Page 1 of 12 | Final Preboards

MANAGEMENT SERVICES (MS)

OCTOBER 2023 BATCH

REO CPA REVIEW

MANAGEMENT SERVICES
FIRST PREBOARD – OCTOBER 2023 BATCH

1. The measurement of performance and the control of costs is aided the most by:
A. organizational charts
B. continuous supervision
C. preparation for the future
D. budgets and standards

2. Examples of non-routine planning include all of the following, except:

A. responses to the appearance of new competition
B. estimating the collection of receivables during the next month for the purpose of
making investment/borrowing decisions

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C. responses to a proposed government regulation of the industry
D. responses to a significant change in consumer tastes

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3. The organizational group that advises or performs technical functions of an enterprise
is the:
A. line
B.
C.
D.
team
executive management
staff ev
4. To resolve an ethical conflict when the immediate superior is involved, an accountant
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should first:
A. go to the next higher level of management
B. report the problem to the SEC
C. resign
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D. go to the company president

5. Usually, a cost easy to assign accurately to a specific operating department is a:

A. standard cost
B. common cost
C

C. joint cost
D. variable cost

6. When the number of units manufactured increases, the most significant change in
average unit cost will be reflected as:
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A. a decrease in the variable element

B. a decrease in the non-variable element
C. an increase in the semi-variable element
D. an increase in the variable element

7. Expenses that require a series of payments over a long period of time—such as long-
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term debt and lease rentals—are frequently known as:

A. programmed fixed expenses
B. avoidable expenses
C. variable expenses
D. committed fixed expenses

8. A company allocates its variable factory overhead based on direct labor hours. During
the past three months, the actual direct labor hours and the total factory overhead
allocated were as follows:
October November December
Direct labor hours 2,500 3,000 5,000
Total factory
overhead allocated P80,000 P75,000 P100,000

Based upon this information, the estimated variable cost per direct labor hour was:
A. P0.125 B. P12.50 C. P0.08 D. P8

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9. For a simple regression-analysis model that is used to allocate factory overhead, an

internal auditor finds that the intersection of the line of best fit for the overhead
allocation on the y-axis is P50,000. The slope of the trend line is .20. The independent
variable, factory wages, amounts to P900,000 for the month. What is the estimated amount
of factory overhead to be allocated for the month?
A. P910,000 B. P950,000 C. P 50,000 D. P230,000

10. A company using regression analysis to correlate income to a variety of sales

indicators found that the relationship between the number of sales managers in a
territory and net income for the territory had a correlation coefficient of 1. The best
description of this situation is:
A. that more sales managers should be hired
B. imperfect negative correlation
C. perfect inverse correlation
D. no correlation

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11. Period costs include
Distribution Costs Outside Processing Costs Sales Commissions

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A. Yes No Yes
B. No Yes Yes
C. No No No
D. Yes Yes Yes

to replace an old machine?

A. acquisition cost of the old machine
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12. Which of the following is the least likely to be a relevant item in deciding whether
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B. outlay to be made for the new machine
C. annual savings to be enjoyed on the new machine
D. life of the new machine
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13. Clark Co.'s operating percentages were as follows:

Sales 100%
Cost of sales:
Variable 50%
Fixed 10 60
Gross profit 40%
C

Other operating expenses:

Variable 20%
Fixed 15 35
Operating income 5%
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Clark's sales totaled P2,000,000. At what sales level would Clark break even?
A. P1,900,000 B. P666,667 C. P1,250,000 D. P1,666,667

14. During June, a company expects sales revenue from its only product to be P300,000,
fixed costs to be P90,000, and variable costs to be P120,000. If the company's actual
sales revenue during June is P350,000, its profit would be:
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A. P90,000 B. P105,000 C. P120,000 D. P140,000

15. A company has just completed the final development of its only product, general
recombinant bacteria, that kills most insects before dying. The product has taken
three years and P6,000,000 to develop. The following costs are expected to be
incurred on a monthly basis for the production of 1,000,000 pounds of the new product:
1,000,000 Pounds
Direct materials P 300,000
Direct labor 1,250,000
Variable overhead 450,000
Fixed overhead 2,000,000
Variable selling, general, and administrative expenses 900,000
Fixed selling, general, and administrative expenses 1,500,000
Total P6,400,000

