ASSIGNMENT #9

Multiple Choice Problems

Answer: Solution:
1) A.

2) B. ₱250,000 VOH ₱200,000 / 40,000dlh = ₱5 × 38,000dlh =

₱190,000
FOH
60,000
Total Overhead Cost
₱250,000

3) A. 4% Controllable Margin ₱ 80,000

Divide by: Total Ave. Assets 2,000,000
Return on Investment 4%

4) D. ₱265,000 VC/u ₱12 × 20,000u = ₱240,000

FC 25,000
Flexible Budget ₱265,000

5) B. No, the return Sales ₱100,000 – Expenses ₱86,000 = CM ₱14,000

is less than the Divide by: Ave. Operating Assets 200,000
Return on Investment 7%
required rate of
9%

6) B. ₱60,000 Contribution Margin ₱100,000

Controllable Fixed Costs (40,000)
Controllable Margin ₱60,000

7) A. The actual
results for
41,000u w/ a new
budget for
41,000u

8) C. ₱88,500 VOH (₱85,000 – ₱15,000)/20,000u × 21,000u

₱73,500
Dep’n on factory building
15,000
Allowed Flexible Budget
₱88,500

9) C. 16,000 direct Variable budgeted Manu Cost (₱120,000 – 40,00)

labor hours ₱80,000
Divide by: VC/u

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 5
Direct labor hours
16,000

10) B.

11) B. ₱40,000 Budgeted CM (₱600,000 – 200,000) ₱400,000

below Actual CM (₱580,000 – 220,00) 360,000
Difference
expectations ₱40,000

12) A. ₱450,000 ROI 10% = ₱45,000 CM / x

x = ₱45,000 / 10%
x = ₱450,000

13) C. ₱16,000 Controllable Margin ₱80,000

Desired rate of return (800,000 × 8%) (64,000)
Residual Income ₱16,000

14) ₱40,000 CM ₱100,000 – Direct FC 60,000 = ₱40,000

15) A. 30% Improved CM (100,000 + 20,000 – 60,000) ₱60,000

Divide by: Average Ope. Assets 200,000
Return on Investment
30%

16) A. Division A

17) B. Projects A, A 40,000/500,000 = 8% ROI

C, and D B 30,000/450,000 = 6.67% ROI
C 32,000/375,000 = 8.53% ROI
D 40,000/425,000 = 9.41% ROI

18) C. A decrease Current ROI 62,000/200,000

of 3.3% 31.00%
Forecasted ROI (62,000 + 10,000)/(200,000 + 60,000)
27.69%
Change in ROI
-3.31%

19) D. 30% CM 90,000/Total Average Assets 300,000 = 30%

20) B. Yes, the New CM (90,000 – 50,000) 40,000

new ROI is still Divide by: 300,000
New ROI 13.33%
above the
required ROI

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21) C. A decrease Current ROI 46,000/210,000
of 3.5% 21.90%
New ROI 46,000/(210,000 + 40,000)
18.40%
Change in ROI
-3.50%

22) B. ₱21,000 Controllable Margin ₱125,000

Desired rate of return (1,300,000 × 8%) (104,000)
Residual Income
₱21,000

23) A. No, since New ROI = 200,000/(800,000 + 150,000) = 21.05%

ROI will be
lowered

24) D. ₱600 Net Operating Income ₱3,600

Desired rate of return (30,000 × 10%) (30,000)
Residual Income ₱600

25) C. 12% NI ₱3,600/30,000 = 12%

26) B. ₱150,000 Sales

₱10,000,000
COGS
7,000,000
Gross Profit
3,000,000
Expense (50% of GP)
(1,500,000)
Net Operating Income ₱1,500,000
Desired rate of return (15,000,000 × 9%)
(1,350,000)
Residual Income
₱150,000

27) A. 10% ROI = 1,500,000/15,000,000 = 10%

28) C. ₱40 FC deducted on Osh = (100 × .60) – 40 = ₱20

FC deducted on Kosh = (150 × .45) – 27.50 = ₱40
Common FC = 100,000 – (20 + 40) = ₱40

