STRATEGIC COST MANAGEMENT - Solutions Manual

CHAPTER 16

MANAGING PRODUCTIVITY AND MARKETING EFFECTIVENESS

Answer to Questions
1. Productivity is the relationship between the output and the input resources required for generating
the output.
2. A critical success factor for a firm that competes as a cost leader is to be the low cost provider. A
low cost provider needs to perform the required tasks for the same output with fewer resources
than its competitors.
3. Among criteria that often are used in assessing productivity and their advantages and
disadvantages are:
Using a prior year’s productivity as the criterion
Advantages:
● Data readily available
● Facilitates monitoring of continuous improvements
Disadvantages:
● Difficult to assess adequacy of productivity improvements
● Hard to compare productivity improvements between the years

Using the best performance as the criterion

Advantages:
● Provides as the benchmark the utmost performance
● Motivates people to strive for the maximum potential
Disadvantages:
● The standard can be too high for the operation and frustrating to workers
● Data may be difficult to obtain
● The criteria on which the operation is based may not be comparable
4. An operational productivity is the ratio of the output to the number of units of an input resource.
A financial productivity measures the relationship between the output and the cost of one or more
of the input resources.
5. A partial productivity is a productivity measure that focuses only on the relationship between the
amount of one of the input resources and the output attained.
A total productivity measures the relationship between the output and the total input costs of all
the required input resources for the output.
6. Manufacturing personnel often prefer operational productivity measures over financial
productivity measures because all the input data for computing operational productivity measures
are either results of their activities or resources consumed for these activities. Financial
productivity measures use costs of resources that often are results of activities by personnel
outside of manufacturing functions.

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 7. Measurements of marketing effectiveness include market share, sales price, sales mix, and sales
quantity variances.
8. Sales quantity variance is a component of sales volume variance. A sales volume variance can be
the result of both sales mix and sales quantity variances.
9. A market size variance measures the effect on the contribution margin and operating income of a
firm because of changes in the total market size for all firms in the same industry or product
segment. A market share variance examines the effect on the contribution margin and operating
income of a firm because of deviations of the firm’s actual market shares from its budgeted
market shares.
10. a. No. A multi-product firm can still have an unfavorable sales volume variance even if it sells
more than the budgeted units of sales. The unfavorable sales volume variance is a result of
selling more of less profitable products and less of more profitable products.
b. A favorable sales quantity variance reflects the marketing manager’s excellent performances
only if there is no adverse change in selling prices, sales mix, or market size. A favorable
sales quantity variance is hardly favorable to the firm if the firm has lowered its selling prices
or sold more of low-priced, low-margin and less of high-priced, high-margin products.
Increases in the total market size in which the firm operates often also leads to a favorable
sales quantity variance. A favorable sales quantity variance in an expanding total market may
not be favorable to the firm strategically if the firm also has an unfavorable market share
variance.
A firm can have a favorable market size variance and an unfavorable market share variance if
the proportional increase of the firm’s total sales is less than those of the total market.
c. Yes. The Wall Street Journal reported on April 14, 1994 (p. B4) that Colgate-Palmolive had
slashed marketing spending to reach its ambitious target of 15 percent annual earnings
growth. The firm, for example, spent P88.8 million on advertising in 1993, compared with
P97.5 million in 1992. The firm met the goal of a 15 percent increase in per share earnings
and its CEO, Mr. Mark, expected the company to announce a similar increase for first quarter
earnings soon. The market share of the firm, however, have decreased in all categories.
11. The sales volume variance is the sum of sales quantity and sales mix variances. The sales
quantity variance is the sum of market size and market share variances.

Answer to Problems

Problem 1 (Operational and Financial Partial Productivity)

Requirement 1
Star Company
Comparative Income Statement
For the years 20X3 and 20X4

20X3 20X4
Sales 15,000 x P40 = P600,000 18,000 x P40 = P720,000
Variable cost of sales:
Materials 12,000 x P 8 = P 96,000 12,600 x P10 = P126,000
Labor 6,000 x P20 = 120,000 5,000 x P25 = 125,000
Power 1,000 x P 2 = 2,000 2,000 x P 2 = 4,000
Total variable costs of sales P218,000 P255,000
Contribution margin P382,000 P465,000