At a sale price of P5.90 per pound, the sales in pounds necessary to ensure a
P3,000,000 profit the first year would be (to the nearest thousand pounds):
A. 13,017,000 pounds C. 15,000,000 pounds

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B. 14,000,000 pounds D. 25,600,000 pounds

16. Based on the cost-volume-profit chart for a manufacturing company,

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the correct statement is:
A. line b graphs total fixed costs
B. point c represents the point at which the marginal contribution per unit increases

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C. line d graphs total costs
D. area e (between lines b and d) represents the contribution margin

17. Value Pro produces and sells a single product. Information on its costs follow:
Variable costs:
SG&A P2 per unit
Production P4 per unit
Fixed costs:
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SG&A P12,000 per year
Production P15,000 per year
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Assume Value Pro produced and sold 5,000 units. At this level of activity, it produced
a profit of P18,000. What was Value Pro's sales price per unit?
A. P15.00 B. P11.40 C. P9.60 D. P10.00

18. Below are income statements that apply to three companies: Alpha, Beta, and
Epsilon:
C

Alpha Co. Beta Co. Epsilon Co.

Sales P100 P100 P100
Variable costs (10) (20) (30)
Contribution margin P 90 P 80 P 70
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Fixed costs (30) (20) (10)

Profit before taxes P 60 P 60 P 60

Within the relevant range, if sales go up by one unit for each firm, which firm will
experience the greatest increase in net income?
A. Alpha Company
B. Beta Company
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C. Epsilon Company
D. can't be determined from the information given

19. Mcdale Inc. produces and sells two products. Data concerning those products for
the most recent month appear below:
Product I49V Product Z50U
Sales P15,000 P14,000
Variable expenses P 3,300 P 2,790

The fixed expenses of the entire company were P18,460. The break-even point for the
entire company is closest to:
A. P23,367
B. P10,540
C. P24,550
D. P18,460

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20. A tile manufacturer has supplied the following data:

Boxes of tiles produced and sold 520,000
Sales revenue P2,132,000
Variable manufacturing expense P650,000
Fixed manufacturing expense P464,000
Variable selling and administrative expense P260,000
Fixed selling and administrative expense P312,000
Net operating income P446,000

If the company increases its unit sales volume by 3% without increasing its fixed
expenses, then total net operating income should be closest to: (Round your
intermediate calculations to 2 decimal places.)
A. P459,380 B. P453,667 C. P13,380 D. P482,660

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21. Langley Corporation has the following standard costs associated with the manufacture
and sale of one of its products:

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Direct material P3.00 per unit
Direct labor 2.50 per unit
Variable manufacturing overhead 1.80 per unit
Fixed manufacturing overhead 4.00 per unit (based on an estimate

Variable selling expenses

Fixed SG&A expense ev
of 50,000 units per year)
0.25 per unit
P75,000 per year
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During its first year of operations Langley manufactured 51,000 units and sold 48,000.
The selling price per unit was P25. All costs were equal to standard.
The volume variance under absorption costing is
A. P8,000 F. B. P4,000 F. C. P4,000 U. D. P8,000 U.
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22. The following information is available for Ford Company for its first year of
operations:
Sales in units 5,000
Production in units 8,000
Manufacturing costs:
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Direct labor P3 per unit

Direct material 5 per unit
Variable overhead 1 per unit
Fixed overhead P100,000
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Net income (absorption method) P30,000

Sales price per unit P40

What was the total amount of Selling, General and Administrative expense incurred by
Ford Company?
A. P30,000
B. P62,500
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C. P6,000
D. can't be determined from the information given

23. The following information regarding fixed production costs from a manufacturing firm
is available for the current year:
Fixed costs in the beginning inventory P 16,000
Fixed costs incurred this period 100,000

Which of the following statements is not true?

A. The maximum amount of fixed production costs that this firm could deduct using
absorption costs in the current year is P116,000.
B. The maximum difference between this firm's the current year income based on absorption
costing and its income based on variable costing is P16,000.
C. Using variable costing, this firm will deduct no more than P16,000 for fixed production
costs.
D. If this firm produced substantially more units than it sold in the current year,
variable costing will probably yield a lower income than absorption costing.