29) B. Aii ₱9,000; Aii = 20,000 – 8,000 = 12,000 – 3,000 = ₱9,000

Bii ₱24,000 Bii = 40,000 – 12,000 = 28,000 – 4,000 = ₱24,000

30) B. ₱400 CM (100 × 60% × 20u) ₱1,200

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 Traceable FC (1,500 × ⅓) + (1,000 × 30%) (800)
Segment Margin
₱400

Problems
Solution:
8.1 Controllable Margin = ₱800,000 – 500,000 = ₱300,000
) ROI 12% = CM ₱300,000 / x
x = ₱300,000 / 12%
x = ₱2,500,000

8.2 Controllable Margin = ₱142,000 – 77,000 = ₱65,000

)

8.3 ROI = ₱640,000 / [(3,400,000 + 4,600,000)/2] = 16%

)

8.4 Toys Shirts

) Controllable Margin 120,000 10,000
Desired rate of return
900,000 × 12% (108,000)
200,000 × 12% (24,000)
Residual Income ₱12,000 (₱14,000)

8.5 Osenesimus Company

) Manufacturing Performance Budget Report
For the year Ending December 31, 2023

Budget Actual
Differences
Direct Materials ₱ 63,800 ₱ 65,000 ₱
1,200U
Direct Labor 81,200 81,000

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 200F
Fixed Overhead 35,000 34,500
500F
Total Costs ₱180,000 ₱180,500
₱500U

8.7 Project’s ROI = (120,000 – 84,00) / 180,000 = 20%

) - The company should accept the project since it reached, and
even surpass the required rate of return of 15%.

8.1 Flexible Budget for 31,000 machine hours

2) Budget Actual
Difference
Indirect Labor ₱15,500 ₱14,800
₱700F
Indirect Materials 46,500 44,000
2,500F
Maintenance 12,400 12,000
400F
Utilities 6,200 6,500
300U
Supervision 4,000 4,200
200U
Insurance 2,000 2,100
100U
Property Taxes 1,000 800
200F
Depreciation 9,000 8,600
400F
Total Costs ₱96,600 ₱93,000
₱3,600F

8.2
1) Division
J K L
Income 140,000 600,000 2,400,000
Revenue 2,000,000 15,000,00 48,000,00
0 0
Invested capital 500,000 3,000,000 16,000,00
0
Income % of revenue 7% 4% 5%
Capital Turnover 4 5 3
Rate of return on invested 28% 20% 15%
capital
Imputed int. rate on invested 20% 12% 12%
capital
Residual Income 40,000 240,000 480,000

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8.2 1) Income percentage of revenue:
3) A = 180,000 / 3,600,000 = 5%
B = 126,000 / 1,800,000 = 7%
C = 80,000 / 8,000,000 = 1%

Capital Turnover:
A = 3,600,000 / 1,000,000 = 3.6
B = 1,800,000 / 600,000 = 3
C = 8,000,000 / 800,000 = 10

Rate of return on invested capital:

A = 180,000 / 1,000,000 = 18%
B = 126,000 / 600,000 = 21%
C = 80,000 / 800,000 = 10%

2) When it comes to income percentage of revenue, Division B is

the best performer for having the highest percentage of 7%. In
terms of capital turnover, Division C is the best performer for
having the most frequent turnover of 10 times. And lastly, based
on the rate of return on invested capital, Division B is the best
performer for having the highest percentage of return, which is
21%.

3) A = 180,000 – (1,000,000 × 10%) = ₱80,000

B = 126,000 – (600,000 × 10%) = ₱66,000
C = 80,000 – (800,000 × 10%) = ₱0
- The best performer with regards to the residual income is
Division A, it got the highest residual income of ₱80,000.

8.3 DESCRIPTION
0) Direct Materials Variable Controllable
Indirect Materials and Supplies Variable Controllable
Direct Labor Variable Controllable
Indirect Labor Variable Controllable
Salary, supervisor of Dept 4 Fixed Uncontrollable
Gasoline Cost Variable Controllable
Utilities (electric and gas) Variable Controllable
Maintenance and repairs Fixed Uncontrollable
Plant supervisor Fixed Uncontrollable
Administrative services allocated Fixed Uncontrollable

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 Depreciation - building Fixed Uncontrollable
Deprecation - equipment Fixed Uncontrollable

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