-*Ilr.

Items I !q 3 arebasedon the following informalion

EdwardCo. hadthefollowingmaterialshandlingcostat threemonthsof actiVitytevelsi
Kiloshandled Costs
Month I 80,000," P 160,000
Month 2 60l0W P 132,000 th,ob&r^/f
Month 3 70,000 P t30,000
,J,1f0On.tjt
I . Whatisthe valueof the slopeoftbe lineaq80,000-kilolevel?
7 . t. 4 c. 1.4x numberof kilos
b. t. 5 d. | 12,w0

2. Whatis the valueof they-int9rc6ptat 60,@0-kilolevel?

t: 0.80 P 48,000per month
F
h., 5lQ@ * 5mO(t:{)
b. P 48;SO0 perkilo/'r ,'.' d. P 4E,000peryear t
--1lt1ttfi
3. Whct is the estimatedcostfor handling500,000kilos for tt",grdlqpgt"ting@ .: 49,1"O
lvLnlt
a. P700,000 I P1,276.000
b. P 74E,000 d. P 8,976,000 ? fi($l1.,^

4. The sfAtement"fsto*y overheadis a function of machinehornswith coefficient of detcrmination(ra) = 76

'
percent"is correctlyinterpretedas 1oq -- ag[ $)ryn rr
y' 70 prcent is
of total variation of factory overherd explainedby lhc regrcssGnoqu$bn or
tbe changein machinehourswhile the remaining3Opercentis accountedfor by something
__ 6tff€|: +fr heUfE-
- 9^-^h;6e
b. An r-squaderfdif0J0with a regrcssionquation nrcqir fr*lo*Oich'Ehu wifl.'6er*tnate70o/o
. of thc time.
c. 30 percentof iotal variationd factory'ovcrfieadis explainedby the,regrcssionequationor
ihe changein machitrehours while 70 percentis.accounbdfor by smrething other than
machinehours.
d. 3O% peroart of overheadcost pedktion nS dror resclts or*sido confidence iilGrvsl
d€terinincdbv the standarddeviation.

5. A rctail eom'pany by marking up variable ln additisr, tttc compary

oses freq*ft*' cclling@ce markdowns to stimue seles- lf the "oo@
ma*dd\r-nsevcmgc' lV/o, wha is tle
compflry'scoltribution margin r*io? .. ,1u1., l4!l
a. 27,5% c. 37.5% (t,il) UN)
,. s.&6 d. 41.7o/o
6 4 W,

yield a.profiteqrraltaAV/o of the contributionmaftin whcn F Fsos

' and FC =
:L. S'*F.+1 .2 c. g=Fr0.2 . t r W lo ' 1 .
y f i= r* o i .i z d . s = r* o .i z n t gr y' l,l i
/ p 230.0mfor
+r,
-&.fr
flat productionmssfor
Total production-mss for Jacob
JacobCompany
Company budgsted
arebudgsted
are * PJ30.009
at for 50,0$-units budgeted
S0,Omunilsof budgetedcfitpth
p
and at 2!0$90--fq{-d0,@0 units,,of hdgAted output. &cruse of th€ rn$d for edditional facih"ties,
budcetedFlxedcostsr@thanbudgetedfixedcostsftr5o.000units.Howmuch
is JJcob's@ffi*riabte costper unit oi6-uput?
N r. s
a. P r.60 F P3.00 (b,, ' p0
b. P 1.67 ! d. P 5.00 r^) ),^ t '
@ g
YOm 6oio I easelor'4pases -@*
w , aa^V.
I iroo^ ?grtoN ,tlo, 'l-40=il
a, .{io' b--W (tt) J!
^oi..Lr-l
fl F sl & '\,;!,
 ReSA - 74o Rerrici&Sc/44a1o{ 4Mdrtlll
t 4t'el
SET- Batch 26 (PageNo,2)
MS PRACTICE rrc 8p
2W @
9. Petros,Inc. ha,sa tqtal of 2,000roomsin its nationwide motels. NA of the room/are
oe€lpLed.paehday, .thei6mFa-.s olerating"o"ts413!.pgr oc,.cJpsd rygP+gt&D4 thisoccupancy
1s[ft"."*i"s-dJ0-A;iffii1Tn. This P 2 I figrtrecon@d co+:9!elnsnts. During
the occupi*cy
October,the
. October, droppcO-ffi:1570.
ratedroppedi6-CIf-45%
oicupanryrhte Alotalol'T:9"OQQ
A totat of PJP.9W iUrcpting
in;rXqlating cost
cost was
was incuned
incurred
duringOctober. What is the estimatedth'evariablecostper occupieinodmp.tOgiJ
. : '" a. p 3.33 P6.00 g
t, $D{
,:"
|.'.) w. , i,ii
h p4.50 --d
d, P8.oo -ttutJ
tc,ltro
|'-
V-lt\Ofrr+
v;
i b..r..r,,h
r*.y*h
lgl'h
tJ"j'
,; Y^rru'^
anincreqpe
is,expecting
. 10.RalphCompany "aV-
biLp'?8,
,nIfixp4-gos, 'l=oflbusinessto
movingtheir plarb
fi downtownarea.
theciowntown sell{ngprf*cb
Likewise;ttis anticipatingthatthe seling
area, Likewise:ttFanticfiatFg tr per unit andgevadsHgrpenses will
|
'r
rtot changB. At presentscenario.th" El"r vol-umenecess{rry
^r ^L- r * ', a +
--^nd6+ -^a-^-i^ to breakeveni
1L- .- l - . r zr l r r m awi{ th9
h m ft.o n

