XAVIER UNIVERSITY - ATENEO DE CAGAYAN ‘School of Business and Management ‘Department of Accountancy TIAL EXAMINATION A C8 (STRATEGIC COST MANAGEMENT) Testa: - R Manufacturing has accumulated the following cost information related to the production and sale: 2F 6000 units of product Direct labor ours 4500 Averagetabor rate Pofhoer Direct materia 25,000 ate seling price raaso ‘Variable rmarartaciring overhond 110% of vet material Variable seing and administrative expense Pafanit xed seling nd adminkstrative expen Paz000 Fixed manofacturing overhead vz7900 ‘ateutae Ws gross prof using variable costing relatd to product B. 2 No plans to shu down a division with 8 P 20000 contibution margin. Overhead allocated P 50,000, P'5,000 of which cannot be eliminated. What the inreaze in income by discontinuing the division? 3) kL. company curently sll 10,00 units f product MforP 18.00 each. Variable costs ae P 8.00 per unit. A discount stare has offered P 16.00 fr 8,000 unis of product M. The managers baieve tht if they acept the special order, they wl lace some sales atthe regular pice. Determine the number ‘of units could lose befor the order became unproftable. 4) R, which bogan business at the start of the curront year, had the following data: Planned and actal protction: 40,000 unite Sales: at PES perunit 37,000 unit Production coz: Variable Paper unit Fired: 260,000 Selling and administrative costs: ‘ari: Pt port Fucd: 32,000 “Tho gross margin that the company would disclose on an absorption-costng income statement is: 5) IMA, which began business at the start of the current year, had the following data: Planned and actual production: 40,000 units Sales: at PAS per unit 37,000units Production cost: Variable: Paper unit 260,000 Selling and adminlstrative costs: ‘Variable: Piper unit Fac 32,000 “The contuibution margin thatthe company would dzcose on an absorption-costing income statement I: ° C began business at the start of the current year. The company planned to produce 25,000 Units, and actual production conformed to expectations. Sales totaled 22,000 units at P30 each. Costs incurred were: Fixed manufacturing overhead 150,000 100,000 Varlable manufacturing cost per unit 8 Variable selling and administrative cost per unit 2s If there were.no variances, the company’s absorptlon-costing net Income would be: 7) Thefollowing data relate to Corporation for the year just ended: Sales revenue 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 310,000 Varlable selling and administrative cost 50,000 Fixed solling and administrative cost 75,000 ‘Which of the following statements is correct? > He varlable-costing income statement would reveal a erase marpin af P?70. 00.3) » 30) uy 2) 13) 1) 1%) 16) Fu) 2) Pec Tartio ha the following sales mi fori thio products: A, 20%; B, 35Hcand¢, St. ae at 2a Poo 00 and the weighted overage contbuton arin P00. Mow many ‘mt of Product A must be sold te break-even? Which of the: 3 A15% de BAK following would decrease contribution marala per unl the most? rease Inseling pice increase in variable expensea in sling 4.815% decessen vata copenses rac ratYB3d 825 percent margin of sfey. is after-tax refun on sakes 2.6 percent and tax ‘te of 40 percent. What cB eonmibuton marge ease prodeenent manufactures single product arable production cott are P20 and aed Mcgee 28 £8 730,000. R uses anormal atty af 20,00 nist sett standard cost. arene ne YE3t ult no inventory, produced 22/000 unt, and aoid 2,000 une, The voles ‘arlance under variable costing world be forthe at ne atable costing The fied manufacturing overhead cont hee been 5 es ‘ortho fast three yar 21,500 units wore produced tnt fon, then ole otro een ‘D.Company has two divisions, Aand 6, that reported the following reclts for October: Dhviston A Division & Sales 30,000 150,000 Variable expenses as apetcentage otsales 70% 60% Segment margin 2,000 23,000 common fixed expenses were P31,000, total fixed expense: must have been: Company manafactures men’s caps. The projected Income statement forthe year before any special orders as follows: ‘Amount Per Unit ‘Sales 400,000 ba Cost of goods sold 320,000 (Gross margin 80,000 Pa Selling expenses 30/000 3 Operating income 50,000 PL Flxed costs included In above projected income statement are P80,000 In cost of goods sold and P9,000In ‘selling expenses. A specal order offering to buy 2,000 caps for PLT each was made to S. ‘eo selling expenses wil be incurred if the special order is accepted. Shas the capacity to ‘Ranuacture 2,000 more caps. Asa result ofthe special order, the operating income would Increase by er ean: itt mstral P65; drat labor, PLO; arable