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Change in profits from 20X3: P465,000 – P382,000 = P83,000 increase
Requirement 2
Operational Partial Productivity
20X4 20X3
DM 18,000 / 12,600 = 15,000 / 12,000 =
1.4286 1.25
DL 18,000 / 5,000 = 3.6 15,000 / 6,000 = 2.5
Power 18,000 / 2,000 = 9 15,000 / 1,000 = 15

Requirement 3
Total cost of production factors
20X4 20X3
DM 12,600 x P10= P126,000 12,000 x P 8 = P 96,000
DL 5,000 x P25 = P125,000 6,000 x P20 = P120,000
Power 2,000 x P 2 = P 4,000 1,000 x P 2 = P 2,000

Financial Partial Productivity

20X4 20X3
DM 18,000 / 126,000 = 15,000 / 96,000 =
0.1429 0.15625
DL 18,000 / 125,000 = 15,000 / 120,000 =
0.144 0.125
Power 18,000 / 4,000 = 4.5 15,000 / 2,000 = 7.5

Requirement 4
Both direct materials and direct labor operation partial productivity improved from 20X3 to 20X4. In
20X4 the firm was able to manufacture more output units for each unit of materials placed into
production and for each hour spent on production. The operational productivity of power in 20X4
deteriorated from 20X3. It is likely that the firm used more equipment in production in 20X4 that
reduced consumption of materials and production hours.

The financial partial productivity for both direct materials and power deteriorated from 20X3 to
20X4. Increases in direct materials costs were more than the improvements in operational partial
productivity for direct materials. Like the operational partial productivity, the financial partial
productivity for direct labor also improved. The extent of improvements, however, is much lower in
financial partial productivity. The direct labor operational partial productivity improved 44 percent in
20X4 over those of 20X3. The financial partial productivity, however, improved only 15.2 percent
between the two years. The decrease in financial partial productivity is likely a result of increases in
direct labor wages.

Requirement 5
Operating Data for Decomposing Financial Productivity Measure
20X4 Output, 20X4 Output 20X4 Output 20X3 Output
1/20X4 Productivity 1/20X3 Productivity 1/20X3 Productivity 1/20X3 Productivity
20X4 Input cost 20X4 Input cost 20X3 Input cost 20X3 Input cost

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(1) Output (unit):
18,000 18,000 18,000 15,000

(2) 1/Productivity
DM: 12,600/18,000 12,000/15,000 12,000/15,000 12,000/15,000
= 0.7 = 0.8 = 0.8 = 0.8
DL: 5,000/18,000 = 6,000/15,000 6,000/15,000 6,000/15,000
0.2778 = 0.4 = 0.4 = 0.4
Power: 2,000/18,000 1,000/15,000 1,000/15,000 1,000/15,000
= 0.1111 = 0.0667 = 0.0667 = 0.0667

(3) Cost per unit of input

DM: P10 P10 P 8 P 8
DL: P25 P25 P20 P20
Power: P 2 P 2 P 2 P 2

(4) Output x (1/Productivity) x Input cost

DM: 18,000 x 0.7 x 10 18,000 x 0.8 x 10 18,000 x 0.8 x 8 15,000 x 0.8 x 8
= P126,000 = P144,000 = P115,200 = P96,000
DL: 18,000 x 0.2778 x 18,000 x 0.4 x 25 18,000 x 0.4 x 20 15,000 x 0.4 x 20
25 = P180,000 = P144,000 = P120,000
= P125,010
Power: 18,000 x 0.1111 18,000 x 0.0667 x 2 18,000 x 0.0667 x 2 15,000 x 0.0667 x 2
x 2 = P4,000 = P2,401 = P2,401 = P2,001
Total P255,010 P326,401 P261,601 P218,001

Decomposition
DM: 18,000 / 18,000 / 144,000 18,000 / 115,200 15,000 / 96,000
126,000 = 0.125 = 0.15625 = 0.15625
= 0.1429
DL: 18,000 / 18,000 / 180,000 18,000 / 144,000 = 15,000 / 120,000
125,010 = 0.1 0.125 = 0.125
= 0.1440
Power: 18,000 / 18,000 / 2,401 18,000 / 2,401 15,000 / 2,001
4,000 = 7.4969 = 7.4969 = 7.4963
= 4.5