expectedlncrease in fixed the

costs, saleihiffiessary to breokeven wo*rldg.--Ip*T Based
onr these
these would
proJectibrts,,wtctt
projections, wfuatwould b" th@B*eg-g$t
U*th@g:g1t gFer tE; increass
gfL,tlAiqcreass of P 78,750?
78-"7ldi ;S0 fn-{t',
/; iiil,3i8
o.!Wt.# i li8i,lil -'^6u0
\rury-Yci--
canpandtru,u
I I . I tcather Lutionmuryin,utioqt'foE ug13g*1,*nffi andan l(..etl
r "pnt
{ Heather break-even
company's *T .i[],=
in.:**;f5W #.ff#* ,.,Or,j
y _If*u
ps0;ooo" d, P75,ooo , c'
/ ,{ " g*d6t
A
g, -
h lZ.The controlterof r"rl
MJ co prepared
Co. prepared
the fc'llowingincome
thefcrtt<rwing incomestatements:
statsments: 1(!11 trfiW
[ ,' '. rNqy.enht
r r ^ - , ^ *L ^ - ,Qeegtqbpf L
, r . 4
Sales : f,1rbt .P1?0,W0P1lg,9p
Cost'ofsales I -Z?ru -235"Q00
Grossmargirt P194,000 P215,0ffi
expenscs.
Sellingandadministrative .lg5-000 108.W0 - -
'
f - ,
tg6
Incornebeforeraxes '' &10'7-000)-
JfM+fo,&ucl howmucrrp.so saf,s *ven?
/ p)tt,Go't c, P 407"{50CI
'b. P228-260 frodrgiveninformation
d. Cannotbedetermined

At 40,000 qnits. of s&les,Zhad Co(poration had en operating loss of P'3.00 per".unit. When sales were
!'' +. 35,000 c. 52.500 /tt rr:ui )
is
70,000units,the companyhada profit erfP 1.?dper uriit. lthe number,glul$ to b,reakeven
s-1rP X ; (Wq7
h. 45,000 / s1,647 -E-*,:." i : E;ss'X'
l\ 14.Jill Companyhasfixed cg6e-of P 300,000.-It producestwo products,X and Y. ProductX hasa variable
\/ cost perce{agEaqu*t t9 b0% of its P l0 ryr. unit selling.p19e. ProdqctY hasa variablecost percentage
70%7t its P 30 seilingprice. Foi the pestsevbialyears,salesof pr_oduct X haveav.eraged '66.670/o
"qurito
of ttr uat* of.produCtY. T'hafratio is pot expectedto change. What is Jill's breakevenpoint in pesos?
a. P 300,000 c. P E57,142 -*1.
b. P 750.000 v e4z;Elz(rt r'ol
/
i{',
15. When saleshvel rirashesP 100,000.teturn.onsAlesis lfflo' ,$fr
-$[1t,
[?**. ,,fr/; ,r,0,[u0
*.#er';l$"d',,
qq!'P.ti"rT
leverage
operating
a . P2 ,5 0 0
at thissaleslevelis 4x?
'. c. 25% of sates
TSokofsates to L qU,Ltr\
\bL:" (,r) ll
-.c.
b. 25.000 units d. Cartnotbe&termined from thlgiven infonnation to

