1. Which of the following characterizes MAS?

I. Broad and diversity in scope

II. Limited to CPAs
III. Management is the main beneficiary of the service
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
1. Which of the following characterizes MAS?
I. Broad and diversity in scope
II. Limited to CPAs
III. Management is the main beneficiary of the service
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
2. Managerial accounting provides data to
achieve all of the following major
objectives except:
A. Planning and control of costs
B. Supporting management planning
C. Compliance with SEC reporting
requirements
D. Determining the costs of products
2. Managerial accounting provides data to
achieve all of the following major
objectives except:
A. Planning and control of costs
B. Supporting management planning
C. Compliance with SEC reporting
requirements
D. Determining the costs of products
3. The main focus of managerial
accounting is:
A. decision making
B. Documenting cash flows
C. the preparation of financial statements
D. the preparation of budgets
3. The main focus of managerial
accounting is:
A. decision making
B. Documenting cash flows
C. the preparation of financial statements
D. the preparation of budgets
4. Which of the following is false?
A. CPAs have historically been business consultants to
their clients
B. Management consultants are licensed and regulated
by laws
C. The primary purpose of management consultancy is to
improve the firm’s use of its capabilities and resources to
achieve its objectives.
D. Management consultancy services are provided not
only to big business enterprises but also to medium-size
and small companies.
4. Which of the following is false?
A. CPAs have historically been business consultants to
their clients
B. Management consultants are licensed and
regulated by laws
C. The primary purpose of management consultancy is to
improve the firm’s use of its capabilities and resources to
achieve its objectives.
D. Management consultancy services are provided not
only to big business enterprises but also to medium-size
and small companies.
5. Which of the following statements is/are correct?
A. Managers carry out their planning function by mobilizing the
organization’s resources and overseeing day-to-day operations.
B. Managers carry out their decision-making function by obtaining
feedback to ensure that the plans are being followed
C. The planning, directing and motivating, and controlling functions
of a manger are kept separate from each manager’s decision-
making activities
D. The manager’s planning function involves setting of the
organization’s goals and identifying alternatives and selecting the
alternative that best furthers such goals set for the organization.
5. Which of the following statements is/are correct?
A. Managers carry out their planning function by mobilizing the
organization’s resources and overseeing day-to-day operations.
B. Managers carry out their decision-making function by obtaining
feedback to ensure that the plans are being followed
C. The planning, directing and motivating, and controlling functions
of a manger are kept separate from each manager’s decision-
making activities
D. The manager’s planning function involves setting of the
organization’s goals and identifying alternatives and selecting
the alternative that best furthers such goals set for the
organization.
6. Titan Company has set various goals, and
management is now taking appropriate action to ensure
that the firm achieves these goals. One such action is to
reduce outlays for overhead, which have exceeded
budgeted amounts. Which of the following functions best
describes this process?
A. Decision making
B. Planning
C. Coordinating
D. Controlling
E. Organizing
6. Titan Company has set various goals, and
management is now taking appropriate action to ensure
that the firm achieves these goals. One such action is to
reduce outlays for overhead, which have exceeded
budgeted amounts. Which of the following functions best
describes this process?
A. Decision making
B. Planning
C. Coordinating
D. Controlling
E. Organizing
7. Which of the following is true regarding the comparison
of managerial to financial accounting?
A. Managerial accounting is generally more precise
B. Managerial accounting has a past focus and financial
accounting has a future focus.
C. The emphasis on managerial accounting is relevance
and the emphasis on financial accounting is timeliness
D. Managerial accounting need not follow generally
accepted accounting principles (GAAP) while financial
accounting must follow them.
7. Which of the following is true regarding the comparison
of managerial to financial accounting?
A. Managerial accounting is generally more precise
B. Managerial accounting has a past focus and financial
accounting has a future focus.
C. The emphasis on managerial accounting is relevance
and the emphasis on financial accounting is timeliness
D. Managerial accounting need not follow generally
accepted accounting principles (GAAP) while
financial accounting must follow them.
8. In comparing management and financial
accounting, which of the following more
accurately describes management
accounting information?
A. comparable, verifiable, monetary
B. budgeted, informative, adaptable
C. required, estimated, internal
D. historical, precise, useful
8. In comparing management and financial
accounting, which of the following more
accurately describes management
accounting information?
A. comparable, verifiable, monetary
B. budgeted, informative, adaptable
C. required, estimated, internal
D. historical, precise, useful
9. To distinguish between management accounting and financial
accounting, the following statements are correct, except
A. Management accounting, in view of its various integrated
recipients should have a separate data recording and retrieval
system from financial accounting
B. Financial accounting is bound by GAAP, and management
accounting need not be in conformity with GAAP.
C. Financial accounting can be regarded as the process while
management accounting can be regarded as the product of the
process
D. Management accounting output must be released on time so as
not to erode its usefulness; Financial accounting output can still be
useful even when delayed.
9. To distinguish between management accounting and financial
accounting, the following statements are correct, except
A. Management accounting, in view of its various integrated
recipients should have a separate data recording and retrieval
system from financial accounting
B. Financial accounting is bound by GAAP, and management
accounting need not be in conformity with GAAP.
C. Financial accounting can be regarded as the process while
management accounting can be regarded as the product of the
process
D. Management accounting output must be released on time so as
not to erode its usefulness; Financial accounting output can still be
useful even when delayed.
10. Which of the following statements is true when
comparing managerial accounting to financial
accounting?
A. Both are highly dependent on timely information
B. Both rely on the same accounting information
system
C. Managerial accounting is concerned with external
decision makers
D. Managerial accounting places more emphasis on
precision than financial accounting
10. Which of the following statements is true when
comparing managerial accounting to financial
accounting?
A. Both are highly dependent on timely information
B. Both rely on the same accounting information
system
C. Managerial accounting is concerned with external
decision makers
D. Managerial accounting places more emphasis on
precision than financial accounting
11. Which of the following exhibits a staff position?
I. Chairman of the board of directors of San
Miguel Corporation
II. Cashier of a branch of McDonalds’
III. Bagger of Puregold Retail Store