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24. Three new companies (R, S, and T) began operations on January 1 of the current year.
Consider the following operating costs that were incurred by these companies during the
complete calendar year:
Company R Company S Company T
Production in units 10,000 10,000 10,000
Sales price per unit P10 P10 P10
Fixed production costs P10,000 P20,000 P30,000
Variable production costs P30,000 P20,000 P10,000
Variable SG&A P10,000 P20,000 P30,000
Fixed SG&A P30,000 P20,000 P10,000

Based on sales of 7,000 units, which company will report the greater income before
income taxes if absorption costing is used?
A. Company R
B. Company S

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C. Company T
D. All of the companies will report the same income.

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25. Hazel Company uses activity-based costing. The company produces two products: coats
and hats. The annual production and sales volume of coats is 8,000 units and of hats
is 6,000 units. There are three activity cost pools with the following expected
activities and estimated total costs:
Activity Estimated Expected Activity
Cost Pool Cost
Activity 1 P20,000
Activity 2 P37,000
Coats
100
800
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Expected Activity
Hats
400
200
Total
500
1,000
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Activity 3 P91,200 800 3,000 3,800

Using ABC, the cost per unit of coats is approximately:

A. P2.40 B. P3.90 C. P 6.60 D. P10.59
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26. If activity-based costing is implemented in an organization without any other changes

being implemented, total overhead costs will
A. be reduced because of the elimination of non-value-added activities.
B. be reduced because organizational costs will not be assigned to products or services.
C. be increased because of the need for additional people to gather information on cost
C

drivers and cost pools.

D. remain constant and simply be spread over products differently.

27. An objection to the use of a factory overhead rate based on direct labor pesos is
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that:
A. these items are difficult to measure
B. a job is charged with more overhead when a highly paid operator works on the job than
when a low-paid operator performs the work
C. overhead is allocated in relation to units produced by workers
D. overhead rates will be distributed inequitably when there are no wage differentials
in the department
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28. Brownfield Company applies factory overhead on the basis of direct labor hours.
Budget and actual data for direct labor and overhead for the year are as follows:
Budget Actual
Direct labor hours 600,000 550,000
Factory overhead costs P720,000 P640,000

The factory overhead for Brownfield for the year is:

A. underapplied by P40,000
B. overapplied by P20,000
C. overapplied by P40,000
D. underapplied by P20,000

29. The principal functions of the budget committee include all of the following except:
A. reviewing individual budget estimates
B. deciding on general policies
C. enforcing budgeted standards
D. analyzing budget reports

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30. In planning for future sales, the type of data most likely to be found in trade
association publications—or from the trade associations themselves—would be the:
A. unemployment rate
B. general economic conditions
C. company's potential market share
D. industry's volume of sales

31. Ying Company plans to sell 200,000 units of finished product in October and
anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory
in units of finished product is 80% of the next month's estimated sales. There are
150,000 finished units in the inventory on September 30.

Ying's production requirement in units of finished product for the three-month period
ending December 31 is:
A. 664,000 B. 665,720 C. 630,000 D. 712,025

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Use the following to answer questions 32-40:
Dilbert Farm Supply is located in a small town in the rural west. Data regarding the

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store's operations follow:
• Sales are budgeted at P260,000 for November, P230,000 for December, and P210,000
for January.
• Collections are expected to be 80% in the month of sale, 19% in the month following
the sale, and 1% uncollectible.
•
•
The cost of goods sold is 65% of sales.
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The company purchases 60% of its merchandise in the month prior to the month of
sale and 40% in the month of sale. Payment for merchandise is made in the month following
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the purchase.
• Other monthly expenses to be paid in cash are P20,300.
• Monthly depreciation is P20,000.
• Ignore taxes.
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Statement of Financial Position

October 31

Assets
Cash ........................................... P 27,000
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Accounts receivable
(net of allowance for uncollectible accounts) .. 79,000
Inventory ...................................... 101,400
Property, plant and equipment
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(net of P574,000 accumulated depreciation) ..... 1,082,000

Total assets ................................... P1,289,400

Liabilities and Stockholders’ Equity

Accounts payable ............................... P 169,000
Common stock ................................... 740,000
Retained earnings .............................. 380,400
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Total liabilities and stockholders’ equity ..... P1,289,400

