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# 1. The Monkey Company sells widgets.

## The company breaks even at an annual sales volume

of 75,000 units. Actual annual sales volume was 100,000 units, and the company reported
a profit of P200,000. The annual fixed costs for the Childless Company are
A. P800,000
B. P600,000
C. P200,000
D. P150,000

## 2. The costs to produce 24,000 units at 70% capacity are:

P 36,000
Direct materials
Direct labor 54,000
Selling expense (35% variable, 65% fixed) 24,000

What unit price would the company have to charge to make P2,250 on a sale of 1,500
additional units that would be shipped out of the normal market area?
A. P5.10
B. P5.60
C. P4.10
D. P5.00

3. YourEx Company’s product mix includes P720,000 in sale of Product X and P640,000 in
sale of Product Y. Product X’s contribution margin is 60 percent and Product Y is 40
percent of sales. Total fixed costs amount to P505,880. Product Y’s sale at breakeven point
should amount to:
a. P640,000
b. P470,600
c. P529,488
d. P720,000

4. Snake Company has revenues of P500,000, variable costs of P300,000, and pretax profit
of P150,000. If the company increases the sales price per unit by 10%, reduces fixed costs
by 20%, and leaves variable cost per unit unchanged, what would be the new breakeven
point in pesos?
A. P80,000
B. P88,000
C. P100,000
D. P125,000

5. Food From Heaven, Inc. (FFHI) sells loose biscuits for P5 per unit. The fixed costs are
210,000 and the variable costs are P45% of the selling price. What would be the amount
of sales if FFHI were to realize a profit of 15% of sales?
A. P700,000
B. P525,000
C. P472,500
D. P420,000

## For Items 6-8

Nicole Co. and Jasmine Co. sell the same product in a competitive industry. Thus, the selling price
of the product for each company is the same. Other data about the two companies are as follows:
Nicole Co. Jasmine Co.
Fixed Costs P 50,000 P 70,000
Contribution margin ratio 40% 52%

## 6. The companies’ break-even points are

Nicole Co. Jasmine Co.
A. P 125,000 P 134,615.38
B. 125,000 units 134,615.38 units
C. P 20,000 P 36,400
D. 20,000 units 36,400 units
(Roque 2016)

7. The indifference point in terms of peso sales volume where the peso profits of the two
companies are equal is
A. P 166,666.67
B. P 134,615.38
C. P 125,000
D. P 129,807.69

## 8. At the indifference point, the companies’ profit amounts to

A. P 16,666.67
B. P 666,666.67
C. P P86,666.67
D. P 0

9. The ff. is the Mhaydel Corporation's contribution format income statement for last month:
Sales P 2,000,000
Less variable expenses 1,400,000
Contribution margin 600,000
Less fixed expenses 360,000
Net income P 240,000

The company has no beginning or ending inventories. A total of 40,000 units were
produced and sold last month. What is the company's degree of operating leverage?
A. 2.50
B. 0.40
C. 0.12
D. 3.30

10. Noella Company has the opportunity to increase its annual sales by P125,000 by selling to
a new, riskier group of customers. The uncollectible expense is expected to be 10%, and
collection costs will be 10%. The company’s manufacturing and selling expenses are 70%
of sales, and its effective tax rate is 40%. If Noella were to accept this opportunity, the
company’s after tax profits would increase by
A. P 7,500
B. P 6,000
C. P12,500
D. P15,000

11. Cara Company has fixed costs of P90,300. At a sales volume of P360,000, return on sales
is 10%; at a P600,000 volume, return on sales is 20%. What is the break-even volume?
A. P225,000
B. P258,000
C. P301,000
D. P240,000

12. The sales price per unit will increase from P32 to P40. The variable cost per unit will remain
at P24, and the fixed costs will remain unchanged at P400,000. How many fewer units
must be sold to break-even at the new sales price of P40 per unit?
A. 2,500
B. 25, 000
C. 10,000
D. 12,500

13. Last month, MAU Company had an income of P0.75 per unit with sales of 60,000 units.
During the current month when the unit sales are expected to be only 45,000, there is a loss
of P1.25 per unit. Both the variable cost per unit and total fixed costs remain constant. The
fixed costs amounted to
A. P 80,000
B. P360,000
C. P247,500
D. P210,000

14. During the month of June, Kokak Corporation produced 12,000 units and sold them for
P20 per unit. Total fixed costs for the period were P154,000, and the operating profit was
P26,000. The variable cost per unit for June was
A. P4.50
B. P5.00
C . P6.00
D. P7.17

15. One of Nobe Company’s activity cost pools is machine setups, with estimated overhead
of P300,000. Nobe produces slacks (400 setups) and shirts (600 setups). How much of
the machine setup cost pool should be assigned to slacks?
A. P 0
B. P120,000
C. P150,000
D. P180,000
For items 16-17
Gilmore Company produces two products in a single factory. The following production and cost
information has been determined:
Model 1 Model 2
Units produced 1,000 200
Material moves (total) 100 40
Testing time (total) 250 125
Direct labor hours per unit 1 5

The controller has determined total overhead to be P480,000. P140,000 relates to material
moves; P150,000 relates to testing; the remainder is related to labor time.

16. If Gilmore uses direct labor hours to allocate overhead to each model, what would
overhead per unit be for Model 2?
A. P 1,200
B. P 400.00
C. P 950.00
D. P 158.33

17. If Gilmore uses activity-based costing to allocate overhead to each model, what
would overhead per unit be for Model 2?
A. P925.00
B. P415.93
C. P158.33
D. P815.00

## For items 18-19

Toylandia Company manufactures two products, X-MAN and Machman. Toylandia's
overhead costs consist of setting up machines, P400,000; machining, P900,000; and
inspecting, P300,000. Information on the two products is:
X-MAN Machman
Direct labor hours 15,000 25,000
Machine setups 600 400
Machine hours 24,000 26,000
Inspections 800 700

A. P600,000.
B. P768,000.
C. P832,000.
D. P960,000.

## 19. Overhead applied to Machman using activity-based costing is

A. P 768,000
B. P 640,000.
C. P 832,000
D. P1,000,000.

20. Lolo Company makes two products, E and M. E is being introduced this period,
whereas M has been in production for 2 years. For the period about to begin, 1,000
units of each product are to be manufactured. The only relevant overhead item is the
cost of engineering change orders. E and M are expected to require eight and two
change orders, respectively. E and M are expected to require 2 and 3 machine hours,
respectively. The cost of a change order is P600. If Lolo is using direct tracing, the
amount of overhead per unit that will be assigned to E and M, respectively, are
A. P4.80 and P1.20, respectively
B. P3.60 and P2.40, respectively
C. P2.40 and P3.60, respectively
D. P1.20 and P4.80, respectively