Productivity change Input price change Output change

DM: 0.1429 – 0.125 0.125 – 0.15625 0.15625 – 0.15625

= 0.0179 F = 0.03125 U =0
DL: 0.144 – 0.1 0.1 – 0.125 0.125 – 0.125
= 0.044 F = 0.025 U =0
Power: 4.5 – 7.4969 7.4969 – 7.4969 7.4969 – 7.4963
= 2.9969 U =0 = 0.0006 (rounding)

Summary of Result
Change as % of 20X3 Productivity

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 Productivity Input Price Total Change Productivity Input Price Total Change
Change Change Change Change
DM: 0.0179 F 0.03125 U 0.01335 U 11.46% F 20% U 8.54% U
DL: 0.044 F 0.025 U 0.019 F 35.2% F 20% U 15.2% F
Power: 2.9969 U 0 2.9969 U 39.98% U 0 39.98% U

Requirement 6

Productivity for both direct materials and direct labor improved in 20X4. The percentages of
improvements in productivity are 11.46 and 35.2 for direct materials and direct labor, respectively, of
the 20X3 productivity. However, cost increases in direct materials and direct labor reduced the gains
in productivity on these two manufacturing factors.

Problem 2 (Direct Labor Rate and Efficiency Variances, Productivity Measures, and Standard
Costs)

Requirement 1

Assembly Department Direct Labor Variances

20X3:
Total actual direct labor hours: 25 x 20,000 = 500,000
Total standard direct labor hours: 24 x 20,000 = 480,000

P30 x 500,000 P28 x 500,000 P28 x 480,000

= P15,000,000 = P14,000,000 = P13,440,000

Rate variance Efficiency variance

= P1,000,000 U = P560,000 U

20X4:
Total actual direct labor hours: 20 x 20,000 = 400,000
Total standard direct labor hours: 21 x 20,000 = 420,000

P36 x 400,000 P35 x 400,000 P35 x 420,000

= P14,400,000 = P14,000,000 = P14,700,000

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 Rate variance Efficiency variance
= P400,000 U = P700,000 F

Testing Department Direct Labor Variances

20X3:
Total actual direct labor hours: 12 x 20,000 = 240,000
Total standard direct labor hours: 14 x 20,000 = 280,000

P20 x 240,000 P21 x 240,000 P21 x 280,000

= P4,800,000 = P5,040,000 = P5,880,000

Rate variance Efficiency variance

= P240,000 F = P840,000 F

20X4:
Total actual direct labor hours: 10 x 20,000 = 200,000
Total standard direct labor hours: 11 x 20,000 = 220,000

P24 x 200,000 P25 x 200,000 P25 x 220,000

= P4,800,000 = P5,000,000 = P5,500,000

Rate variance Efficiency variance

= P200,000 F = P500,000 F

Recap:
Assembly Department Testing Department
20X3 20X4 20X3 20X4
Rate variance P1,000,000 U P400,000 U P240,000 F P200,000 F
Efficiency variance P560,000 U P700,000 F P840,000 F P500,000 F

Requirement 2

Assembly Department Operational Partial Productivity

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20X3: 20,000 / 500,000 = 0.04
20X4: 20,000 / 400,000 = 0.05

Testing Department Operational Partial Productivity

20X3: 20,000 / 240,000 = 0.0833

20X4: 20,000 / 200,000 = 0.1

Requirement 3

Assembly Department Financial Partial Productivity

20X3: 20,000 / P15,000,000 = 0.001333

20X4: 20,000 / P14,400,000 = 0.001389

Testing Department Financial Partial Productivity

20X3: 20,000 / P4,800,000 = 0.004167

20X4: 20,000 / P4,800,000 = 0.004167

Requirement 4

Operational partial productivity

20X3 20X4 Change
Assembly 0.04 0.05 0.01 F 25% F
Testing 0.0833 0.1 0.0167 F 20% F

Financial partial productivity

20X3 20X4 Change
Assembly 0.001333 0.001389 0.000056 F 4.2% F
Testing 0.004167 0.004167 -0- -0-

Operational partial productivity improved in both departments from 20X3 to 20X4. The financial
partial productivity in the Assembly also improved while the Testing remains unchanged.

Requirement 5
The standards in a standard costing system often are determined independently and incorporate
changes in operating factors. The standard for the operation of a year may change because of changes
in, for example, technology, quality of materials, experience of production workers, designs, or
processes.
Productivity measures use as the criterion the productivity of a prior year without adjusting for
changes occurred or the expected changes for the current year. As a result, assessments of
productivity may depict an entirely different picture than those of variance analyses in a standard
costing system.

