UM DIGOS COLLEGE b.

Confidentiality
Roxas Ext., Digos City c. Integrity
ACC 223 – First Exam d. Objectivity

Instruction: Chose the correct answer and shade the 6. Controllers are ordinarily concerned with
corresponding letter in your answer sheets. Use any a. Investor relations
ballpoint pen. b. Credit extension and collection of bad debts
c. Short-term financing
THEORY d. Preparation of tax returns
1. Which of the following statements is/are correct?
a. Managers carry out their planning function by 7. If a management accountant has a problem in resolving
mobilizing the organization’s resources and an ethical conflict, the first action that should normally be
overseeing day-to-day operations. taken is to
b. Managers carry out their decision-making function a. Resign from the company
by obtaining feedback to ensure that plans are b. Notify the police
being followed. c. Discuss the problem with his immediate supervisor
c. The planning, directing and motivating, and d. Remain silent
controlling functions of a manager are kept
separate from such manager’s decision-making 8. Which of the following is not an objective of
activities. management accounting?
d. The manager’s planning function involves setting a. Maximization of profit and minimization of costs
of the organization’s goals and identifying b. Measuring the performance of managers of
alternatives and selecting the alternative that best subunits
furthers such goals set for the organization. c. Providing information for planning and decision
making
2. In which of the following aspects is managerial d. Providing assistance in directing and controlling
accounting similar to financial accounting? operations
a. Users of reports
b. Emphasis between the past and future 9. Which of the following statements is false?
c. Type of data provided to users a. Management accounting is an integral part of the
d. Reliance on the cost accounting database controller’s function in an organization
b. The standards of Ethical Conduct for Management
3. Which of the following aspects is managerial accounting Accountants include concepts related to
similar to financial accounting? competence, confidentiality, integrity and
a. Managerial accounting is as concerned with objectivity
providing information to stockholders as it is with c. Modern cost accounting plays a role in planning
providing information to managers. new products, evaluating operational processes
b. Managerial accounting focuses more on the and controlling costs
segments of an organization rather than on the d. The COO (Chief Operating Officer) is primarily
organization as a whole. responsible for management accounting and
c. Managerial accounting need not follow the GAAP financial accounting
d. Managerial accounting is not mandatory, i.e., not
required by any external law or regulation. 10. Which of the following statements about management
or financial accounting is false?
4. The American Institute of Management Accountants a. Management accounting should be flexible
came up with the Standards of Ethical Conduct for b. Financial accounting must follow GAAP
Management Accountants which have four sections, c. Management accounting is not subject to
namely regulatory reporting standards
a. Competence, security, integrity and objectivity d. Both management and financial accounting are
b. Competence, confidentiality, integrity and subject to mandatory record-keeping
maturity requirements
c. Competence, confidentiality, integrity and
objectivity 11. How may the following be used in calculating the break-
d. Competition, confidentiality, integrity and even point in units?
objectivity Fixed cost CM per unit
a. Denominator Numerator
5. Provisions in this Ethical Standards for Management b. Denominator Not used
Accountant cover avoidance of conflicts of interest, c. Numerator Not used
improprieties of accepting gifts or favors, and other matters d. Numerator Denominator
generally associated with professional behavior.
a. Competence
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12. The contribution margin increases when the sales P400,000 to P480,000 and variable cost per unit remain
volume remains the same and unchanged. How would these changes affect the break-
a. Variable cost per unit decreases even point?
b. Variable cost per unit increases a. The break-even point in units would be increased.
c. Fixed cost decreases b. The break-even point in units would be decreased.
d. Fixed cost increase c. The break-even point in units would remain
unchanged.
13. The peso amount of sales needed to attain a desired d. The effect cannot be determined.
profit is calculated by dividing the contribution margin ratio
into 20. In cost-volume-earnings analysis, which of the following
a. Fixed cost should be subtracted from fixed cost in the numerator?
b. Desired profit a. Predicted operating loss
c. Desired profit plus fixed cost b. Predicted operating profit
d. Desired profit less fixed cost c. Unit contribution margin
d. Variable costs
14. Each of the following would affect the break-even point
except a change in the 21. Break-even analysis assumes over the relevant range
a. Number of units sold that
b. Variable cost per unit a. Total costs are unchanged.
c. Total fixed cost b. Selling prices are unchanged.
d. Sales price per unit c. Variable costs are non-linear.
d. Fixed costs are non-linear.
15. The contribution margin ratio always increases when
the 22. Variable costs
a. Break-even point increases a. Are constant per unit
b. Break-even point decreases b. Vary per unit
c. Variable costs as a percentage of net sales c. Decrease per unit as volume decreases
decrease d. Remain constant in total
d. Variable costs as a percentage of net sales increase
23. Fixed costs
16. If fixed costs attendant to a product increases while a. Remain constant in total as volume changes
variable costs and sales price remains constant, what will b. Are fixed per unit as volume changes
happen to (1) contribution margin and (2) break-even c. Increase per unit as volume increases
point? d. Are always a product cost
CM Break-even Point
a. Increase Decrease 24. How would the following be used in calculating the
b. Decrease Increase expected sales level expressed in units?
c. Unchanged Increase CMU Est. Loss
d. Unchanged Unchanged a. Denominator Numerator
b. Numerator Numerator
17. Which of the following would cause the break-even c. Not used Denominator
point to change? d. Numerator Denominator
a. Sales increased
b. Total production decreased 25. Which of the following statements is correct?
c. Total variable cost increased as a function of a. Gross Margin and contribution margin are the
higher production same.
d. Fixed cost increased b. Contribution margin is the excess of sales over
variable costs, and this is the amount available for
18. If a company’s variable costs are 70% of sales, which recovery of fixed assets and generation of profit.
formula represent the computation of peso sales that will c. One inherent, simplifying assumption in CVP is
yield a profit equal to 10% of the contribution margin that production equals sales.
where S equals sales in pesos for the period and FC equals d. Unit variable costs change directly with cost driver
total fixed cost for the period? or activity level.
a. .2/FC c. .27/FC
b. FC/.2 d. FC/.27