A. I and II C. I and III

B. II and III D. I, II and III
E. Answer not given
11. Which of the following exhibits a staff position?
I. Chairman of the board of directors of San
Miguel Corporation
II. Cashier of a branch of McDonalds’
III. Bagger of Puregold Retail Store

A. I and II C. I and III

B. II and III D. I, II and III
E. Answer not given
12. Each of the following would be
considered a staff function EXCEPT the:
I. vice-president of finance
II. Plant foreman
III. Vice-president of production
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
12. Each of the following would be
considered a staff function EXCEPT the:
I. vice-president of finance
II. Plant foreman
III. Vice-president of production
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
13. Controllership has attained special recognition in corporate
management as business expands in complexity and reach, and as
controller exerts influence for management to take organization’s goals.
Controllership and treasurership constitute corporate finance. These are
among the controller’s traditional functions:
1. Tax management 6. Risk management
2. Financial reporting and interpretation 7. Economic appraisal
3. Credit management 8. Planning for control
4. Souring and investing of funds
5. Reporting to government regulatory agencies
A. All 8 items C. Items 1, 2, 3, 4, 5, 7, and 8 only
B. Items 1, 2, 5, 7, and 8 only D. 2, 3, 5, and 7, and 8 only
13. Controllership has attained special recognition in corporate
management as business expands in complexity and reach, and as
controller exerts influence for management to take organization’s goals.
Controllership and treasurership constitute corporate finance. These are
among the controller’s traditional functions:
1. Tax management 6. Risk management
2. Financial reporting and interpretation 7. Economic appraisal
3. Credit management 8. Planning for control
4. Souring and investing of funds
5. Reporting to government regulatory agencies
A. All 8 items C. Items 1, 2, 3, 4, 5, 7, and 8 only
B. Items 1, 2, 5, 7, and 8 only D. 2, 3, 5, and 7, and 8 only
14. Which of the following functions are
being done by a chief accountant?
I. Credit limit determination
II. Tax administration
III. Cash flow statement preparation
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
14. Which of the following functions are
being done by a chief accountant?
I. Credit limit determination
II. Tax administration
III. Cash flow statement preparation
A. I and II C. I and III
B. II and III D. I, II and III
E. Answer not given
15. The Institute of Managements Accountants’ Standards of Ethical
Conduct contains a policy regarding confidentiality that requires that
management accountants:
A. refrain from disclosing confidential information acquired in the
course of their work except when authorized by management
B. refrain from disclosing confidential information acquired in the
course of their work in all situations
C. refrain from disclosing confidential information acquired in the
course of their work except when authorized by management, unless
legally obligated to do so.
D. refrain from disclosing confidential information acquired in the
course of their work in all cases since the law requires them to do so.
15. The Institute of Managements Accountants’ Standards of Ethical
Conduct contains a policy regarding confidentiality that requires that
management accountants:
A. refrain from disclosing confidential information acquired in the
course of their work except when authorized by management
B. refrain from disclosing confidential information acquired in the
course of their work in all situations
C. refrain from disclosing confidential information acquired in
the course of their work except when authorized by
management, unless legally obligated to do so.
D. refrain from disclosing confidential information acquired in the
course of their work in all cases since the law requires them to do so.
16. It requires a practitioner to be, among
other things, honest and candid within the
constraints of client confidentiality
A. Integrity
B. Objectivity
C. Maturity
D. Independence in mental attitude
16. It requires a practitioner to be, among
other things, honest and candid within the
constraints of client confidentiality
A. Integrity
B. Objectivity
C. Maturity
D. Independence in mental attitude
17. Which of the following choices best depicts the
progression of data?
A. Data, Information, Knowledge, Insights, Action
B. Data, Insights, Knowledge, Information, Action