16, Jack Company sells 50,000 unitqpf a state-of-the-artmobile,gadget.Thesewere taken from the "o*puny'$t)
records: i
P ?9.'0Oq
receivable,
7n0t06nDg,bt' A'icounts
D,f0'1h@/-po' e4--j3
-l ! ';, tt,t 14ffi
'v'-- . l5days
Dayssaleoutstanding, hr
ldl+,w
KB,AP W' ratio'49Yo
Contributionn'rargin N cS txfrdlil
t,^^t
| 'l
-trf
^,.atX(t'.
liYh"
'^ D.n{ii / W{,'J4'
ffiffi$'*-rpiiils+q
Shirhi'rr!qri;.1 rrrnq"p.4*'5-
Profitforthg,pgriodwas:F'4t5;0{0t/-.' -t
Frtrl '" ,- " r''.:-
Wy.: ending receivablesbalanceis the averagebalanceduring the -l'ear. LJsinga 360-dayyear and assuming
{WVA thatally!.-lg::de onc{edit. thecompant'-jitlj"iT;
what'is
'&. P 1,032,000 cc.. ] Y
2 ,2,061,122
061,122
b. p 1.320.b00 P 2.106.t22.44q
 ReSA -76p Ra/izz'Sa/4d(( *uaat Sgt A
MS PRACTICESET - Batch 26 (Page fi,lo.3) l :i
: .rl i '
, '.
/\
17.JulieCompany.whichi, ,rai"*ffi;@come
" tax rate,hadthe followingoperating
datafor the period
\-
' .iustended:

fiJ,Tfil::lH'xli
itin -.e4
/
Fixedcosts 504,000 = {22ffi
"P +t80h r'
Managementplans to improve the quality of its sole product by way of implementingthe following
changes:
( I ) Replacinga componentthat costs P 3.50 with a higher-gradeunit that costrl!J.0, and -(
--
(2) Acquiring a P lS0'O00 packagingmachine. Julie will depreciatethe machine over 4-l0-),"ar period
with no estimated
salvagevalueby thestraight-line
nrethodof depreciation.
6(/

ry
If thecompahywantsto earnafter-taxof P 172,800in-thecorningyear,it mustsell
a. l'0,300units {ZZ,SO0 units 'LBsfr t)'t
b. 21,316urlits d. 27,000units {
Itemsl8 to 22 aqebasedon the fgllowinginformation
Cinger Co. is invdved in sellingan exclusivetoy in the markpt.It lold 1,E00udls of toys during the
currentyear" The manufacturingcapaeityof Cinger'sfacilities is 3,fi)0 un'iiild?ffi The operatingrestrltsof
CingerCo. duringthecurrentyearshowthefollowing: k, [x.-t
Sales p 900,000
SOD
Variablecosts: Manufacturing p 3 15.000
'contribution Selling lso;oq
margin #;;ffi'vww !ry*'
,28
Fixedcosts: Manufacturing p 90,000
Sglliqg I t2,500
Administration 45:000 247,500
Net incomebeforetaxes p 157J00
lqfrfl" tax(4tr/o) (6Jr0@)
Net incorneaftertaxes -p-m*

18.The break-even
volurnein unitsof toysfor theI'earis
a. 420 c. 550
b, 495 n l,to o
19. If the.salesvolurneis cstimatodto be 2,100units in the next year, and if thc pric*and coetsstay at the
samelevelsandamountsnextyear.the after-taxIncomethat Cingercanexpectior nextyear is
a. P 1t0,250 c. p t94,500
F P 135,000 d. P 283,s00
20' Gingerhas6 potehtialfoleign customerthat hasofferedto buy 1.500unitsat p 450 per'rtliit. Assurnethat'
all of Ginget'scostswould be at the samebvels and ratesas iastyear. Wftat net itrcomeaftertaxeswoultl
Ginger if it took this orderand rejectedsomebusinsssfrom regularcustomerssd as not to exceed
"Iq""t
capacity?
/ P 2l t,500 c. P 256,500
b. P 252.ffi d. P 297,5fr)
21. Cinger plansto marftetits productin a new territory. lt estimrtpsthat an advertisingand promotion.
p*9t,Sq:""ually would needto bi undertakenfor
, ,,^ P1o.91ut"9gK the next two to threeyears. tn
\''r'- \.] addition'fl-L 25)er unifd€slffimission gyix=andafuvethe cun€ntcornmission to the salesforce in the
new territorywould be rcquired. How mfnaunils,gpuld haveto be sold in the new territoryto maintain
Ginger'scurrentafter-taxinconreof P 94.500i -Ufa'hrn"t t- lr
a . 2 7 3 .30 vc. . I1r \r
.0 7J9
.v v5
. .00
307.50 ; ;,il;il u(t
1-b W ,
22. AssumingGinger is expectingthat per unit . ... '. qa*'i
selling price will decline l07o next y{i{:-variaAle cogts,will
increaseP 40 per ton and thb fixed costs will not change. What satesvolume in pesoswill be requiredto
earn an after-taxincomeof P 94.500 next vear?

