Mac Midterm Exam

4-1
REBATO, NIÑO D.
MM
ASIAN DEVELOPMENT FOUNDATION COLLEGE

TACLOBAN CITY
GRADUATE SCHOOL
MIDTERM EXAMINATION - MAC
Test 1
Indicate whether the following statements are true or false. If false, explain why.
1. Managerial accountants have a single role within an organization: collecting and reporting
costs to management.
ANSWER: FALSE, managerial accountants also engage in various other activities to
support decision-making and improve the organization's overall financial performance
2. Financial accounting reports are general-purpose and intended for external users.
ANSWER: TRUE
3. Managerial accounting reports are special-purpose and issued as frequently as needed.
ANSWER: TRUE
4. Managers’ activities and responsibilities can be classified into three broad functions: cost
accounting, budgeting, and internal control.
ANSWER: TRUE
5. Managerial accounting reports must now comply with generally accepted accounting
principles (GAAP).
ANSWER: FALSE, Managerial accounting reports are not required to comply with
Generally Accepted Accounting Principles (GAAP).
For number 6 to 12
Match the numbered sentences with the corresponding terms. Write the letters only.
6.__G___All activities associated with providing product or performing a service.
7.__A__A method of allocating overhead based on each product’s use of activities in making
the product.
8.__E__Systems implemented to reduce defects in finished products with the goal of
achieving zero defects.
9. _B__ A performance measurement approach that uses both financial and non-financial
measures, tied to company objectives, to evaluate a company’s operation in an integrated
fashion.
10._D___Inventory system in which goods are manufactured or purchased just as they re
needed for use.
11._C___A company’s effort to employ sustainable business practices with regards to its
employees, society and the environment.
12.__F___A code of ethical standards developed to guide management to exercise correct
practices.
TERMS:
a. Activity based costing
b. Balanced score card
c. Corporate social responsibility
d. Just in time inventory
e. Total Quality Management
f. Statement of Ethical Professional Practices
g. Value Chain
4-2
Page 2 of 4 pages
Test 2
Manufacturing cost data for Copa Company are presented below.
Case A Case B Case
C
Direct materials used P (a) P68,400 P130,0

00
Direct labor 57,000 86,000 (g)
Manufacturing overhead 46,500 81,600 102,0
00
Total manufacturing costs 195,650 (d) 253,7
00
Work in process 1/1/20 (b) 16,500 (h)
Total cost of work in 221,500 (e) 337,0
process 00
Work in process 12/31/20 (c) 11,000 70,0
00
Cost of goods 185,275 (f) (i)
manufactured
Compute the cost of goods manufactured and sold by providing the correct answers to the letter.
Note Do not copy the problem. Write the letters with the corresponding answers.
Test 3
The condensed income statement for the Peri and Paul partnership for 2020 is as follows.
Peri and Paul Company
Income Statement
For the Year Ended December 31, 2020
Sales (240,000 P1,200,0
units) 00
Cost of goods 800,000
sold
Gross profit 400,0

00
Operating
expenses
Selling $280,000
Administrative 150,000 430,0
00
Net loss P (30,000)
A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the
selling expenses are variable, and 40% of the administrative expenses are variable.
4-3
Instructions
(Round to nearest unit, peso, and percentage, where necessary. Use the CVP income statement
format in computing profits.)
a. Compute the break-even point in total sales pesos and in units for 2020.
b. Peri has proposed a plan to get the partnership “out of the red” and improve its profitability.
She feels that the quality of the product could be substantially improved by spending P0.25
more per unit on better raw materials. The selling price per unit could be increased to only
P5.25 because of competitive pressures. Peri estimates that sales volume will increase by
25%. What effect would Peri’s plan have on the profits and the break-even point in pesos of
the partnership? (Round the contribution margin ratio to two decimal places.)
c. Paul was a marketing major in college. He believes that sales volume can be increased only
by intensive advertising and promotional campaigns. He therefore proposed the following
plan as an alternative to Peri’s: (1) increase variable selling expenses to P0.59 per unit, (2)
lower the selling price per unit by P0.25, and (3) increase fixed selling expenses by $40,000.
Paul quoted an old marketing research report that said that sales volume would increase by
60% if these
Page 3 of 4 pages
changes were made. What effect would Paul’s plan have on the profits and the break-even
point in pesos of the partnership?
d. Which plan should be accepted? Explain your answer.
Test 4
Ideal Manufacturing Company has supported a research and development (R&D) department
that has for many years been the sole contributor to the company’s new farm machinery
products. The R&D activity is an overhead cost center that performs services only to in-house
manufacturing departments (four different product lines), all of which produce
agricultural/farm/ranch-related machinery products.
The department has never sold its services to outside companies. But, because of its long history
of success, larger manufacturers of agricultural products have approached Ideal to hire its R&D
department for special projects. Because the costs of operating the R&D department have been
spiraling uncontrollably, Ideal’s management is considering entertaining these outside
approaches to absorb the increasing costs. However, (1) management doesn’t have any cost
basis for charging R&D services to outsiders, and (2) it needs to gain control of its R&D costs.
Management decides to implement an activity =based costing system in order to determine the
charges for both outsiders and the in-house users of the department’s services.
R&D activities fall into four pools with the following annual costs.
Market analysis P1,050,0