C. Data, Information, Insights, Knowledge, Action
D. Data, Insights, Information, Knowledge, Action
17. Which of the following choices best depicts the
progression of data?
A. Data, Information, Knowledge, Insights,
Action
B. Data, Insights, Knowledge, Information, Action
C. Data, Information, Insights, Knowledge, Action
D. Data, Insights, Information, Knowledge, Action
18. Which of the following is not a purpose of an
accounting information system?
A. To collect and store data about internal and
external events, transactions, and activities
B. To detect and report all management and
employee fraud
C. To process collected and stored data into valuable
information
D. To provide appropriate internal controls to
safeguard assets, including data
18. Which of the following is not a purpose of an
accounting information system?
A. To collect and store data about internal and
external events, transactions, and activities
B. To detect and report all management and
employee fraud
C. To process collected and stored data into valuable
information
D. To provide appropriate internal controls to
safeguard assets, including data
1. The coefficient between two variables is zero, how might
a scatter diagram of these variable appear?
A. Random points
B. At least squares line that slopes up to the right side
C. At least squares line that is vertical
D. At least squares line that is horizontal
E. At least squares line that slopes down to the right side
F. Under this condition, a scatter diagram could not be
plotted on a graph
1. The coefficient between two variables is zero, how might
a scatter diagram of these variable appear?
A. Random points
B. At least squares line that slopes up to the right side
C. At least squares line that is vertical
D. At least squares line that is horizontal
E. At least squares line that slopes down to the right side
F. Under this condition, a scatter diagram could not be
plotted on a graph
2. Which one of the following is correct
regarding a relevant range?
A. Total variable costs will not change
B. Total fixed costs will not change
C. The relevant range cannot be changed
after being established
D. Unit variable cost changes
E. Unit fixed cost does not change
2. Which one of the following is correct
regarding a relevant range?
A. Total variable costs will not change
B. Total fixed costs will not change
C. The relevant range cannot be changed
after being established
D. Unit variable cost changes
E. Unit fixed cost does not change
3. A company has a space that it uses to
make a component. It could rent the space
to another company. The rent it could earn
is:
A. A sunk cost
B. An opportunity cost
C. An avoidable cost
D. An imputed cost
3. A company has a space that it uses to
make a component. It could rent the space
to another company. The rent it could earn
is:
A. A sunk cost
B. An opportunity cost
C. An avoidable cost
D. An imputed cost
4. The segregation of fixed and variable costs is key to proper cost
analysis. Regression analysis is a technique used for this purpose.
Identify the appropriate statements below on regression analysis.
i. It assumes that a change in the value of a dependent variable is
related to the change in the value of an independent variable.
ii. A linear relationship between direct cost and production volume
can cause a problem when using accounting data for regression
analysis.
iii. It attempts t find an equation for the linear relationship
among variables.
iv. It establishes a cause-and-effect relationship
4. The segregation of fixed and variable costs is key to proper cost
analysis. Regression analysis is a technique used for this purpose.
Identify the appropriate statements below on regression analysis.
i. It assumes that a change in the value of a dependent variable is
related to the change in the value of an independent variable.
ii. A linear relationship between direct cost and production volume
can cause a problem when using accounting data for regression
analysis.
iii. It attempts t find an equation for the linear relationship
among variables.
iv. It establishes a cause-and-effect relationship
A. All four statements are appropriate
B. Statements 1, 3 and 4 only
C. Statements 1 and 3 only
D. Statements 2 and 4 only
Use the following information in answering the next items(s):
The Sparrow Company derived the following cost relationship from a
regression analysis of its monthly manufacturing overhead cost.
C=Php80,000+Php12M where
C=monthly manufacturing overhead cost
M=machine hours

