AE 122 Enhancement Activity

Multiple Choice. Select the best answer. Show computations on problems. Gross Profit Analysis

1. Gross profit may vary due to one or a combination

of the following except: A) change in sales mix. B) 8. The decrease in gross profit due to decrease in
change in quantity sold. C) change in units selling price must be A)P72,000 B) P79,200 C)
produced. D) change in production costs. E) P81,000 D) P90,000
change in unit selling prices.
9. The sales volume variance must be: A) P63,000 U
2. The gross margin percentage is equal to: A) Net B) P90,000 F C)P108,000 F D) P108,000 U
operating income + Operating expenses/Sales B)
Net operating income/Sales C) Cost of goods 10. The increase (decrease) in quantity sold must be:
sold/Sales D) Cost of goods sold/Net income A) (7.95%) B) 12.00% C) 13.33% D) 13.64%
3. Variance that arises solely because the actual
units sold differs from the budgeted units to be 11. The change in gross profit due to change in cost
sold. A) sales price variance B) sales volume price must be: A)P39,680F B) P47,290 F C)
variance C) sales mix variance D) none of the P47,290 U D) P63,290 F E) P63,290 U
above.
12. The change in gross profit due to change in
4. In a multi-product company, the sales volume quantity sold must be: A)P42,710 U B) P44,710 F
variance can be divided into what variances? A)
C) P63,290 U D) P108,000 F
mix and production volume B) sales mix and sales

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quantity C) sales price and sales volume D) sales

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volume and sales quantity 13. The percent of increase (decrease) in cost price

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5. A cost variance of zero indicates that the D) (9.85%)

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manufacturing management was A) unable to
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keep production costs at budgeted costs B) able to The following information were from the
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control production cost below budgeted costs C)

condensed income statements of Stallion
able to control production costs at budgeted costs
D) unable to keep production costs at budgeted Company who is producing a single product (in
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costs even if the purchasing department was able thousands):

to keep the budgeted price.
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2018 2019
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Sales P72,000 P87,480

6. If the sales this year amounted to P500,000, sales Cost of Sales 45,000 64,800
this year at last year’s prices is P460,000. The
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cost of sales this year is P300,000, and the cost of The owners would like to know what reasons
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sales this year at last year’s price is P260,000.

caused the current performance of the company
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How much is the gross profit variation due to sales

price factor? A) P0 B) P400,000 U C) P40,000 F and ask your opinion. Through review of the
D)P240,000 F E) can’t be determined complete records you were able to obtain this
additional information: (1) The selling price
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7. If the sales this year amounted to P276,000, sales for every unit is P7.20 during 2018 and; (2) The
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this year at last year’s price is P230,000, the cost marketing department did a tremendous job and
of sales this year is P190,000, and the cost of
was able to increase sales units by 20% during
sales this year at last year’s price is P180,000.
How much is the gross profit variation due to sales 2019.
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quantity factor? A) P0 B) P40,000 U C) P40,000 F

D)P240,000 F E) can’t be determined 14. The increase (decrease) in gross profit because of
the change in units sold is: A) (P4,320) B) P5,400
Pierce Corporation has the following gross profits C) P14,400 D) P23,400
for 2018 and 2019:
2019 2018
15. The increase (decrease) in gross profit because of
Sales P810,000
P792,000 the change in sales price is: A) P900 B) P1,080 C)
Cost of Sales 480,000 464,000 (P4,320) D) P15,480
Gross Profit P330,000
P328,000
Sales price was 10% lower during 2019:

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AE 122 Enhancement Activity
Multiple Choice. Select the best answer. Show computations on problems. Gross Profit Analysis

16. The increase (decrease) in gross profit because of 2020 Product Units sold Total Price Total Cost
the change in unit cost is: A) (P19,800) B) One 20,000 P240,000 P180,000
P10,800 C) (P10,800) D) P9,000
Two 20,000 180,000 150,000
17. The percentage increase (decrease) in sales
Three 4,000 20,000 16,000
price is: A) (2.125%) B) 1.25% C) (1.25%)
D) 2.125%
23. The Sales Price factor shows a variance of: A)
18. The percentage increase (decrease) in unit P56,000 F B) P56,000 U C)
cost is: A) 20% B) (20%) C) 44% D) (44%) P100,000 F D) P100,000 U

The following data for the years ended 24. The Cost Price factor shows a variance of: A)
December 31, 2019 and 2020 were presented P28,000 F B) P28,000 U C)
to the management of Zigzag Company: P63,500 F D) P63,500 U
Net Sales Cost of Sales Gross Profit
2020 1,363,000 911,800 451,200 25. The Sales-mix factor shows a variance of: A)
2019 1,250,000 776,000 474,000 P2,500 F B) P2,500 U C) P2,750 F D) P2,750
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The management requested you to determine
the cause of the decline in gross profit on

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sales in spite of the favorable information
given by the sales division that the quantity

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sold in 2020 was higher than in 2019 and that
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the production costs in 2020 were lower than

that of 2019 by 6%.
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19. The percent change in volume is: A) 17.50%

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B) 14.00% C) 25.00% D) 20.00%

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20. The increase (decrease) in net sales due to

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volume factor is: A) (P194,000) B)

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P194,000 C) (P312,500) D) P312,500

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21. The increase (decrease) in net sales due to

price factor is: A) (P113,000) B)
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P113,000 C) (P199,500) D) P199,500

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22. The increase (decrease) in net sales due to

cost factor is: A) (P135,800) B)
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P135,800 C) (P58,200) D) P58,200

Numbers Company manufactures 3 consumer

products, namely One, Two, and Three. Sales
and other information related to the said
products are as follows:
2019 Product Units sold Unit Price Unit Cost

One 15,000 P10 P8

Two 20,000 8 7
Three 5,000 6 4.50

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 AE 122 Enhancement Activity
Multiple Choice. Select the best answer. Show computations on problems. Gross Profit Analysis

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