the canister would cost P80 per day.
Deflated balloons can be purchased at a price of P10.00
each.
What is the estimated Gibo’s profit if the helium canister
is rented assuming there are 5 balloons being unsold?
a. No effect
b. Increase the profit by P150
c. Increase the profit by P90
d. Decrease the profit by P80
Use the following information for the next two questions.

21. The purchasing manager at Cara Company knows the Underfoot Products uses standard costing. The following
amount of raw materials required for each unit of the information about overhead was generated during May:
single product the company manufactures. Which of the
following statements best describes the information the Standard variable overhead rate P2 per machine hour
purchasing manager will require to estimate the Standard fixed overhead rate P1 per machine hour
quantity of raw materials to purchase?
Actual variable overhead costs P381,000
a. The amount of raw materials on hand at the
beginning of the period and the minimum quantity Actual fixed overhead costs P175,000
of raw materials management wishes to have in Budgeted fixed overhead costs P190,000
inventory at the end of the period Standard machine hours per unit 10
b. The amount of raw materials on hand at the produced
beginning of the period, the minimum quantity of Good units produced 18,000
raw materials management wishes to have in Actual machine hours 200,000
inventory at the end of the period, and the
estimated quantity of product the company expects
25. Compute the fixed overhead budget variance.
to sell in the period
a. P5,000 (F) c. P10,000 (F)
c. The amount of raw materials on hand at the
b. P5,000 (U) d. P15,000 (F)
beginning of the period, the minimum quantity of
raw materials management wishes to have in
26. Compute the fixed overhead volume variance using
inventory at the end of the period, and the
variable costing system.
estimated quantity of product the company expects
a. P5,000 (U) c. P10,000 (F)
to produce in the period
b. P10,000 (U) d. P0
d. The amount of raw materials required to meet the
estimated quantity of product the company expects
27. ______ refers to avoiding competition in making a
to produce in the period
product distinct from that of competitors by adding
value or features for which consumers are willing to pay
22. In multiproduct situations, when sales mix shifts toward
more.
the product with the highest contribution margin then:
a. Kaizen c. Confrontation
a. total revenues will decrease
b. Product differentiation d. Cost differentiation
b. breakeven quantity will increase
c. total contribution margin will decrease
28. A company would be reducing its discretionary costs if
d. operating income will increase
it
a. fired a production supervisor.
23. Hanlon Company has recorded the following data
b. closed its research and development department.
regarding its inventories. To manufacture product
c. successfully negotiated a reduction in its factory
MPC1, it takes 4 hours to move raw materials to the
rent.
work-in-process area. Transforming the raw materials
d. reduced its direct labor costs by hiring temporary
into finished goods takes three production steps of 3
workers.
hours each. The finished goods are then temporarily
stored in a storage area for 10 hours. Finally, they are
29. Which of the following factors would suggest a switch
inspected which takes 4 hours. Calculate the
to activity-based costing?
manufacturing cycle efficiency for product MPC1.
a. Product lines similar in volume and manufacturing
a. 52.94% c. 14.29%
complexity.
b. 48.15% d. 33.33%
b. Overhead costs constitute a significant portion of
total costs.
24. Gibo Zamora sells helium balloons in Luneta Park on
c. The manufacturing process has been stable.
Saturdays as a means of making some extra spending
d. Production managers use data provided by the
money. He buys balloons from a party store at a cost
existing system.
of P12 each and sells them at a price of P30.00 each.
Demand for the balloons ranges between 35 and 45 per
30. SuperClose Company follows and aggressive financing
day. Gibo normally purchases 40 balloons. The helium
policy in its working capital management while
loses its resilience in a couple of days, so balloons not
SuperSweet Corporation follows a conservative
sold cannot be saved for the following Saturday. Gibo
financing policy. Which one of the following statements
usually just releases the balloons that do not sell. As
is correct?

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a. SuperClose has low ratio of short-term debt to total then how many units did the company produce during
debt while SuperSweet has a high ratio of short- March?
term debt to total debt. a. 12,000 units c. 11,000 units
b. SuperClose has a low current ratio while b. 18,000 units d. 19,000 units
SuperSweet has a high current ratio
c. SuperClose has less liquidity risk while SuperSweet 37. Budgets set at very high levels of performance (i.e.,
has more liquidity risk. very low costs)
d. SuperClose finances short-term assets with long- a. assist in planning the operations of the company.
term debt while SuperSweet finances short-term b. stimulate people to perform better than they
assets with short-term debt. ordinarily would.
c. are helpful in evaluating the performance of
31. The sales mix for Emory's Hardware is as follows: managers.
Product A: 12 units @ P5.25 sales price; P4.85 variable d. can lead to low levels of performance.
cost per unit.
Product B: 10 units @ P7.50 sales price; P6.95 variable 38. Typically, managers have the LEAST control over the:
cost per unit. a. direct material price variance
Product C: 6 units @ P12.25 sales price; P10.35 b. direct materials efficiency variance
variable cost per unit. c. machine maintenance
Emory's fixed costs are P75,950. d. scheduling of production