The standard time required to manufacture one six-unit case of

Sparrow’s single product is 4 machine hours. Sparrow applies
manufacturing overhead to production on the basis of machine
hours, and its normal annual production is 50,000 cases.
5. Sparrow’s estimated variable
manufacturing overhead cost for a month
in which scheduled production is 5,000
cases will be
A. P80,000
B. P320,000
C. P240,000
D. P360,000
C. P240,000

Total VC=bX
= 12 x (5,000 x 4hrs)
= 240,000
6. Sparrow’s predetermined fixed
manufacturing overhead rate would be
A. P1.60 per machine hour
B. P1.20 per machine hour
C. P4.00 per machine hour
D. P4.80 per machine hour
D. P4.80 per machine hour

(80,000𝑥12𝑚𝑜𝑠) 960,000
= = 4.8
(5,000 𝑢𝑛𝑖𝑡𝑠 𝑥 4) 2,000,000
7. The following data of Umbrella pertains to activity
and costs for two months:
May June
Activity levels in units 10,000 20,000

Variable costs --------------- P20,000 P?

Fixed cost---------------------- 15,000 ?
Mixed costs------------------- 10,000 ?
Total costs-------------------- 45,000 70,000
Assuming that these activity levels are within
the relevant range, the mixed costs for June
2023 for Umbrella is:
A. P10,000
B. P35,000
C. P15,000
D. P40,000
C. P15,000

VC 40,000
FC 15,000
MC 15,000
Total Costs 70,000
8. Variable costs are assumed to be:
A. Linear in relation to activity changes
B. Curvilinear
C. Expressed in equation form as Y=a +
bX
D. Non-linear
8. Variable costs are assumed to be:
A. Linear in relation to activity changes
B. Curvilinear
C. Expressed in equation form as Y=a +
bX
D. Non-linear
9. The classification of an item of cost as either
fixed or variable depends on how that cost
behaves:
A. per unit, as the volume of activity changes
B. in total, as the volume of activity changes
C. When someone is observing it
D. per changes in peso
E. when the company ceases to operate
9. The classification of an item of cost as either
fixed or variable depends on how that cost
behaves:
A. per unit, as the volume of activity changes
B. In total, as the volume of activity changes
C. When someone is observing it
D. per changes in peso
E. when the company ceases to operate
10. To which function of management is
CVP analysis most applicable?
A. Planning
B. Organizing
C. Directing
D. Controlling
10. To which function of management is
CVP analysis most applicable?
A. Planning
B. Organizing
C. Directing
D. Controlling
11. Select the correct statement
concerning the cost-volume-profit
graph at the right:

A. the point identified by “B” is the break-even point

B. Line F is the variable cost line
C. at point B, profits equal total costs
D. Line E is the total cost line
11. Select the correct statement
concerning the cost-volume-profit
graph at the right:

A. the point identified by “B” is the break-even point

B. Line F is the variable cost line
C. at point B, profits equal total costs
D. Line E is the total cost line
12. Which of the following nis not a limiting
factor of Cost-Volume-Profit analysis?
A. Efficiency is assumed to be constant
B. The analysis assumes a linear relationship
among variables
C. The analysis assumes variable costs
per unit are variable
D. The entity’s inventory levels are constant
13. Cost-volume-profit analysis is a technique available to
management to better understand the interrelationship of several
factors that affect a firm’s profit. As with many such techniques, the
accountant oversimplifies the real world by making assumptions.
Which of the following is not a major assumption underlying CVP
analysis?
A. All costs incurred by a firm can be separated into their fixed and
variable components
B. The product selling price per unit is constant at all volume levels
C. Operating efficiency and employee productivity are constant at all
volume levels
D. For multi-product situations, the sales mix can vary at all
volume levels
14. All of the following statements related to the use of break-
even analysis are true except:
A. a change in fixed costs changes the break-even point but
not the contribution margin figure
B. a combined change in fixed and variable costs in the same
direction causes a sharp change in the break-even point
C. a change in fixed costs changes the contribution margin
figure but not the break-even point
D. a change in per-unit variable costs changes the contribution
margin ratio
E. a change in sales price changes the break-even point
14. All of the following statements related to the use of break-
even analysis are true except:
A. a change in fixed costs changes the break-even point but
not the contribution margin figure
B. a combined change in fixed and variable costs in the same
direction causes a sharp change in the break-even point
C. a change in fixed costs changes the contribution
margin figure but not the break-even point
D. a change in per-unit variable costs changes the contribution
margin ratio
E. a change in sales price changes the break-even point
15. A company’s breakeven point in sales pesos may be affected by
equal percentage increases in both selling price and variable cost per
unit (assume all other factors are equal within the relevant range).
The equal percentage changes in selling price and variable cost per
unit will cause the breakeven point in sales pesos to
A. decrease by less than the percentage increase in selling price
B. decrease by more than the percentage increase in the selling
price
C. remain the same
D. increase by more than the percentage increase in selling price
E. increase by less than the percentage increase in selling price
F. no relationship can be found between breakeven point and selling
price
equal percentage increases in both selling price and variable cost per
unit (assume all other factors are equal within the relevant range).
The equal percentage changes in selling price and variable cost per
unit will cause the breakeven point in sales pesos to
A. decrease by less than the percentage increase in selling price
B. decrease by more than the percentage increase in the selling
price
C. remain the same
D. increase by more than the percentage increase in selling
price
E. increase by less than the percentage increase in selling price
F. no relationship can be found between breakeven point and selling
price
16. On January 1, 1992, Lake Co. increased its direct labor
wage rates. All other budgeted costs and revenues were
unchanged. How did this increase affect Lake’s budgeted
breakeven point and budgeted margin of safety?

A B C D
Budgeted Breakeven Point Increase Increase Decrease Decrease
Budgeted Margin of Safety Increase Decrease Decrease Increase
Use the following in answering the next item(s)”
After reviewing its cost structure (variable costs of P7.50 per unit and
monthly fixed costs of P60,000) and potential market, FRANCE INC.
established what is considered to be a reasonable selling price. The
company expected to sell 50,000 units per month and planned its
monthly results as follows:
Sales P500,000
Variable costs 375,000
Contribution margin 125,000
Fixed costs 60,000
Income before taxes 65,000
Income taxes (at 40%) 26,000
Net Income 39,000
17. What is the breakeven point in units?
A. 24,000 units
B. 30,000 units
C. 20,000 units
D. 35,000 units
A. 24,000 units

BEP (units) = FxC / UCM=60,000/2.5

= 24,000 units
18. If the company wants a P60,000 before-
tax profit, how many units must it sell?
A. 24,000 units
B. 48,000 units
C. 54,000 units
D. 60,000 units
B. 48,000 units

CM 120,000 / 2.5 = 48,000 units

FC 60,000
IBT 60,000
19. If the company wants an after-tax return
on sales of 9%, how many units must it sell?
A. 24,000 units
B. 48,000 units
C. 54,000 units
D. 60,000 units
D. 60,000 units

