AE323 Midterm Quizzers AY 23 24
AE323 Midterm Quizzers AY 23 24
AE323 Midterm Quizzers AY 23 24
Department of Accounting
Information System
AE323
MIDTERM PROJECT
Cost Classification
1. The AAA Company is manufacturer of toys and have the following costs:
2. BBB Company is manufacturer of furniture and have the following costs per unit.
Total units produced is 200 and units sold is 130. Each product is sold at P3,200.
Glass P450
Laborer 500
Factory supplies 90
Transportation out 100
Wood 600
Factory utilities 125
Marketing cost 50
Screws and nails 80
Depreciation of factory building 300,000
Salary factory janitor 48,000
Salary of manager 720,000
4. DDD Company sells its commercial products at full cost plus 25% mark up.
Given the following data, compute for the ratio of contribution margin. 20%
If variable overhead is 50% of the total manufacturing cost, compute for the total
variable cost? (Give the answer)
6. During the month of May, Vinarao Corp. produced and sold 12,000 units of
products. Manufacturing and selling costs incurred during May were:
The product unit’s cost under absorption costing was? (Give the answer)
7. Excellent Writer produces and sells boxes of signing pens for P1,000 per box.
Direct materials are P400 per box and direct manufacturing labor averages P75 per
box. Variable overhead is P25 per box and fixed overhead is P12,500,000 per year.
Administrative expenses, all fixed, run P4,500,000 per year, with sales commissions
of P100 per box. Production is expected to be 100,000 boxes, which is met every
year. For the year just ended, 75,000 boxes were sold. What is the inventoriable
cost per box using variable costing? P500
What would Vicencio Corporation’s operating income be for 2024 using the
absorption costing system? P400,000
Labasan Corporation began the year with no inventory, produced 5,500 units and
sold 5,250 units. What is Labasan Corporation’s ending inventory cost using
absorption costing? P12,500
10. During the last year, Hansen Company had profit under absorption costing that was
P5,500 lower than its income under variable costing. The company sold 9,000 units
during the year and its variable cost were P10 per unit, of which P6 was variable
selling expense. If fixed production cost is P5 per unit under absorption costing
every year, then how many units did the company produced during the year? 7,900
units
11. Indiana Corporation produces a single product that it sells for P9 per unit. During
the first year of operations, 100,000 units were produced and 90,000 units were
sold. Manufacturing costs and selling and administrative expenses for the year were
as follows:
What was Indiana Corporation’s profit under absorption costing? (Give the answer)
12. Last year, fixed manufacturing overhead of XYZ Company was P30,000, variable
production cost were P48,000, fixed selling and administration costs were P20,000
and variable selling administrative expenses were P9,600. There was no beginning
inventory. During the year, 3,000 units were produced and 2,400 units were sold at
a price of P40 per unit. Compute for the changes in inventory. (Give the answer)
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What amount should be considered product cost for external reporting purposes?
P898,000
How much of the costs should be inventoried for external reporting purposes?
P512,000
What amount should be considered product cost for internal reporting purposes?
P640,000
16. The following information pertains to the product produced by the Men’s Belt
Division of Leather Goods Corporation:
During the period, Division produced 10,000 units and sold 90,000 units, both as
budgeted. There was no beginning and ending work-in-process inventories, and
there was no beginning finished goods inventory during the period.
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There was no difference between the total budgeted and actual fixed costs.
Variable manufacturing costs vary with production while variable selling costs vary
with sales. Central administration costs are allocated to the different divisions of the
company. For this period, central administration cost allocated to Men’s Belt
Division amounted to P150,000.
Assuming that 40% of the Division’s total fixed costs is controllable by the Division
Manager, how much was the division’s operating income during the period?
P88,000
A B
Sales P150,000 P400,000
Other revenues 10,000 15,000
Direct materials 30,000 65,000
Direct labor 20,000 40,000
Variable factory overhead 5,000 15,000
Fixed factory overhead 25,000 55,000
Variable selling and admin expenses 15,000 30,000
Fixed selling and admin expenses 35,000 60,000
Central corporate expenses (allocated) 12,000 20,000
18. The following is a summarized income statement of Carr Co’s profit center for the
month of March 2024.
Which of the following amounts is most likely not subject to the control of the profit
center’s manager? P33,000
Accept or Reject
During the month, Alex has received a special, one-time order for 1,500 units of
Sensory Switch.