What are the composite break-even units? 39. Halo Co. is currently operating at a loss of P15,000. The
a. 98,000 sales manager has received a special order for 5,000
b. 2,000 units of product, which normally sells for P35 per unit.
c. 3,500 Costs associated with the product are: direct material,
d. 4,000 P6; direct labor, P10; variable overhead, P3; applied
fixed overhead, P4; and variable selling expenses, P2.
32. A decrease in the price of a complementary good will The special order would allow the use of a slightly lower
a. shift the demand curve of the joint commodity to grade of direct material, thereby lowering the price per
the left unit by P1.50 and selling expenses would be decreased
b. increase the price paid for a substitute good by P1. If Halo Co wants this special order to increase
c. shift the supply curve of the joint commodity to the total net income for the firm to P25,000, what sales
the right price must be quoted for each of the 5,000 units?
d. shift the demand curve of the joint commodity to a. P18.50 c. P29.00
the right b. P24.50 d. P26.50

33. The local video store’s business increased by 12% 40. If the operating asset turnover ratio increased by 30
after the movie theater raised its prices from P65 to percent and the margin increased by 20 percent, the
P70. Thus, relative to movie theater admissions, divisional ROI
videos are a. would increase by 56 percent.
a. substitute goods c. complementary goods b. would decrease by 60 percent.
b. superior goods d. public goods c. would increase by 20 percent.
d. cannot be determined.
34. Alona Corporation has developed the following flexible
budget formula for monthly indirect labor costs: 41. The Tam Corporation makes a variety of leather goods.
Total Cost = P15,000 + P4.50 per machine hr. It uses standards costs and a flexible budget to aid
Operating budgets are based upon the monthly average planning and control. Budgeted variable overhead at a
of 10,000 machine hours of planned machine time. 45,000-direct labor hour level is P27,000.
Compute the flexible budget for indirect labor cost for
the year where production requires 115,000 machine During April material purchases were P241,900. Actual
hours. direct-labor costs incurred were P140,700. The direct-
a. P532,500 c. P690,000 labor usage variance was P5,100 unfavorable. The
b. P517,500 d. P697,500 actual average wage rate was P0.20 lower than the
average standard wage rate.
35. At the end of the accounting period Delas Alas
Corporation reports operating income of P30,000 and The company uses a variable overhead rate of 20% of
the fixed overhead cost rate is P20 per unit. Under standard direct-labor cost for flexible budgeting
variable costing, if this company produces 100 more purposes. Actual variable overhead for the month was
units of inventory, then operating income: P30,750.
a. will increase by P2,000
b. will increase by P2,000 only if the additional 100 What were the standard hours allowed during the
units of inventory are sold month of April?
c. will not be affected a. 51,950 c. 48,550
d. is indeterminable b. 56,925 d. 60,320

36. Laurel Company produces a single product. During
March, the company had net operating income under
absorption costing that was P6,000 lower than under
variable costing. The company sold 15,000 units in
March, and its variable costs were P3 per unit, of which
P3 was variable selling expense. If fixed manufacturing
overhead was P1.50 per unit under absorption costing
and fixed selling & administrative expense was P0.50,
42. Quick Co. was analyzing variances for one of its
operations. The initial budget forecast production of
20,000 units during the year with a variable
manufacturing overhead rate of P10 per unit. Quick
produced 19,000 units during the year. Actual variable
manufacturing costs were P210,000. What amount
would be Quick's flexible budget variance for the year?
a. P10,000 favorable.
b. P20,000 favorable.

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c. P10,000 unfavorable.
d. P20,000 unfavorable. 48. Which of the following best describes a firm's external
funding requirement?
43. Assuming costs are represented on the vertical axis and a. Growth in assets minus growth in liabilities minus
volume of activity on the horizontal axis, which of the net income
following costs would be represented by a line that is b. Growth in assets minus the current year's
parallel to the horizontal axis? retained earnings
a. total direct material costs c. Growth in assets minus growth in current
b. a consultant paid P75 per hour with a maximum liabilities minus net income
fee of P1,200 d. Growth in assets minus growth in current
c. employees who are paid P10 per hour and liabilities minus the year's retained earnings
guaranteed a minimum weekly wage of P200
d. rent on exhibit space at a convention Use the following information for the next two questions.