𝐹𝐶 60,000 60,000
𝑆𝑎𝑙𝑒𝑠 = =
(𝐶𝑀𝑅−(𝑃𝑅𝐵𝑇/𝐴𝑇𝑅) (25%−( 9% )
= 25%−15%
60%

60,000
= = 600,000
10%

600,000 / (500,000/50,000)=60,000 units

20. If the company wants an after-tax profit of
P45,000 on its expected sales volume of
50,000 units, what price must it charge?
A. P11.20
B. P10.20
C. P10.36
D. P11.90
B. P10.20
Sales 510,000 / 50,000 = 10.20
VC 375,000
CM 135,000
FC 60,000
IBT 75,000
IT 30,000
NI 45,000
21. If the company wants a before-tax return
on sales of 16% on its expected sales volume
of 50,000 units, what price must it charge?
A. P11.20
B. P10.20
C. P10.36
D. P11.90
 𝐹𝐶 60,000 60,000
𝑆𝑎𝑙𝑒𝑠 = = 25%−16% =
(𝐶𝑀𝑅−(𝑃𝑅𝐵𝑇) 9%

= 666,666.67

666,666.67 / 50,000=
C. P10.36
𝐹𝐶
Profit w/ units=
(𝐶𝑀𝑅−𝐵𝑇%)
60,000
50,000(SP)= 𝑆𝑃−7.50
−16%
𝑆𝑃

𝑆𝑃−7.50
50,000(SP)x − 16% = 60,000
𝑆𝑃
𝑆𝑃−7.50 1
(50,000(SP)x − 16% = 60,000)
𝑆𝑃 50,000
𝑆𝑃−7.50 60,000
(SP 𝑆𝑃 − 16% = 50,000𝑆𝑃 )𝑆𝑃
SP-7.50-16%SP=1.2
SP-16%SP=1.2+7.50
84%SP=8.7
SP=8.7/84%=10.36
22. PORTUGAL CORP. manufactures and sells T-shirts
imprinted with college names and slogans. Last year, the
shirts sold for P7.50 each, and the variable cost to
manufacture them was P2.25 per unit. The company
needed to sell 20,000 shirts to break even. The net income
after tax last year was P5,040. PORTUGAL’s expectations
for the coming year include the following:
• The sales price of the T-shirts will be P9.00
• Variable costs to manufacture will increase by one-third,
• Fixed costs will increase by 10%
• The income tax rate of 40% will be unchanged
Sales for the coming year are expected to exceed last
year’s by 1,000 units. If this occurs, PORTUGAL’s sales
volume in the coming year will be
A. 22,600 units
B. 21,960 units
C. 23,400 units
D. 21,000 units
A. 22,600 units

NI 5,040 / 60% = 8,400

UCM=7.50 -2.25=5.25
Sales (units)= (IBT / UCM) + BEP(units)
= (8,400/5.25) + 20,000
= 1,600 + 20,000
= 21,600
21,600 + 1,000 = 22, 600 units
23. SPAIN CORP. earns an after-tax profit of P2,400 on sales
of P88,000. The average tax rate of the company is 25%. The
only product in this operation sells for P20, of which P15 is in
variable cost. You were asked to analyze the breakeven point
of this project and its sensitivities to change in cost levels and
of product price. A decrease in variable costs of P1.00 er unit
and an increase in fixed costs of P6,000 would bring the
breakeven point to
A. no change at all
B. a lower level
C. P82,660
D. P45,000
C. P82,660
Sales 88,000 / 20 = 4,400units
VC 66,000
CM 22,000
FC 18,800
IBT 3,200
IT
NI 2,400