32. Expected cash collections in December are:

A. P230,000 B. P184,000 C. P233,400 D. P49,400

33. The cost of December merchandise purchases would be:

A. P141,700 B. P169,000 C. P81,900 D. P149,500

34. December cash disbursements for merchandise purchases would be:

A. P141,700 B. P149,500 C. P157,300 D. P81,900

35. The excess (deficiency. of cash available over disbursements for December would be:
A. P55,800 B. P37,900 C. P93,700 D. P17,900

36. The net income for December would be:

A. P60,200 B. P37,900 C. P40,200 D. P55,800

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37. The cash balance at the end of December would be:

A. P180,500 B. P153,500 C. P82,800 D. P27,000

38. The accounts receivable balance, net of uncollectible accounts, at the end of
December would be:
A. P46,000 B. P93,100 C. P43,700 D. P81,300

39. Accounts payable at the end of December would be:

A. P81,900 B. P141,700 C. P59,800 D. P149,500

40. Retained earnings at the end of December would be:

A. P380,400 B. P418,300 C. P471,300 D. P466,400

41. Which of the following would least likely cause an unfavorable materials quantity
(usage) variance?

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A. labor that possesses skills equal to those required by the standards
B. scheduling of substantial overtime
C. a mix of direct materials that does not conform to plan

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D. materials that do not meet specifications

42. The most probable reason a company would experience a favorable labor rate
variance and an unfavorable labor efficiency variance is that:

use of higher paid, experienced individuals

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A. the mix of workers assigned to the particular job was heavily weighted toward the

B. the mix of workers assigned to the particular job was heavily weighted toward the
use of new, relatively low-paid, unskilled workers
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C. because of the production schedule, workers from other production areas were
assigned to assist in this particular process
D. defective materials caused more labor to be used in order to produce a standard
unit
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43. Each unit of Product 8in1 requires two direct labor hours. Employee benefit costs
are treated as direct labor costs. Data on direct labor are as follows:
Number of direct employees 25
Weekly productive hours per employee 30
Estimated weekly wages per employee P240
C

Employee benefits (related to weekly wages) 25%

The standard direct labor cost per unit of Product 8in1 is:
A. P8.00 B. P10.00 C. P12.00 D. P20.00
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44. The following information relates to Department 1 of Ruiz Company for the fourth
quarter. The total overhead variance is divided into three variances: spending,
variable efficiency, and volume.
Actual total overhead (fixed plus variable) P178,500
Budget formula P110,000 + P.50 per hour
Total overhead application rate P1.50 per hour
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Actual hours worked 121,000

What was the spending variance in this department during the quarter?
A. P8,000 favorable
B. P4,500 favorable
C. P8,000 unfavorable
D. P4,500 unfavorable

45. A company has a favorable variable overhead spending variance, an unfavorable

variable overhead efficiency variance, and underapplied variable overhead at the end
of a period. The journal entry to record these variances and close the variable
overhead control account will show which of the following?

VOH spending variance VOH efficiency variance VMOH

A. debit credit credit
B. credit debit credit
C. debit credit debit
D. credit debit debit

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46. Under the two-variance approach, the volume variance is computed by subtracting
_________ based on standard input allowed for the production achieved from budgeted
overhead.
A. applied overhead
B. actual overhead
C. budgeted fixed overhead plus actual variable overhead
D. budgeted variable overhead

47. Magliacane Corporation is a service company that measures its output by the number
of customers served. The company has provided the following fixed and variable cost
estimates that it uses for budgeting purposes.
Fixed Element per Month Variable Element per Customer Served
Revenue P4,300
Employee salaries and wages P58,100 P1,200

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Travel expenses P700
Other expenses P31,900

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When the company prepared its planning budget at the beginning of February, it assumed
that 39 customers would have been served. However, 35 customers were actually served
during February.

B. P167,700 C. P153,200
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The revenue in the company's flexible budget for February would have been closest to:
A. P170,709 D. P150,500

48. Dermody Snow Removal's cost formula for its vehicle operating cost is P2,850 per
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month plus P317 per snow-day. For the month of December, the company planned for
activity of 16 snow-days, but the actual level of activity was 14 snow-days. The
actual vehicle operating cost for the month was P7,640. The spending variance for
vehicle operating cost in December would be closest to:
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A. P282 U B. P282 F C. P352 U D. P352 F

49. ABC Corp. is composed of three operating divisions. Overall, the ABC Corp. has a
return on investment of 20%. A Division has a return on investment of 25%. If ABC
Corp. evaluates its managers on the basis of return on investment, how would the A
Division manager and the ABC Corp. president react to a new investment that has an
C

estimated return on investment of 23%?