44. The coefficient of determination is Rogers Rods & Reels Ltd. manufactures and sells various
a. a measure of the variability of actual costs around types of fishing equipment. At the end of 2022, Rogers had
the cost-estimating equation. estimated for the production and sale of 15,000 bass fishing
b. used to construct probability intervals for cost rods. Each rod has a standard calling for 1.5 pounds of
estimates. direct material at a standard cost of P8.00 per pound and
c. a standardized measure of the degree to which 15 minutes of direct labor time at a standard cost of P.18
two variables move together. per minute. During 2023, Rogers actually produced and sold
d. a measure of the percent variation in the 16,000 rods. These 16,000 rods had an actual direct
dependent variable that is explained by an materials cost of P179,200 (25,600 pounds at P7.00 per
independent variable. pound) and an actual direct labor cost of P44,800 (224,000
minutes at P.20 per minute). Each rod sells for P50.
45. Donnelly Corporation manufactures and sells T-shirts
imprinted with college names and slogans. Last year, 49. What is Rogers' net income (loss) based on a flexible
the shirts sold for P7.50 each, and the variable cost to budget?
manufacture them was P2.25 per unit. The company a. P579,500 c. P576,000
needed to sell 20,000 shirts to break even. The net b. P564,800 d. P590,000
income last year was P5,040. Donnelly’s expectation
for the coming year include the following: 50. What is Rogers' flexible budget variance?
The sales price of the T-shirts will be P9 a. P11,200 F c. P 3,500 F
Variable cost to manufacture will increase by one-third b. P11,200 U d. P 3,500 U
Fixed costs will increase by 10%
The income tax rate of 40% will be unchanged 51. An approach to improvement that involves completely
redesigning business processes in order to eliminate
The selling price that would maintain the same unnecessary steps, reduce errors, and reduce costs.
contribution margin rate as last year is a. Total quality management
a. P9.00 c. P8.25 b. Process reengineering
b P10.00 d. P9.75 c. Theory of constraints
d. Life-cycle costing
46. Phelps Co. sells two products, Arks and Bins. Last year,
Phelps sold 12,000 units of Arks and 24,000 units of 52. Reporting under the direct costing concept is
Bins. Related data are: accomplished by
Product Unit Unit Unit a. Including only direct costs in the income statement.
Selling Variable Contribution b. Matching variable costs against revenues and
Price Cost Margin treating fixed costs as period costs.
Arks P120 P80 P40 c. Treating all costs as period costs.
Bins 80 60 20 d. Eliminating the work in process inventory
accounting
Assuming that last year's fixed costs totaled P910,000,
what was Phelps Co.'s composite break-even point? 53. Jones Company has P5,000,000 of average inventory
a. 34,125 c. 11,375 and cost of sales of P30,000,000. Using a 365-day year,
b. 27,302 d. 9,101 calculate the firm's inventory conversion period.
a. 30.25 days c. 45.00 days
47. Lord Industries manufactures a single product. Variable b. 60.83 days d. 72.44 days
production costs are P10 and fixed production costs are
P75,000. Lord uses a normal activity of 10,000 units to 54. Which one of the following statements concerning the
set its standard costs. Lord began the year with no capital intensity ratio is correct?
inventory, produced 11,000 units and sold 10,500 a. The capital intensity ratio is the amount of sales
units. The volume variance under each product costing generated from each peso of total assets.
are: b. The lower the capital intensity ratio, the greater the
Under Absorption Variable Costing amount of assets required to support each peso of
Costing sales.
a. P3,750 Unf P 0 c. A highly capital-intensive firm will have a low capital
b. P3,750 Fav P7,500 Unf intensity ratio.
d. The capital intensity ratio is the amount of total
c. P7,500 Unf P3,750 Unf
assets required to generate one peso of sales.
d. P7,500 Fav P 0
55. On a balanced scorecard, which of the following would
not be an example of a customer satisfaction measure?
a. Market share.

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b. Economic value added. Medium and 85% for Classy. Total fixed costs are
c. Response time. P225,000. If fixed costs will increase by 30 percent,
d. Customer retention. what amount of peso sales would be necessary to
generate an operating profit of P48,000?
56. Bidder’s budgeted sales for the coming year are a. P1,350,000 c. P1,135,000
P60,000,000, of which 80% are expected to be made b. P486,425 d. P910,000
on credit. Bidder wants to change its credit terms from
n/30 to 2/10 n/30 . If the new credit terms adopted, 63. ABC Company breaks even at P300,000 sales and earns
Bidder estimates that cash discounts would be taken on P30,000 at P350,000 sales. Which of the following is
40% of the credit sales and the uncollectible amount true?
would be unchanged. The adoption of the new credit a. Fixed costs are P20,000.
terms would result in expected discounts taken in the b. Profit at sales of P400,000 would be P80,000.
coming year of c. The selling price per unit is P3.
a. P 1,200,000 c. P 960,000 d. Contribution margin is 60% of sales.
b. P 384,000 d. P 480,000
64. Planners have determined that sales will increase by
57. Overland has a part with a unit cost of P40. It costs P52 25% next year, and that the profit margin will remain
to place, process and receive an order. The carrying at 15% of sales. Which of the following statements is
cost of the inventory is approximately 20% of the part's correct?
peso value per year. The firm uses 2,000 of the parts a. Profit will grow by 25%.
each year. What order quantity minimizes total b. The profit margin will grow by 15%.
inventory cost? c. Profit will grow proportionately faster than sales.
a. 93 c. 161 d. Ten percent of the increase in sales will become net
b.127 d. 205 income.

