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Department of Accountancy

Managerial Accounting – Part 2

Problem 1: Butliness also does a ‘deep pan cheesy and tomato pizza’ on one of its counters, the

standard or budget cost and usage of the topping ingredients for one pizza are as follows

0.6kg Tomatoes @ P1.40/kg 0.84

0.6kg Cheese @ P7.50/kg 4.50

TOTAL 5.34

1.2kg ingredients will produce or yield a 1kg pizza (due to evaporation in the cooking process). On a

Wednesday afternoon 60 pizzas were cooked (to the weight specified of 1.0 kg) and the following

ingredients were used during the process;

Tomatoes 28 kg P45.00

Cheese 40kg 270.00

Required: Calculate the material price usage, mix and yield variances for Butliness for this day.

Problem 2: A company’s standard direct labor rates in effect for the fiscal year ending June 30 and

standard hours allowed for the output in April are

Standard DL Rate/hr. Standard DLH Allowed

Labor Class III P 8.00 500

Labor Class II P 7.00 500

Labor Class I P 5.00 500

The wage rate for each labor class increased on January 1 under the terms of a new union contract. The

standard wage rates were not revised. The actual direct labor hours (DLH) and the actual direct labor

rates for April were as follows:

Actual Rate/hr. Actual DLH

Labor Class III P 8.50 550

Labor Class II P 7.50 650

Labor Class I P 5.40 375

Required: Calculate the labor rate and usage, mix and yield variances.

Problem 3: Maryville Company uses three different types of chemicals in manufacturing a deluxe brand

of lawn fertiliser. The standard amount of Chemicals X, Y and Z used in manufacturing a 20-kg. bag of

lawn fertiliser is 5 kg., 7 kg. and 8 kg., respectively. The budgeted purchase prices of Chemicals X, Y and Z

are $1.00 per kg., $0.40 per kg. and $0.20 per kg., respectively. Operating data for 20,000 bags of lawn

fertiliser produced in May are as follows:

Actual input quantity Actual input price

Chemical X 97,900 kg. $1.05

Chemical Y 132,000 kg. $0.36

Chemical Z 210,100 kg. $0.18

Required: Calculate the material price usage, mix and yield variances.

Problem 4: Batangas Company produces a compound by mixing 3 gallons of AB-5 (costing $2.25 per

gallon) and 4 gallons of CR-3 (costing $7.50 per gallon). The output is 5 gallons of the compound. During

August, 21,000 gallons of AB-5, costing $46,500, were purchased and used; 26,000 gallons of CR-3,

costing $198,000, were purchased and used. A total of 37,000 gallons of output were obtained.

Required: Calculate the total direct material variance, usage and price variance, and the direct material

mix and yield variance.

Problem 5: The following was the composition of workers in a factory during a particular month, in one

of the production departments. The standard composition of workers and wage rates per hour were as

follows.

Skilled: Two workers at a standard rate of P20 per hour each

Semi-Skilled: Four workers at a standard rate of P12 per hour each

Unskilled: Four workers at a standard rate of P8 per hour each.

The standard output of the gang was four units per hour of the product. During the month in question,

however the actual composition of the workers and hourly rates paid were as under

Skilled: 2 workers @ P20 per hour

Semi-Skilled: 3 workers @ P14 per hour

Un-skilled: 5 workers @ P 10 per hour

The workers were engaged for 200 hours during the month, which included 12 hours when no

production was possible due to the machine breakdown. 810 units of the product was recorded as

output of the workers during the month.

Required: Calculate the total direct labor variance, efficiency and rate variance, and the direct labor mix

and yield variance.

Problem 6: The following data were taken from the records of Romblon Corporation for the year ended

December 31, 2017 and 2018.

2018 2017

Units Sold 10,000 12,000

Sales P 260,000 P 250,000

Cost of Sales P 180,000 P 200,000

Gross Profit P 80,000 P 50,000

Required: Perform a Gross Margin Analysis under the (a) Two-way; (b) Three-Way; and (c) Four-way

method.