il ; ?1?3X%, 4{\
br>
ReSA . ?k RaneruScnool$ z*crnuttaaal SetA
*
MS PRACTICE SET* Batch 26 (PageNo.4)
Ilsru-?a&-22-atc.-b-el9dptt-the,tb.[1p:utngjn-&:r4atien
Affig" Skt Cg*p,*y iecenity *xpandedits manufacluring capacityto allow it to produc* un Q 15,000
of eitherthe N/$ountaineerirrg
pairsof cioss-gountry'skii modelor Touringmodel. The salesdepartmenMi"
,nunogr*"nt that,it tan sell between 9,000 arad13,000 pairs(units)of eitherproductlhp fem. . Becausethe
produce "[he informationbelow was
modelsareverysimilarrOrangeSki will o{y.g:g
compiledby theaccounting departm0nt. LL^i' lraPlora
Msilnlarnssdlg kudng
; Sellingpriceperunit P 88.00 P E0.00
jt*.n* p.,i,nit i'ii'lt tfft\o::r: (r,,t\y:iii--,
modeli'*'pi{ta*Eri
mounrairreering
r.* :r
tirt'*ili b-'iltitrP 316,800'if;ilre
Fixetlcostswill totalft6r-mDrhe
t o u rin g r n o d e l i , p ,o a u c" H 'u ffi i i l c.,'p *yissuf,.iecttoa40o/oincom etaxr ate.\-
23. tf OrangeSki Companydesiresan atter-taxnetincomeol'F 24.000,how manypairso{' Touringmodelskis
, willthb companyhaveto sell? 4oao
a . 1 3 ,85 3 c, 12,5?9
l3 .l l 8 d. 4.460
,{
24. T'hetotal salesfevenucat which Orange Ski Company woulcl make thc sameprofit or loss regardlessof the
17irv -\lU(N
ski model it decidedto produce is 15,2X ',ltq|@ln ;
a. P 924,000 c. P 686,400 9 x -- 5tt6t
Psro,ooo d. p 422.400 a - (e{d!
f .

25. g<;wmuch would the variablecost per unit of tnerfzuU& modellraveto changebefore it had the sanre
breakeven model?
point in unitsasthe'Mountaineering
a. P 5.03decrease E P ?.97decrease
b. P 4.53increase d. P 2.68increase

?6. lf the variablecost per unit of "Iouringskis decreascs

by l0%. and the total fixed cost of Touring skis
increasesby l0%, the newbreakeven pointwill be yu
pairs
..r 10.730 tif g 1+c+ 7W ff
b,, 12,812pairs
c. l3.oo7pairs -','^".,n
12 'tt
d. tJnchangedfrom 11.648pairs the
Lrecause cost changes are 0(ual anclthereforesomewhat
offseuing
al:._

ceiuldguamnteethe annualsaleof t2;0$,skis of either

2 7 .lf the OrangeSki Companysalesclepartment
would
model. C)range
a. skisbecsuse
Produce'Iouring thcy havea lowerfixedcost
b. skisbecause
Produceonly Mountaineering point .
theyhavea lowerbreakeven
ProduceMountaineeringskis bscau$e they are moreprofitable
,f
'd. eachmodelhasthe sameunit variablecost
Be indifferentasto whichis soldbecause

28.A mail"order confectioter sells fine candy in one-poundeq=**qp the caBacityto produce600,000
thatit will
bclxesannuallybut fbrecasts produce
and sell 500,00qlbiesin the comirtgyear. The costs.
anddistributethe candyaredetailedbelow'
to rnanuf,acture 6ilanizationhasinvestedcapitgfofP-!]5
nrillion.
Variable costsper pound
Manufacturing P4.85
Packaging 0.35
Disffihution r.80
'fotal P,7."0.Q
Annual fixed costs
Manulbcturing overhead P 8r 0,000
Marketing and distributiorr 270,0i)0
'l'he sellingprice per pgundthat tlre conlectionershouldchargefor a one-poundbox of candyto obtaina
20o/orate ofreturnon invcstedcapitalis

I anoul
a. P 9.70 c. P I,1.50
b . P i l ,0 5 d^r P r i.86
,/
([tND)