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Problem 3 (Sales Variance)

Requirement 1
Selling price variances (in 000)
Flexible budget sales:
Master Budget for 20X3 Budgeted Total Units Flexible
Total Selling Price Sold in 20X3 Budget Sales
Sales Units Per Unit
Premium P150 x 180 = P27,000
P36,000 ⎟ 240 =
Regular P120 x 540 = P64,800
P43,200 ⎟ 360 =
Premium Regular
Selling
Flexible Selling Price Flexible Price
Actual Budget Variance Actual Budget Variance
Barrels 180 180 540 540
Sales P28,800 P27,000 P1,800 F P62,100 P64,800 P2,700 U

Total selling price variance of the firm = P1,800 F + P2,700 U = P900 U

Requirement 2
Sales volume variances for the period for each of the products and for the firm
Flexible budget variable expenses:
Master Budget for 20X3 Budgeted Total Flexible
Total Variable Budget
Variable Number of Expenses Units Variable
Expenses Units Per Unit Sold in 2013 Expenses
Premium P90 x 180 = P16,200
P21,600 ⎟ 240 =
Regular P75 x 540 = P40,500
P27,000 ⎟ 360 =

Premium Regular
Sales Sales
Flexible Master Volume Flexible Master Volume
Budget Budget Variance Budget Budget Variance
Barrels 180 180 540 360
Sales P27,000 P36,000 P64,800 P43,200
Variable
expenses 16,200 21,600 40,500 27,000
Contribution
margin P10,800 P14,400 P3,600 U P24,300 P16,200 P8,100 F

Fixed
expenses 10,000 10,000 – 5,000 5,000 –
Operating
income P 800 P 4,400 P3,600 U P19,300 P11,200 P8,100 F
Total sales volume variance of the firm = P3,600 U + P8,100 F = P4,500 F
Requirement 3
Sales quantity variances for the firm and for each of the products. (See next page.)

Requirement 4

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Sales mix variances for the period for each of the products and for the firm (000 omitted).
Calculation for sales mixes:
Budgeted Actual
Total Sales Sales Total Sales Sales
in Units Mix in Units Mix
Premium 240 0.40 180 0.25
Regular 360 0.60 540 0.75
600 1.00 720 1.00
Flexible Budget Master Budget
Total actual units of all products sold x Total actual units of all Total budgeted units of sales
Actual sales mix x Standard contribution products sold x for all products x Budgeted
margin per unit Budgeted sales mix x sales mix x Standard
Standard contribution contribution margin per unit
margin per unit

Premium
720 x 0.25 x P60 = 720 x 0.40 x P60 = 600 x 0.40 x P60 = P14,400
P10,800 P17,280

Sales mix variance Sales quantity variance

= P6,480 U = P2,880 F

Sales volume variance

= P10,800 – P14,400
= P3,600 U

To verify: Sales volume variance

= Sales mix variance + Sales quantity variance
= P6,480 U + P2,880 F
= P3,600 U
Regular
720 x 0.75 x P45 = 720 x 0.60 x P45 = 600 x 0.60 x P45 = P16,200
P24,300 P19,440

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 Sales mix variance Sales quantity variance
= P4,860 F = P3,240 F

Sales volume variance

= P24,300 – P16,200
= P8,100 F

To verify: Sales volume variance

= Sales mix variance + Sales quantity variance
= P4,860 F + P3,240 F
= P8,100 F

Total
Sales mix variance = P6,480 U + P4,860 F = P1,620 U
Sales quantity variance = P2,880 U + P3,240 F = P6,120 F

Requirement 5
Verification
Sales mix variance + Sales quantity variance = Sales
volume variance
Premium P6,480 U P2,880 F P3,600 U
Regular P4,860 F P3,240 F P8,100 F
Total P1,620 U P6,120 F P4,500 F

Requirement 6
Market size variances. (See below.)