overhead, Po; apoled feed sverhend, PA: And variable sollng expenses, PZ. The special Relevant costs for prcinga special order Include casting fled manafacturing overhead b. nonmanufacturing cost thet, € additional setup costs fr the. 4.allof the above costs, /Armajor factor in evahating a special order a. The expected contribution margin onthe order b. The possible effects on sales at regular price, The avalabity of capacityo produce the additional units, 4. Allof the above.20) ay 2) 23) 2) 25) 26) 2) ng PAI espe Testo ihe 2 ea pegs omen ape ard coed Pn ea overhenatn Potent separ forth por K Cobar the Prt, 70 percent at FRO Foo, et NO continue, Ko. woukl be better oll bY Bnet g Y Mormon fr guectine 20 and 22 ‘towing cay, FOF P1B per ut andthe stand cnt err the prodit shown the Direct material pa Direct labor 2 Overhead (80% fed) 3 Tent ro R fort ne Pes defor 3,000 nts ofthe product The oly adtona cotta R would bo Beemer taxes of per unt, that Ron Sllallo the current production domestically, what would be the minimum sles pce ‘Rwould consis for this special order? ‘Aum that Rhasstfient dle capac to produce the 1,000 unit H want toncrease ts ‘erating profit by PS,co0, what would It charge asa per-unit seling pele? Use the following information for questions 22 and 25. Belioving that ts traditional casting system maybe providing misleading Information, an ‘rganlsstion is considering an atvtybased costing (ABC) approach teow employs aful-cost system and has been applying its manufacturing overhead on the basis of machine hours. Budgeted Badgoted Activity Cost Driver Aetity Cost Materials handling Novofpartshandled 6,000,000 720,000 ‘Setup costs No.of setups 750 335,000 Machining casts Machine hours 30,000 40,000 Quality control No. of batches 500 225,00 2,800,000 Costs, sales, and production data for one of the organization's products forthe coming year are as follows! Prime cost: Direct materials cost per unit Paco Direct labor cost per unlt (0.50 DLA @ P25/DLH) 075 Total Ps.as Sales and production data: Expected sales 20,000 units Batch she 5,000 unkts Setup 2per batch ‘Tota parts per finished unit Sparts ‘80MM per batch ‘Machina hours required {the organization uses the fulhcost system, the cost per unit for this product forthe coming year will be {the organization employs an actvity-based costing system, the cost per unitfor the product described forthe coming year will be ‘A company annually consumes 10,000 units of Part. The cirrying cost ofthis partis P2per yoar and the ordering costs are P00. The company uses an ordor quantity of 500 units. ifthe company operates 200 days per year, and the ead time for ordering Part Cl 5 days, whats the order point? Use the following information for questions 25 and 26. ‘The following information relates to financlal projections of BCo. for 2023: Projected sales {60,000 units Projected variable costs 2.00 per unit Projected fixed casts 50,000 per year Projected unit sales price P7.00 How many units would B Co. need to sell in 2023 to earn a profit before taxes of P10,0007 |B Co. achieves its projections in 2023, what will be its degree of operating leverage? ‘The master budget contains the following components, among others: (1) direct-material budget, (2) budgeted balance sheet, (3) production budget, and (4) cash budget. Which ofthese components ‘would be prepared first and which would be prepared last? Fist last : a aida2 29) 30) 31) 33) eo) 35) 36) 3a) 38) Stan to, 200,000, Free IK pe monta te OF Partcuar product during Sul, and expects sles to increase st e ibvetois area anne reandr of hr Te ne 20a Septmber 30 ondng Tato, he nated to be 1.100 unk and 290 nits, respectively nthe bass of Ding tm tent Erato queen Sth 57 oT ‘month oslo soon aoeimt ublet tothe folowing colecton pattern: 2% ar calcd nthe ‘nthe tet month after sale; nd 0% are collected i the second ‘October, November, and December were P70;000, 0,000, ae . what were the firm's budgated collections for December? makes allsales on mona titon aun, eto ong otcon ptr: 20 caed in trom ane Zt ecellece tho fst month afer sale and 10% ar calcd nthe second sales for October, November, and December were nk 50,000, veges fo October, November and Decamber were 770/00, P6000, and idgeted receivables balance on December 31? Thos ‘Company's budgeted income statement reflects the following amounts: estes Soler Purchases Expenses fnary 120,000 76,000 24,000 uy 120,000 6,000 24,200 325,900 31,250 27,000 April 330,000 4,500 28,600 Sales are oleted San the month of sl, 50% In the month folowing sal, and 18% i0 the ‘month following sale. One percant of sales Is uncollacible and expensed at the