00
Product design 2,350,0
00
Product 3,600,0
development 00
Prototype testing 1,400,0
00
Activity analysis determines that the appropriate cost drivers and their usage for the four
activities are:
Total
4-4
Activities Cost Drivers Estimated

Drivers
Market analysis Hours of analysis 15,000

hours
Product design Number of designs 2,500desig
ns
Product development Number of products 90produ
cts
Prototype testing Number of tests 500 tests
Instructions
a. Compute the activity-based overhead rate for each activity cost pool.
b. How much cost would be charged to an in-house manufacturing department that consumed
1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and
requested 92 engineering tests?
c. How much cost would serve as the basis for pricing an R&D bid with an outside company on
a contract that would consume 800 hours of analysis time, require 178 designs relating to 3
products, and result in 70 engineering tests?
d. What is the benefit to Ideal Manufacturing of applying activity-based costing to its R&D
activity for both in-house and outside charging purposes?
Page 4 of 4 pages
Test 5 Note: No 1 and 2 are related data.

1. Billing Company produces and sells a single product. Expected sales for the next four
months are given below:
Sales in Units:
April 10,000
May 12,000
June 15,000
July 9,000
August 10,000
The company needs a production budget for the second quarter. Experience indicates that
end of the month inventories should equal 10 percent of the following month’s sales in units
At the end of March, 1000 units were on hand. Prepare the production budget for the
second quarter.
2. Continuing the problem of Billing company…

Each unit of product uses 5 ounces of raw materials. At the end of March, 11,250 ounces of
materials were on hand. The company wants to maintain an inventory of materials equal to 5 percent
of the following month’s production needs. Prepare the Materials Purchase Budget.
4-5
Test 6
Fisher company budgets cash two months at a time. Budgeted cash disbursements for March
and April are as follows:
March April
Inventory purchases P90,000 P82,000
Selling and Administrative
Expense ( including depreciation of
P5,000 per month.) 75,000 70,000
Equipment purchases 15,000 6,000
Dividend payment 5,000 0
Budgeted cash collection from
Customers 150,000 185,000
Cash balance March 1 10,000
There must be a minimum cash balance of P5,000 at the end of each month. If needed the
company can borrow money at 12% per year. All borrowings are at the beginning of a month, and
repayments are at the end of the month. Interest is paid only when money is being repaid.
Prepare a cash budget for March and April.
END
Pls send your admission slip together with answers to this account :
margie.mabitad511@gmail.com
All answers should be submitted on or before 3 pm today, September 24, 2023.
THANK YOU

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4-1

ASIAN DEVELOPMENT FOUNDATION COLLEGE

Direct materials used P (a) P68,400 P130,0

Gross profit 400,0

Net loss P (30,000)

Market analysis P1,050,0

Activities Cost Drivers Estimated

Market analysis Hours of analysis 15,000

Test 5 Note: No 1 and 2 are related data.

2. Continuing the problem of Billing company…

All answers should be submitted on or before 3 pm today, September 24, 2023.

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