Requirement 7
Market share variances (000 omitted. See below.)
Weighted average budgeted contribution margin per unit
Master budget total contribution margin P30,600
Master budget total sales units ⎟ 600
Weighted-average budgeted contribution margin per unit P 51
Calculation for market shares:
Budgeted: Total sales in units 600 ⎟ Total sales of the industry 1,500 = 0.40

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 Actual: Total sales in units 720 ⎟ Total sales of the industry 1,600 = 0.45

Calculation for variances:

Actual total market size Actual total market x Budgeted total market size x
x Actual market share x Budgeted market share Budgeted market share x Average
Average budgeted x Average budgeted budgeted contribution margin per
contribution margin per contribution margin per unit
unit unit
1,600 x 0.45 x P51 1,600 x 0.40 x P51 1,500 x 0.40 x P51
= P36,720 = P32,640 = P30,600

Market share variance Market size variance

= P4,080 F = P2,040 F

Sales quantity variance

= P4,080 F + P2,040 F
= P6,120 F

Requirement 8

The sum of market size variance and market share variance and verification that this total equals the
sales quantity variance.

Total market size variance + Total market share variance = Total quantity variance
P2,040 F P4,080 F P6,120 F

Problem 4 (Productivity and Ethics)

Requirement 1
The operational partial productivity deteriorates slightly from 0.0051 in 20X3 (500/99,000) to 0.005
in 20X4 (560/112,000). Manipulating accounting numbers in order to show a desirable result is an
unethical behavior regardless the intention.

Requirement 2

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 Tan should not follow the order without following a consistent accounting method. If the firm
believes that certain cost items should be reclassified as indirect costs, the same procedure should be
followed for all years. Tan should then go back and revise operating results of previous years.

Problem 5 (Small Business Market Size and Share Variances)

Requirement 1

Budget Actual
Empress’ Empress’
Designs Industry Share Designs Industry Share
WS 50 500 10.0% 45 425 45/425
DH 25 200 12.5% 35 150 35/150

Requirement 2
Weighted Average Budgeted Contribution Margin Per Unit:
(50 welcome signs x P2) + (25 doghouses x P5.20) / 75 = P3.07

Market Share Variance

Welcome Signs: (45/425 – 0.1) x 425 x P3.07 = P7.68 F
Doghouses: (35/150 – 25/200) x 150 x P3.07 = P49.89 F
Requirement 3

Market Size Variance

Welcome Signs: (45 – 500) x 50/500 x P3.07 = P23.03 U
Doghouses: (150 – 200) x 25/200 x P3.07 = P19.19 U

Requirement 4
Among possible reasons are quality changes, pricing changes, less producers due to seasonal
variations, and market no longer there.

Requirement 5
Among alternatives are improving costs through adopting activity based costing, making different
signs, using less expensive wood, finding competitive advantage.

Answer to Multiple Choice Questions

1. A 11. A 21. A
2. C 12. B 22. D
3. B 13. A 23. C
4. D 14. B 24. D
5. A 15. C
6. C 16. D
7. C 17. B
8. B 18. C
9. C 19. A
10. D 20. D
Supporting Computations:

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Operational partial productivity

20X3 20X4
Input Input
Resource Partial Resource Partial
Output Used Productivity Output Used Productivity
X-45 60,000 ÷ 75,000 = 0.8 64,000 ÷ 89,600 = 0.7143

Direct
labor 60,000 ÷ 10,000 = 6.0 64,000 ÷ 10,847 = 5.9002

Financial partial productivity

20X3 20X4
Cost of Cost of
Input Input
Units of Resource Partial Units of Resource Partial
Output Used Productivity Output Used Productivity
X-45 60,000 ÷ P540,000 = 0.1111 64,000 ÷ P609,280 = 0.1050

Direct
labor 60,000 ÷ 300,000 = 0.2 64,000 ÷ P347,104 = 0.1844

Total productivity in units

20X3 20X4
(a) Total units manufactured 60,000 64,000
(b) Total variable manufacturing costs
incurred P840,000 P956,384
(c) Total productivity (a) ÷ (b) 0.071429 (5) 0.066919
(d) Decrease in productivity 0.071429 – 0.066919 = 0.00451 (6)

Total productivity in sales pesos

20X3 20X4

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 (a) Total sales P1,500,000 P1,600,000
(b) Total variable manufacturing costs
incurred P840,000 P956,384
(c) Total productivity (a) ÷ (b) P1.7857 (5) P1.6730
(d) Decrease in productivity P1.7857 – P1.6730 = P0.1127 (6)

(7) Operational partial productivity:

(8) Financial partial productivity:

20X3 20X4
(1) Output 400,000 486,000
(2) Direct materials:
Quantity 160 180
Unit cost x P3,375 x P3,125
Total direct materials cost P540,000 P562,500
(3) DM financial partial
productivity (1) (2) 0.7407 0.864
(4) Direct labor:
Hour spent 10,000 13,500
Hourly wage x P26 x P25
Total direct labor cost P260,000 P337,500
(5) DL financial partial
productivity (1) (4) 1.5385 1.44

(9) Total productivity:

20X3 20X4
(1) Output 400,000 486,000
Total cost:
Direct materials P540,000 P562,500
cost
Direct labor cost 260,000 337,500
(2) Total cost P800,000 P900,000
(3) Total productivity (1) (2) 0.5 0.54

Market Share
Firm Total Market Market Share
Actual 100,000 / 2,000,000 = 5%
Budget 90,000 / 1,500,000 = 6%

1. Market size variance: (2,000,000 – 1,500,000) x 0.06 x P8 = P240,000 F (10)

2. Market share variance: (5% - 6%) x 2,000,000 x P8 = P160,000 U (11)
3. Sales quantity variance: (100,000 – 90,000) x P8 = P 80,000 F (12)

(13)
Product A Product B Total
Budgeted sales unit 30,000 60,000 90,000

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Budgeted contribution margin per unit x P4.00 x P10.00
Budgeted total contribution margin P120,000 P600,000 P720,000
Budgeted average contribution margin
per unit P8.00

(14)
Product A Product B Total
Actual units sold 35,000 65,000
Budgets sales unit – 30,000 – 60,000
Differences in sales units 5,000 5,000
Budgeted contribution margin per unit x P4.00 x P10.00
Sales volume contribution margin
variance P20,000 F P50,000 F P70,000 F
Sales mixes:
Budgeted Actual
Unit % Unit %
Product A 30,000 1/3 35,000 35
Product B 60,000 2/3 65,000 65
TOTAL 90,000 100 100,000 100

(15)Sales mix contribution margin variance:

Product A: (0.35 – 1/3) x 100,000 x P4 = P 6,667 F
Product B: (0.65 – 2/3) x 100,000 x P10 = 16,667 U
Total sales mix contribution margin variance P10,000 U

(16)Sales quantity contribution margin variance:

Product A: (100,000 – 90,000) x 1/3 x P4 = P13,333 F
Product B: (100,000 – 90,000) x 2/3 x P10 = 66,667 F
Total sales quantity contribution margin variance P80,000 F

(17)Weighted average budget contribution margin per unit:

P8.00 (calculated in no. 13)
Market size contribution margin variance:
(2,000,000 – 1,500,000) x 90,000 / 1,500,000 x P8 = P240,000 F

(18)Market share contribution margin variance:

(100,000 / 2,000,000 – 90,000 / 1,500,000) x 2,000,000 x P8 =
P160,000 U

(19)Flexible budget contribution margin variance:

Flexible Budget
Total Contribution margin Contribution
Actual Operating Result Flexible Budget Margin Variance
Product A 35,000 x P3 = P105,000 35,000 x P4 = P140,000 P 35,000 U
Product B 65,000 x P12 = P780,000 65,000 x P10 = P650,000 P130,000 F
TOTAL P885,000 P790,000 P 95,000 F

(20)Total contribution margin price variance (given) P50,000 F

Sales price variance:
Product A: (P12 – P10) x 35,000 = P70,000 F
Product B: (P24 – P25) x 65,000 = P65,000 U

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 Total sales price variance – 5,000 F
Total variable cost price variance P45,000 F

(21)Total flexible budget contribution margin variance P95,000 F

Total contribution margin price variance (given) 50,000 F
Total variance cost efficiency variance P45,000 F

(22)Sales mix ratio:

Actual Budget
Quantity Ratio Quantity Ratio
R66 1,000 0.50 1,200 0.75
R100 1,000 0.50 400 0.25
TOTAL 2,000 1.00 1,600 1.00

R66 sales quantity variance: (2,000 – 1,600) x 0.75 x P10 = P3,000 F

(23)R100 sales mix variance: (0.5 – 0.25) x 2,000 x P70 = P35,000 F

(24)Total sales volume variance:

R66: (1,000 – 1,200) x P10 = P 2,000 U

R100: (1,000 – 400) x P70 = 42,000 F
Total P40,000 F

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