Assume that the excess capacity available for the special order is only 1,000 units,
so that if the order were accepted, Alex would have to reduce sales to regular
customers. What is the minimum price for this special order? P100
20. Faith Corporation has considerable excess capacity. During the month, it received a
special order at a price much lower than its regular price. The special order’s cost
sheet shows the following:
Materials P8,000
Labor 12,000
Variable factory overhead cost 35,000
Fixed factory overhead cost 20,000
The applied fixed factory overhead cost includes an allocated P5,000 for in-house
design costs, although no in-house design cost will be done for the special order.
Instead, the job will require the use of external designers for which the company will
incur P7,000.
What is the total amount to be included in the calculation to determine the minimum
acceptable price for the special order? (Give the answer)
A foreign distributor has offered to buy 15,000 units at P90 per unit during 2023.
Assume that all of Jordan’s cost would be at the same levels and rates in 2023 as in
2024. If Jordan accepted this offer and rejected some business from regular
customers so as not to exceed capacity, what would be the total contribution margin
under special sales for 2024? P525,000
Make or Buy
22. Plainfield Company manufactures part G for use in its production cycle. The cost
per units for 10,000 units of part G are as follows:
Prime cost 18
Conversion cost 21
Variable overhead 10
Total manufacturing cost 35
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Verona Company has offered to sell Plainfield 15,000 units of part G for P35 per
unit. If Plainfield accepts Verona’s offer, the released facilities could be used to
save P45,000 in relevant costs in the manufacture of part H. In addition, P5 per unit
of the fixed overhead applied to part G would be totally eliminated. How much is the
cost to buy? P255,000
23. Red Nose Company makes hoses for its sprayers. Unit costs applicable to these
hoses are:
Prime cost 55
Variable overhead cost 9
Five thousand units are required for the year. The space is used for the hosses
production can be used as warehouse and will save rental cost of P48,000 per year.
The hoses can be bought for P70 per piece. How much is the cost to buy per unit?
(Give the answer)
24. Picnic Items Inc manufactures coolers of 10,000 units that contain a freezable ice
bag. For an annual volume of 10,000 units, fixed manufacturing costs of P500,000
are incurred. Variable costs per unit are:
Bags Corp. offered to supply the assembly ice bags for P60 with minimum order of
5,000 units. If Picnic accepts the offer, the direct materials for the freezable bag will
cost Picnic P20 if it will produce it, instead of P80 per unit. How much is the net
savings? P50,000
Drop or Add
25. Rice Corporation currently operates two divisions which had operating results for
the year ended December 31, 2024 as follows:
Since the Troy Division also sustained an operating loss during 2024, Rice’s
president is considering the elimination of this division. Assume that the Troy
Division fixed cost could be avoided if the division were eliminated. If the Troy
Division had been eliminated on January 1, 2024, Rice Corporation’s operating
profit would be? (P30,000)
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C J P
Sales P200,000 P150,000 P125,000
Direct fixed cost 60,000 35,000 40,000
Allocated fixed 35,000 40,000 25,000
cost
Variable cost 95,000 75,000 50,000
The Company lost its lease and must move to smaller facility. As a result, total
allocated fixed costs will be reduced by 40%. However, one product must be
discontinued. Which Company should be discontinued? P Company
27. Condensed monthly operating profit data for Frodo Baggins, Inc. for May 31, 2024
follow:
28. Julius International produces weekly 15,000 units of Product Ji and 30,000 units of
Product Jill for which 800,000 common variable costs are incurred. These two
products can be sold as is or processed further. Further processing of either
product does not delay the production of subsequent batches of the joint products.
Below is information:
Ji Jill
Unit selling price without process further P24 P18
Unit selling price with further processing 30 22
Total separately weekly variable costs 100,000 90,000
The study shows that after further application of additional manufacturing process,
the following is projected
Fixed cost of the plant amounts to P500,000. Interest rate is 12%. Which product
should go through additional manufacturing process? Meat
30. Whitehall Corporation produces chemicals used in the cleaning industry. During the
previous month, Whitehall incurred P300,000 of joint costs in producing 60,000
units of AM-12 and 40,000 units of BM-36. Whitehall uses the units-of-production
method to allocate costs. Currently, AM-12 is sold at split off for P3.50 per unit.
Flank Corporation has approached Whitehall to purchase all of the production of
AM-12 after further processing. The further processing will cost Whitehall P90,000.
What is the incremental profit (loss) if product is sold at split off? (Give the answer)
/fd