A Division manager ABC Corp. president
A. Accept Accept
B. Accept Reject
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C. Reject Accept
D. Reject Reject

50. Texas Division of the Houston Company has the following statistics for its most
recent operations:
Assets available for use (Market Value) P3,600,000
Assets available for use (Book Value) P2,000,000
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Texas Division's return on investment 25%

Texas Division's residual income 200,000
Return on investment (entire Houston Company) 20%

Compute EVA assuming the cost of capital is 10% and the tax rate is 40%.
A. P 90,000 B. P 150,000 C. P0 D. P (60,000)

51. The Steelrod Division of Metal Products Company is considering an investment in a

new project. The project has an estimated cost of P1,000,000. If Metal Products
Company has a target rate of return of 12%, how large does the return on investment on
this project need to be to generate P150,000 of residual income?
A. 15% B. 12% C. 25% D. 27%

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52. Residual income is used as a performance measure in which of the following types
of centers?
Revenue Investment Profit
A. Yes No Yes
B. Yes Yes Yes
C. No Yes Yes
D. No Yes No

53. To avoid waste and maximize efficiency when transferring products among divisions
in a competitive economy, a large diversified corporation should base transfer prices
on:
A. full cost
B. replacement cost
C. variable cost
D. market price

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54. A company has two divisions, A and B, each operated as a profit center. A charges
B P35 per unit for each unit transferred to B. Other data follow:
A's variable cost per unit P30

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A's fixed costs P10,000
A's annual sales to B 5,000 units
A's sales to outsiders 50,000 units

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A is planning to raise its transfer price to P50 per unit. Division B can purchase
units at P40 each from outsiders, but doing so would idle A's facilities now committed
to producing units for B. Division A cannot increase its sales to outsiders. From
the perspective of the company as a whole, from whom should Division B acquire the
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units, assuming B's market is unaffected?
A. Division A, in spite of the increased transfer price
B. outside vendors
C. Division A, but only at the variable cost per unit
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D. Division A, but only until fixed costs are covered; then should purchase from
outside vendors

55. Division Alpha can purchase a required part from an outside supplier at P35.
Division Beta will supply the part at a transfer price of P38.50. Division Alpha's
manager should
C

A. pay the P38.50 price to Division Beta.

B. tell his immediate supervisor that Division Beta is being unreasonable.
C. negotiate an appropriate transfer price with the manager of Division Beta.
D. buy from the outside supplier.
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56. When a buying division in a transfer pricing decision elect to purchase from an
outside supplier,
A. the impact on overall company profits is usually not considered in the decision.
B. only fixed costs should be included in the decision analysis.
C. the price from the outside supplier is likely to be more than the incremental cost
to the supplying division.
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D. overall company profits should be enhanced.

57. Rio Hondo Company is a manufacturer of electronic components. The following

manufacturing information is available for the month of May:
Good units manufactured 40,000
Value-added hours of manufacturing time 20,000
Total units manufactured 50,000
Total hours of manufacturing time 30,000

What is the throughput per hour?

A. 1.3 units (rounded)
B. 2.0 units
C. 1.8 units
D. 0.8 units

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58. One of the products manufactured by McAllen Company is a plastic disk. The
information below relates to the Disk Production Department:

Good units produced 200,000

Units started in production 250,000
Processing time (budgeted hours) 425
Processing time (total hours) 400
Value-added processing time 300
What is the process quality yield in the Disk Production Department?
A. 75% B. 44% C. 80% D. 125%

59. The balanced scorecard links the perspectives of an organization's stakeholders

with the organization's
A. goals and vision, performance goals, strategic plan, and financial resources.
B. mission and overall plan, performance measures, departmental plans, and resources.
C. mission and vision, performance measures, strategic plan, and resources.

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D. mission and vision, performance goals, overall plan, and resources.

60. In selecting non-financial performance measures managers should choose measures

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that reflect
A. qualitative characteristics that point out sub-optimization activities and
throughput bottlenecks.
B. both short-term and long-term measures related to critical success factors.
C. long-term supplier satisfaction levels.
D. short-term financial viability.
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61. In a trend analysis, an index number of 139 for 20xx sales indicates that
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A. sales for 20xx were 139 percent higher than sales for the same company in the base
year.
B. sales for 20xx for this company were 139 percent of the sales figure of another
company being used in the comparison.
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C. sales for 20xx were 139 percent of the sales for the same company in the base year.
D. actual sales for 20xx exceeded budgeted sales for 20xx by 39 percent.

