MANAGERIAL ACCOUNTING

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The financial performance (in Philippine Pesos) of Gugma Corporation's two segments are shown below:

	NIYEBE	KIAT
Sales	1,425,000	480,000
Net operating income	391,875	127,200
Average operating assets	722,500	162,000
Minimum required rate of return	10%	15%

Determine the following:

1. Minimum required return for Niyebe =
2. Residual Income for Kiat =

Gugma Corporation incurred the following quality costs for the year ended 2021:

Cost of quality training	P 10,569
Cost of rework labor and overhead	P 14,498
Cost of field servicing	P 12,905
Cost of recalled product	P 10,209
Downtime due to rework	P 10,018
Product testing	P 11,289
Inspection of goods	P 13,920
Warranty replacements	P 14,348
Quality engineering	P 12,244

Determine the total prevention cost.

Gugma Corporation incurred the following quality costs for the year ended 2021:

Cost of quality training	P 12,486
Cost of rework labor and overhead	P 11,647
Cost of field servicing	P 11,132
Cost of recalled product	P 10,401
Downtime due to rework	P 10,834
Product testing	P 10,090
Inspection of goods	P 14,905
Warranty replacements	P 11,717
Quality engineering	P 11,360

Determine the total external failure cost.

Gugma Corporation produced 350 units of product HRYA. To produce this, the company used 1,800 kilograms of plastic which they bought at P12 per kilogram. On the other hand, the standard price per kilogram of plastic is set at P12.50.

The production resulted to an unfavorable total direct material spending variance of P850.

Using limited data, determine the following:

1. Direct material quantity variance =
2. Total standard kilograms allowed to produce the 350 units of product HRYA. =

For requirement 1, Indicate whether the variance is favorable or unfavorable. Follow the format for your final answer: xx,xxxx.xx FAVORABLE or xx,xxx.xx UNFAVORABLE. (For example, 20,050.00 FAVORABLE or 17,500.50 UNFAVORABLE). Round off final answers to two decimal places.)