1. Tokyo Company is a producer and distributor of various motorized recreational scooter, bike and motorcycle products. The Osaka division handles scooters and would like to earn a long-run rate of return of 20%. The Osaka division will change its unit selling price as necessary to provide this return. The following data are available on the division and its product:

Variable cost per scooter	P 200
Total annual fixed costs	P 1,220,000
Long-run normal demand	10,000 units each year
Average operating assets	P 1,400,000

How much should the company set as selling price if it is to achieve the target of 20% RoI?

Group of answer choices

a. P 294

b. P 350

c. P 228

d. P 150

2. For the past ten years, RM Company has produced small gas motors that fit into its main product line of weed-cutting machine. As material costs have steadily increased, the controller of RM Company is reviewing the decision to continue making the small motors and has identified the following:

1. The equipment used to manufacture the gas motors has a book value of P 350,000.
2. The space now occupied by the gas motor manufacturing department could be used to eliminate the need for storage space now being rented.
3. Units can be purchased from an outside supplier for P 89.95.
4. Five of the persons who work at the gas motor manufacturing department would be terminated and given severance pay.
5. P 25,000 unsecured note is still outstanding on the equipment used in the manufacturing process.

Which of these items are relevant to the decision that the controller is to make?

Group of answer choices

a. A, B, D and E

b. A, C and D

c. B, C and D

d. B, C, D and E

3. Kirei Company is considering an equipment upgrade. Kirei uses discounted cash flow (DCF) analysis in evaluating capital investments and has an effective tax rate of 40%. Selected data developed by Kirei is:

	Existing Equipment	New Equipment
Original cost	P 50,000	P 95,000
Accumulated Depreciation	45,000	-
Current Market Value	3,000	95,000
Accounts Receivable	6,000	8,000
Accounts payable	2,100	2,500

Based on this information, what is the initial investment for a DCF analysis of this proposed upgrade?

Group of answer choices

a. P 92,800.

b. P 96,600.

c. P 96,200.

d. P 95,800.

4. The condensed monthly estimated income data for Kaidama Stores are presented in the following table for November 2022:

	Mall Store	Downtown Store	Total
Sales	P 80,000	P 120,000	P 200,000
- Variable Expenses	32,000	84,000	116,000
Contribution Margin	P 48,000	P 36,000	P 84,000
- Fixed Expenses	20,000	40,000	60,000
Operating Income	P 28,000	(P 4,000)	P 24,000

Additional information

• Management estimates that closing the Downtown Store would result in a 10 percent decrease in Mall Store sales, while closing the mall store would not affect Downtown Store sales.
• One-fourth of each store's fixed expenses would continue through December 31, 2022 if either store were closed.
• The operating results for November 2012 are representatives of all months.

How much is the decrease in Kaidama monthly operating income during 2022 if the Downtown Store is closed?

Group of answer choices

a. P 40,800

b. P 25,200

c. P 10,800

d. P 6,000

5. A manufacturer uses a standard cost system with overhead applied based upon direct labor hours. The manufacturing budget for the production of 5,000 units for the month of May included the following information:

Direct labor:
10,000 hours at P 15 per hour	P 150,000
Variable overhead	30,000
Fixed overhead	80,000

During May, 6,000 units were produced and the fixed overhead budget variance was P 2,000 favorable. Fixed overhead during May was

Group of answer choices

a. Underapplied by P 16,000

b. Overapplied by P 16,000

c. Underapplied by P 2,000

d. Overapplied by P 18,000

6. The Machining Department of Hock Company has a total capacity of 2,400 machine hours per month. The company has three different products that it produces. Use the following information to determine the product mix that will produce the highest operating income.