Problem 7: The income statement of Bulacan Corporation for the years ended December 31, 2017 and

2018 showed the following data:

2017 2018

Sales P 800,000 P 924,000

Cost of Sales 480,000 501,600

Gross Margin 320,000 422,400

Operating Expenses 180,000 220,000

Net Income P 140,000 P 202,400

Additional Data:

Units Sold 80,000 88,000

Unit Selling Price P 10.00 P 10.50

Unit Costs P 6.00 P 5.70

Required: Perform a Gross Margin Analysis under the (a) Two-way; (b) Three-Way; and (c) Four-way

method.

Problem 8: The following income statement data presented by Laguna Corporation for the years ended

December 31, 2017 and 2018:

2017 2018

Sales P 600,000 P 699,600

Cost of Sales 360,000 380,160

Gross Profit P 240,000 P. 319,440

During 2018, the following transpired that affected net sales, cost of sales, which contributed in the

changes in gross margin.

1. Units sold in 2018 was 10% higher than 2017

2. Unit selling price in 2018 was 6% higher than 2017

3. Unit cost in 2018 was 4% lower than 2017

Required: Perform a Gross Margin Analysis under the (a) Two-way; (b) Three-Way; and (c) Four-way

method.

Problem 9: The income data of Escao Company for the year 2018 and 2017 are as follows:

Sales P276,000 P204,000 P 72,000 favourable

Cost of goods sold 151,800 122,400 29,400 unfavourable

Gross profit P124,200 P 81,600 P. 42,600 favourable

Required:

1. If the sales price in 2018 is appropriately 20% higher than the sales price in 2017, how much is

the (a) Sales Price Variance; and (b) Sales Volume Variance.

2. The number of units increased (decreased) by

3. How much is the (a) cost volume variance and (b) Cost Price Variance

4. The 2018 cost price is higher (lower) than the 2017 cost price by

2017 2018

Sales P 200,000 P 216,000

Cost of Sales P 150,000 P 189,000

Gross Profit P 50,000 P 27,000

Required: Considering that the company’s selling price per unit decreased by 10%, compute the

following:

1. Sales price and sales volume variance

2. Cost Price and Cost Volume Variance

Problem 11: San Pedro Corporation manufactures three consumer products, Alps, Bets, and Chaps. Sales

and other information related to the said products are as follows:

2016 Units Unit Price Unit Cost Total Sales Cost of Sales

Alps 15,000 P 10 P8 P 150,000 P 120,000

Bets 20,000 8 7 160,000 140,000

Chaps 5,000 6 4.5 30,000 22,500

2017 Units Unit Price Unit Cost Total Sales Cost of Sales

Alps 20,000 P 12 P9 P 240,000 P 180,000

Bets 20,000 9 7.5 180,000 150,000

Chaps 4,000 5 4 20,000 16,000

Based on the above information, an analysis of the gross profit would show the following changes:

Required:

1. The Sales Price factor shows a variance of

2. The Cost Price factor shows a variance of

3. The Quantity factor shows a variance of

4. The Sales-mix factor shows a variance of

Problem 12: Aquatic Manufacturing Corporation, a multiple product company, has the following data

available for gross profit variation analysis

2016 Alps Bets Chaps Total

Sales P 225,000 P 240,000 P 45,000 P 510,000

Cost of Sales 180,000 210,000 33,750 423,750

No. of Units 22,500 30,000 7,500 60,000

Sales P 360,000 P 270,000 P 30,000 P 660,000

Cost of Sales 270,000 225,000. 24,000 519,000

No. of Units 30,000 30,000 6,000 66,000

Based on the above information, an analysis of the gross profit would show the following changes:

Required:

1. The Sales Price factor shows a variance of

2. The Cost Price factor shows a variance of

3. The Quantity factor shows a variance of

4. The Sales-mix factor shows a variance of

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