58. If D0 = P1.75, g (which is constant) = 3.6%, and P0 = Use the following information for the next two questions.
P32.00, what is the stock’s expected total return for the
coming year? Jordan Auto has developed the following production plan:
a. 8.37% c. 8.81%
b.8.59% d. 9.27% Month January February March April
Units 10,000 8,000 9,000 12,000
59. Abra, Inc., is contemplating a project that costs
P180,000. Expectations are that annual cash revenues Each unit contains 3 pounds of raw material. The desired
will be P70,000 and annual expenses (including raw material ending inventory each month is 120% of the
depreciation) will total P30,000. The project has a six- next month’s production, plus 500 pounds. (The beginning
year useful life and a residual value of P30,000. Assume inventory meets this requirement). Jordan has developed
Seattle Inc. uses straight line method of depreciation. the following direct labor standards for production of these
units.:
The accounting rate of return based on average
investment for the project is
Department 1 Department 2
a. 53.3% c. 22.2 %
b.66.7% d. 38.1% Hours per unit 2.0 0.5
Hourly rate P6.75 P12.00
60. Madden Company has projected its income before taxes
for next year as shown below. Madden is subject to a 65. How many raw material should Jordan Auto purchase in
40% income tax rate. March?
a. 27,000 pounds. c. 36,000 pounds.
Sales [160,000 units] P8,000,000 b. 32,900 pounds. d. 37,800 pounds.
Less: Cost of sales
Variable costs P2,000,000 66. Jordan Auto’s total budgeted direct labor pesos for
Fixed costs 3,000,000 5,000,000 February usage should be
Income before taxes P3,000,000 a. P156,000 c. P175,500
b. P165,750 d. P210,600
Madden’s net assets are P36,000,000. The peso
sales that must be achieved for Madden to earn a 67. ABC, Inc. is operating at full capacity with a sales level
10% after tax return on assets would be of P14M and fixed assets of
a. P8,800,000 c. P16,000,000 P7M. What is the required addition to fixed assets if
b.P12,000,000 d. P6,880,000 sales are to increase by 10 percent?
a. P350,000 c. P140,000
61. Sari-Sari Grocery is currently open only on Monday to b. P700,000 d. P280,000
Saturday. It is considering opening on Sundays. The
annual incremental costs of Sunday opening is 68. Gerald's Manufacturing is operating at 78 percent of its
estimated at P124,800. Its gross margin is 20%. It fixed asset capacity and has current sales of P575,000.
estimates that 60% of Sunday sales to customers would How fast can the firm grow before any new fixed assets
be on other days if its stores were not open on Sundays. are needed?
The Sunday sales that would be necessary for Sari-sari a. 22.00% c. 31.16%
to attain the same weekly operating income is b. 28.21% d. 37.00%
a. P19,500. c. P30,000.
b. P29,250. d. P20,000. 69. A firm's balance sheet as of December 31 is shown
below. The firm's sales for the year were
62. Gorio Co. provides two products, Medium and Classy. P1,000,000,000, and its after-tax margin on sales was
Medium accounts for 60 percent of total sales, variable 5%. Sales are expected to increase next year to
cost as a percentage of selling price are 60% for P1,300,000,000, and it plans to distribute 50% of its

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TEAM PRTC

net profits to stockholders. Based on the percentage-

of-sales method, the amount of funds that must be
obtained externally by borrowing or by selling new
stock is

Assets (P millions) Liabilities (P millions)

Cash P 50 Accounts P 30
payable
Receivables 130 Accrued 40
taxes &
wages
Inventories 150 Mortgage 130
bonds
Net fixed 220 Common 150
assets stock
Retained 200
earnings
a. P111.50 million. c. P65 million.
b. P165 million. d. P144 million.

70. A hospital records the number of floral deliveries its

patients receive each day. For a one-week period, the
records show the following deliveries.

Day Number Deliveries

1 15
2 27
3 26
4 24
5 18
6 21
7 26

Using exponential smoothing with a smoothing

constant of 0.4 to forecast the number of deliveries,
calculate the forecast of deliveries in the third day.
Assume the forecast for day 1 are 15 deliveries.
a. 19.8 c. 26.4
b. 22.2 d. 26.6

End of Examination

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