𝐹𝐶 18,800+6,000
BEP (units)=
𝐶𝑀𝑅
= 30%
= 82,667
24. The POLAND CORP. makes three products. The cost data for
these three products is as follows:
Product A Product B Product C
Selling price P10 P20 P40
Variable costs 7 12 16
Total annual fixed costs are P840,000. The firm’s experience has
been that about 20 percent of dollar sales come from product A, 60
percent from B, and 20 percent from C.
What is the units’ sale of product C in order to breakeven?
A. 10,000
B. 110,000
C. 40,000
D. 16,471
A. 10,000
SP VC UCM S/Mix C/CMR
A 10 7 3=30% 20% 6%
B 20 12 8=40% 60% 24%
C 40 16 24=60% 20% 12%
42%
𝐹𝐶 840,000
Composite BEP(pesos) = = = 2,000,000
𝐶𝑜𝑚𝑝𝑜𝑠𝑖𝑡𝑒 𝐶𝑀𝑅 42%

A 20% 400,000 / 10 40,000

B 60% 1,200,000 / 20 60,000
C 20% 400,000 / 40 10,000
110,000
25. ICELAND CORP.’s variable expenses are
70% of sales. At a P300,000 sales level, the
degree of operating leverage is 10. If sales
increase by P60,000, the degree of operating
leverage will be:
A. 4
B. 6
C. 10
D. 12
 Sales 300,000
A. 4 VC 210,000
CM 90,000
FC 81,000
EBIT 9,000
𝐶𝑀 90,000
𝐸𝐵𝐼𝑇 = = = 9,000 Sales 360,000
𝐷𝑂𝐿 10 VC 252,000
CM 108,000
FC 81,000
𝐶𝑀 108,000 EBIT 27,000
𝐷𝑂𝐿 = = =4
𝑃 27,000
26. The following information relates to MOROCCO
CORP.
Sales at breakeven point P312,500
Total fixed expenses 250,000
Net operating income 150,000
What is MOROCCO’s margin of safety?
A. P62,500
B. P100,000
C. P187,500
D. P212,500
C. P187,500

Sales 500,000
VC 100,000
CM 400,000 (400,000/80%)
FC 250,000
NOI 150,000

MOS=BS-BEP=500,000-312,500=187,500
C. P187,500

Sales 500,000
VC 100,000
CM 400,000 (400,000/80%)
FC 250,000
NOI 150,000

MOS=BS-BEP=500,000-312,500=187,500
27. Ipil-ipil Corp. would like to market a new product at a
selling price of P15 per unit. Fixed costs for this product
are P1,000,000 for less than 500,000 units of output and
P1,500,000 for 500,000 or more units of output. The
contribution margin percentage is 20%. What would be the
amount of the sales pesos to earn a target operating
income of P1 million?
A. P11,323,500
B. P12,500,000
C. P12,382,950
D. P11,779,800
27. Ipil-ipil Corp. would like to market a new product at a
selling price of P15 per unit. Fixed costs for this product
are P1,000,000 for less than 500,000 units of output and
P1,500,000 for 500,000 or more units of output. The
contribution margin percentage is 20%. What would be the
amount of the sales pesos to earn a target operating
income of P1 million?
A. P11,323,500
B. P12,500,000
C. P12,382,950
D. P11,779,800
B. P12,500,000

X= .8x+1,500,000+,1000,000
x-.8x =2,500,000
.20x=2,500,000
.20
X=12,500,000
28. AMSTERDAM CORP. operates on a contribution
margin of 30% and currently has fixed costs of P200,000.
Next year, sales are projected to be P1,000,000. An
advertising campaign is being evaluated that costs an
additional P30,000. How much would sales have to
increase to justify the additional expenditure?
A. P60,000
B. P90,000
C. P100,000
D. P300,000
C. P100,000

30,000/.30=100,000
Use the following information in answering
the next item(s):
A company sells two products, Alpha and
Beta. The sales mix consists of a composite
unit of two units of Alpha for every five units of
Beta (2:5). Fixed costs are P49,500. The unit
contribution margin for Alpha and Beta are
P2.50 and P1.20 respectively.
29. Considering the company as a whole,
the number of composite units to break
even is:
A. 31,500
B. 4,500
C. 8,250
D. 9,900
B. 4,500
UCM Sales Mix
Composite/UCM
Alpha 2.50 2 5
Beta 1.20 5 6 .
11
BEP = FC/CUCM=49,500/11=4,500

4,500 x 2 = 9,000
4,500x 5 =22,500