ACTIVITY # 1: MANAGEMENT ADVISORY SERVICES PART 1

The following information is for Questions 1 to 3:

White Feather Inc has the following information is available for June 2019:
Beginning Ending
Raw Material Inventory P 6,000 P 7,500
Work in Process Inventory 17,300 11,700
Finished Goods Inventory 21,000 16,300

1. Direct labor is P9.60 per hour and overhead for the month was P9,600. Compute total manufacturing costs
for June, if there were 1,500 direct labor hours and P21,000 of raw material was purchased.
A. P58,500 C. P43,500
B. P46,500 D. P43,100
2. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. What are prime costs and
conversion costs, respectively if there were 1,500 direct labor hours and P21,000 of raw material was
purchased?
A. P29,100 and P33,900 C. P33,900 and P29,100
B. P33,900 and P24,000 D. P24,000 and P33,900
3. Direct labor is paid P9.60 per hour and overhead for the month was P9,600. Cost of Goods Manufactured,
if there were 1,500 direct labor hours and P21,000 of raw material was purchased is
A. P49,100. C. P51,000.
B. P45,000. D. P49,500.
4. The following are selected information about Blue Company’s operations at high and at low levels of
activity follow:
Level of Activity
Low High
Number of units produced ............ 25,000 30,000
Total manufacturing costs ........... P575,000 P680,000
Direct material cost per unit ....... P5 P5
Direct labor cost per unit .......... P6 P6

Using the high-low method, what is the cost formula for manufacturing overhead?
A. P50,000 per period plus P10 per unit C. P50,000 per period plus P22 per unit
B. P50,000 per period plus P21 per unit D. P347,000 per period plus P0.10 per unit
5. At a sales level of P300,000, Tofu Inc.'s gross margin is P15,000 less than its contribution margin, its net
income is P50,000, and its selling and administrative expenses total P120,000. At this sales level, its
contribution margin would be:
A. P250,000. C. P170,000.
B. P155,000. D. P185,000.
6. WHT Company provided the following information., which would like help in estimating its future
maintenance costs:
Units Maintenance Cost Units Maintenance Cost
3 P450 11 P640
7 P530 15 P700
Using the least-squares regression method to estimate the cost formula, the expected total cost for an activity
level of 10 units would be closest to:
A. P612.50. C. P595.84.
B. P581.82. D. P601.50.
7. During the year just ended, Dazed Company' income under absorption costing was P3,000 lower than its
income under variable costing. The company sold 9,000 units during the year, and its variable costs were
P9 per unit, of which P3 was variable selling expense. If production cost is P11 per unit under absorption
costing every year, then how many units did the company produce during the year?
A. 8,000. C. 9,600.
B. 10,000. D. 8,400.
8. Last year, fixed manufacturing overhead was P30,000, variable production costs 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. Under variable costing, net income would be:
A. a profit of P6,000. C. a loss of P2,000.
B. a profit of P4,000. D. a loss of P4,400.
9. Last year, Tower Company reported P750,000 in sales (25,000 units) and a net income of P25,000. At the
break-even point, the company's total contribution margin equals P500,000. Based on this information, the
company's:
A. contribution margin ratio is 40%. C. variable expense per unit is P9.
B. break-even point is 24,000 units. D. variable expenses are 60% of sales.
10. Last year, Coffee Café Inc., reported sales of P640,000, a contribution margin of P160,000, and a net loss
of P40,000. Based on this information, the break-even point was:
A. P640,000. B. P480,000.
 C. P800,000. D. P960,000.
11. Forever Y Company has a margin of safety percentage of 20%. The break-even point is P400,000 and the
variable costs are 40% of sales. Given this information, the net income is:
A. P48,000. C. P60,000.
B. P80,000. D. P0.
12. Rainz Corp. is planning to sell 200,000 units for P2.00 a unit and will just break even at this level of sales.
The contribution margin ratio is 25%. What are the company's fixed expenses?
A. P100,000 C. P200,000
B. P160,000 D. P300,000
13. Frieda Company has budgeted sales and production over the next quarter as follows:
April May June
Sales in units ......... 100,000 120,000 ?
Production in units ..104,000 128,000 156,000
The company has 20,000 units of product on hand at April 1. A minimum of 20% of the next month's sales
needs in units must be on hand at the end of each month. July sales are expected to be 140,000 units.
Budgeted sales for June would be (in units):
A. 188,000. C. 128,000.
B. 160,000. D. 184,000.
14. Wishy Wash Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and
70,000 units in June. The company desires that the inventory on hand at the end of each month be equal
to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31
there were 25,000 units of Product W in the ending inventory. Given this information, Wishy Wash
Company's production of Product W for the month of April should be:
A. 60,000 units. C. 75,000 units.
B. 65,000 units. D. 66,000 units.
15. SS Firm's sales budget shows quarterly sales for the next year as follows:
Quarter Sales (units) Quarter Sales (units)
First ..... 10,000 Third ..... 12,000
Second .... 8,000 Fourth .... 14,000
Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next
quarter's sales. Budgeted production for the second quarter should be:
A. 7,200 units. C. 8,800 units.
B. 8,000 units. D. 8,400 units.
16. The following are selected data from WHO Industries’ year-end financial statements are presented below.
The difference between average and ending inventory is immaterial.
Current ratio ............ 2.0 Inventory turnover ....... 8 times
Acid-test ratio .......... 1.5 Gross profit margin ...... 40%
Current liabilities ...... P120,000
Sheridan's sales for the year was:
A. P800,000. C. P1,200,000.
B. P480,000. D. P240,000.
17. QB Company's price-earnings ratio is 8.0 and the market price of a share of common stock is P32. The
company has 3,000 shares of preferred stock outstanding with each share receiving a dividend of P3 per
share. The earnings per share of common stock is:
A. P10. C. P4.
B. P7. D. P3.
18. A Company has a current ratio of 3.5 to 1 and an acid-test ratio of 2.8 to 1. Current assets equal P175,000
of which P5,000 consists of prepaid expenses. The Company's inventory must be:
A. P30,000. C. P50,000.
B. P40,000. D. P35,000.

Hello Company makes and sells a single product and uses a flexible budget for overhead to plan and control
overhead costs. Overhead costs are applied on the basis of direct labor-hours. The standard cost card shows
that 5 direct labor-hours are required per unit. Hello Company had the following budgeted and actual data for
March:
Actual Budgeted
Units produced ............... 33,900 30,800
Direct labor-hours ........... 161,800 154,000
Variable overhead costs ...... P140,500 P123,200
Fixed overhead costs ......... P80,000 P77,000

19. The variable overhead spending variance for March is:

A. P4,900 U. C. P14,700 U.
B. P11,060 U. D. P17,300 U.
20. The variable overhead efficiency variance for March is:
A. P12,400 F. C. P12,400 U.
B. P6,160 U. P 6,1 6 0 F .