	Machine Hours Per Unit	Contribution Margin per Unit	Current Unit Sales Demand
Superior	2	P 6.00	1,000
Deluxe	1	P 5.00	1,500
Standard	0.5	P 2.50	2,000

The product mix should be as follows:

Group of answer choices

a. Produce 500 units of Superior, 750 units of Deluxe, and 1,300 units of Standard

b. Produce 1,500 units of Deluxe, 450 units of Superior, and 0 unit of Standard

c. Produce 2,000 units of Standard, 1,400 units of Deluxe, and 0 unit of Superior

d. Produce 1,000 units of Superior, 800 units of Standard, and 0 unit of Deluxe

7. The first order of 500 units incurred P 120,000 of labor costs; the next order of 500 units required an additional P 72,000 of labor costs. What percentage of learning occurred?

Group of answer choices

a. 80%

b. 95%

c. 90%

d. 85%

8. Torikatsu Company purchased a machine for P 100,000; current accumulated depreciation totals P 40,000. Management is contemplating the purchase of a new machine for P 120,000. Current disposal of the old machine would cost P 60,000. What is the correct category for each item?

Group of answer choices

a. Sunk: P 100,000 cost of the old machine, P 60,000 disposal of old machine

b. Sunk: P 60,000 book value of old machine Relevant: P 60,000 disposal of old machine

c. Sunk: P 100,000 cost of old machine Relevant: P 120,000 cost of new machine

d. Sunk: P 100,000 cost of old machine Relevant: P 120,000 cost of new machine, P 60,000 disposal of old machine

9. Ayala Avenue invested in a four-year project. Ayala's cost of capital is 8 percent. Additional information on the project is as follows:

Year	Post-tax cash inflow	PV of P 1 at 8%
1	P 2,000	0.926
2	2,200	0.857
3	2,400	0.794
4	2,600	0.735

Assuming a net present value of P 2,500, what is the payback period?

Group of answer choices

a. Between 3 years and 3.5 years

b. Between 2 years and 2.5 years

c. Between 3.5 years and 4 years

d. Between 2.5 years and 3 years

10. Lanen Company produces two automotive parts, carburetors and air filters. Both products are made in the same manufacturing facilities but are produced under different processes. To accomplish an accurate allocation of production costs, the company uses activity-based costing. The cost accountant for the company provided information about the activities used to produce the company's products. The activities were organized into the following overhead cost categories. The most appropriate cost driver for each category is also provided.

Category	Estimated Cost	Cost Driver	Carburetors	Air Filters
Unit-level	P 60,000	Labor hours	900	700
Batch-level	P 22,000	Set-ups	20	30
Product-level	P 45,000	Storage space	2,000 sq.m.	4,000 sq.m.
Facility-level	P 100,000	Machine hours	7,500	12,500

If carburetors and air filters require the same amount of direct labor, what will be effect if labor hours are used as the allocation base for product-level costs?

Group of answer choices

a. Air filters will be over costed

b. Carburetors will be over costed

c. Air filters and carburetors will be over costed

d. Air filters and carburetors will be under costed

11. Author Industries, Inc. has been producing two bearings, components B12 and B18, for use in production.

	B12		B18
Machine hours required per unit	2.5		3.0
Standard cost per unit:
Direct material	P 2.25		P 3.75
Direct labor	4.00		4.50
Manufacturing overhead:
Variable (See Note 1)	2.00		2.25
Fixed (See Note 2)	3.75		4.50
	P 12.00		P 15.00

Author's annual requirement for these components is 8,000 units of B12 and 11,000 units of B18. Recently, Author's management decided to devote additional machine time to other product lines resulting in only 41,000 machine hours per year that can be dedicated to the production of the bearings. An outside company has offered to sell Author the annual supply of the bearings at prices of P 11.25 for B12 and P 13.50 for B18. Author wants to schedule the otherwise idle 41,000 machine hours to produce bearings so that the company can minimize its costs (maximize its net benefits).

Note 1: Variable manufacturing overhead is applied on the basis of direct labor hours.

Note 2: Fixed manufacturing overhead is applied on the basis of machine hours.

Assume that Author's idle capacity of 41,000 machine hours has a traceable avoidable annual fixed cost of P 44,000 that will continue if the capacity is not used. The maximum price Author would be willing to pay a supplier for component B18 is

Group of answer choices

a. P 14.10

b. P 14.00

c. P 14.50

d. P 10.50