PROBLEM
19. A company increased the selling price for its product
from P1.00 to P1.10 a unit when fixed costs increased from
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1. A Company sold 100,000 units of its product at P20 per b. What would be the sales at break-even point if
unit. Variable costs are P14 per unit (manufacturing costs of fixed factory overhead increases by P1,700?
P11 and selling expenses of P3). Fixed costs are incurred c. What would the operating income be if the sales
uniformly throughout the year and amounts to P792,000 increased by 25%?
(manufacturing cost of P500,000 and selling expenses of
P292,000).

Calculate the following: (5 points) 4. Lor, Inc. produces only two products, A and B. These
a. The break-even point in units and in pesos. account for 60% and 40% of the total sales pesos of Lor’s
b. The number of units that must be sold to earn an respectively. Variable costs as a percentage of sales pesos
income of P600,000 before income tax. are 60% for A and 85% for B. Total fixed costs are P150,00.
c. The number of units that must be sold to earn an There are no other costs.
after-tax income of P90,000 if the income tax is
40%. Compute: (3 points)
d. The number of units required to break-even if the a. The weighted contribution margin ratio.
labor cost is 50 percent of variable costs and 20 b. The break-even point in sales pesos.
percent of fixed costs, and if there is a 10% c. The sales pesos necessary to generate a net
increase in labor costs. income of P9,000 if total fixed costs will increase
by 30%.

2. Michael Company sells one product for P100 per unit.

Variable costs are P60 per unit. Fixed costs are P150,000.
Michael results of operations for 2018 as follows: (4 pionts) 5. Beep Company sold 50,000 units of its product at P24 per
Income Statement unit. Variable costs are P13.20 per unit (manufacturing
For the Year Ended December 31, 2018 costs of P10 and selling costs of P3.20). Fixed costs are
incurred uniformly throughout the year and amount to
Sales 500,000 P594,000 (manufacturing costs of P400,000 and selling
Variable costs 300,000 costs of P194,000). There are no beginning and ending
Contribution Margin 200,000 inventories.
Fixed costs 150,000
Profit before tax 50,000 a. Compute the break-even point in units.
b. Compute the number of units that must be sold to
a. What are the degrees of operating leverage for realize a net income of P75,060 before taxes.
Michael Company? c. If the income tax rate is 35%, compute the number
b. What is the margin of safety in sales revenue? of units that must be sold to realize a net income
c. What is the margin of safety in units? of P68,900 after taxes.
d. What is the margin of safety in percentage? d. If labor costs were 50% of variable costs and 20%
of fixed costs, a 10% increase in wages and salaries
would increase the number of units necessary to
break-even. Compute the break-even units.
3. FULL TON COMPANY e. What was the Beep’s net income or loss?
Financial Project for Product USA
For the Year Ended December 31, 2018

Sales (100 units at P100) 10,000

Manufacturing costs:
Direct Labor 1,500
Direct Materials 1,400
Variable FOH 1,000
Fixed FOH 500 4,400
Selling Expenses:
Variable 600
Fixed 1,000
Administrative Expenses:
Variable 500
Fixed 1,000 3,100
Operating Income 2,500

(3 points)
a. How many units of product USA would have to be
sold to break-even?
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