end of the Year. G pays forall purchases n the month following purchase and takes advantage of 3% lscount. The following balances are as of anvary 1: cosh 5,000 ‘Accounts recabvabl 58,000 ‘Accounts payable 72,000 OF this balance, P25}000 wil bo collected in January sind the remaining amount wil be callocted én February. “The monthly expense figures Include P5,000 of depreciation. The expenses are pald inthe month Incurred. Grainger’ expected cash balance at the end of lanuary i: The manufacturing cycle efficiency for P Company when the processing time & six hours and Inspection, waiting, and move time are one hour each i: “The folowing costs relate to R Company: Variable manufacturing cost, P42; variable sling and ‘bdministrative cost, P10; applied fixed manufacturing overhead, P37; and allocated fixed soling and cdministrative cost, PLZ if uses absorption manufacturing-cost pricing formas, the company's ‘markup percentage would be computed on the basis of: "The following data pertain to Q Enterprises: ‘Variable manufacturing cost P60 Variable solling and administrative cost 10 ‘Applied ford manufacturing cost 30 ‘located fixed selling and admlolstrative cost 5 ‘wat price willthe company charge ifthe firm uses costpls pricing based on total cost and 3 markup percentage of 6K? tt the target profi s 760,000 fora volume of 480 units, fxed costs aro P268,000, andthe variable ‘cost por units PASO, thon the markup percentage on varlable cost wold be: Which ofthe following torms describes a pricing strategy in which a now products inital price I sot Yelatvely Jow in order to gain a large matket share? Electronics currently sels a camers for P240. An aggressive competitor has announced plans fora similar product that will be aold for ?205. Fs marketing department beleves that Pe price dropped to meet competition, unkt sales wil increase by 20%. The current cost to He facture and aitbute tho camera P275, and Fhas 2 profit goal of 20% of sales. HF moots TDmpetitive selling prices, what ts the company’s target cost? conventional manufacturer to ‘Ajustntime manufacturer ls more kel th ta. receive more frequent deliveries of materats b.spend less money on advertising need workers with fewer sls a. all ofthe above39) 40) Test 2: UNSA NI COMPANY, a manufacturing firm, isin the inital year. You, as a newly hired budget staff, are interested in learning 25 budgoting procoss. As 2 starting point, (eStio data, ions 39 and Oper at Year end: me Curentarene ne neem ea: Long term assets 4,000,000 ‘Long-term liabitiies ‘Sao The tong: poo ee $5,000,000 je The far value organs a terest rate of an is far was eal Tig fe sake feat ana rrmaer eee america yearand. dts et ot ey cnt ans book value. The income tats 2%, sighted avera; barista Ag€ cost of capital to be used in the economic value added (EVA) ‘The economic value added (EVA) is Long Problom: (10 points) stages of preparing the annual budget for the coming ‘much 2s possible about the Vou ere eequired to come up with tho income taternent and balance sheet at the end of 2022 accounting period. The following data are made avalable: ‘Oui December 32, 2024, the UNSA NI COMPANY with outstanding ordinary shares Of ‘Thirty Thousand Pesos had the following assets and liabilities: ae : 76 of Property, Pant & Equipment ‘Accounts Receivable. 12% of cash Finished Goods 1 psf Property. Plant & Eauipment ‘Workin Process | 2 YBof Finished Goods Materials 1 2o0% oF workin Process Prepaid Expenses 1 afmot Workin Process property, Plant & Equipment (net) ~ 200% of Accounts Receivable = Poo more than the total of Cash, Acsounts a Trecehable, and Workin Process result basne i "result ofthe year’s business: «retained Earnings ccounineened 5 pase ond of 2022 tre ear isaqual to /60f he Te oat balances of Accounts Reeclvable, Dldends al fren bles ng feof ear werathe samme on December 31 202298 propald Expenses, CATT 34, 221. Inventories were Me ced by exactly 50%, except forte Fins + aed by 33 4/3% Property Pant, and ‘Equipment were reduced BY acd ioe i caer wt heed 7 SN ee ee stn tho aroun of acount ecevle af werhead and 257 cent hed gods costing 38,000, Deer abo 0s Dee dar, were ade on rpg yar Factory overhead Wis vied ace rate of 100% of hod goods St i. plied overhead equivalent to oneifteenth of ordinary shares on fabor 0o5t, applied amount, whic was ose Into the eost of goods sold account, ee Th yt nprocns athe set erage year, Total marketing and zo tho mount of wo £00 and P8,AOO respective: five expenses gonds sla statement or the cutent Yt coset or the current year. ne of December 31,2022. 5) lee or cash(t rove cash bane par sant sheet). {end of Final Examination)