62. During the year, Dempsey Corporation's current ratio increased while its quick
ratio decreased. Which of the following could help explain this situation?
A. A decrease in accounts receivable during the year
C

B. An increase in accounts payable during the year

C. The sale of short-term investments during the year
D. An increase in inventory levels during the year
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63. Holiday Corporation provided these figures for the year ended December 31, 20xx:
Cost of goods sold, P516,117; change in inventory, P67,483 decrease; average accounts
payable, P52,529. What is the company's payables turnover? Round your answer to one
decimal place.
A. 9.1 times B. 8.5 times C. 10.9 times D. 8.0 times

64. Market research shows potential customers will buy a particular product at a
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selling price of P3,100. If the desired profit is 28 percent of target cost, the
company should make the product if the cost does not exceed
A. P3,100. B. P868. C. P2,232. D. P2,422.

65. Thomas Company is currently operating at a loss of P15,000. The sales manager has
received a special order for 5,000 units of product, which normally sells for P35 per
unit. Costs associated with the product are: direct material, P6; direct labor, P10;
variable overhead, P3; applied fixed overhead, P4; and variable selling expenses, P2.
The special order would allow the use of a slightly lower grade of direct
material, thereby lowering the price per unit by P1.50 and selling expenses would be
decreased by P1. If Thomas wants this special order to increase the total net income
for the firm to P10,000, what sales price must be quoted for each of the 5,000 units?
A. P23.50 B. P24.50 C. P27.50 D. P34.00

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66. Quest Company produces a part that has the following costs per unit:
Direct material P 8
Direct labor 3
Variable overhead 1
Fixed overhead 5
Total P17

Zest Corporation can provide the part to Quest for P19 per unit. Quest Company has
determined that 60 percent of its fixed overhead would continue if it purchased the
part. However, if Quest no longer produces the part, it can rent that portion of the
plant facilities for P60,000 per year. Quest Company currently produces 10,000 parts
per year. Which alternative is preferable and by what margin?
A. Make-P20,000
B. Make-P50,000
C. Buy-P10,000
D. Buy-P40,000

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67. Browning Company has 15,000 units in inventory that had a production cost of P3
per unit. These units cannot be sold through normal channels due to a significant

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technology change. These units could be reworked at a total cost of P23,000 and sold
for P28,000. Another alternative is to sell the units to a junk dealer for P8,500. The
relevant cost for Browning to consider in making its decision is
A. P45,000 of original product costs.
B. P23,000 for reworking the units.
C. P68,000 for reworking the units.
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D. P28,000 for selling the units to the junk dealer.
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68. Holt Industries has two sales territories-East and West. Financial information for
the two territories is presented below:
East West
Sales P980,000 P750,000
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Direct costs:
Variable (343,000) (225,000)
Fixed (450,000) (325,000)
Allocated common costs (275,000) (175,000)
Net income (loss) P(88,000) P 25,000
C

Because the company is in a start-up stage, corporate management feels that the East
sales territory is creating too much of a cash drain on the company and it should be
eliminated. If the East territory is discontinued, one sales manager (whose salary is
P40,000 per year) will be relocated to the West territory. By how much would Holt's
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income change if the East territory is eliminated?

A. increase by P88,000
B. increase by P48,000
C. decrease by P267,000
D. decrease by P227,000

69. The Winwood Company manufactures two products: Q and T. The costs and revenues are
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as follows:
Product Q Product T
Sales price P150 P88
Variable cost per unit 80 42

Total demand for Product Q is 14,000 units and for Product T is 9,000 units. Machine
time is a scarce resource. During the year, 54,000 machine hours are available.
Product Q requires 5 machine hours per unit, while Product T requires 3 machine hours
per unit.
How many units of Products Q and T should Winwood produce?
Product Q Product T
A. 14,000 0
B. 8,307 4,154
C. 10,800 0
D. 5,400 9,000

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70. Stars Manufacturing Company produces Products A1, B2, C3, and D4 through a joint
process. The joint costs amount to P200,000.
If Processed Further
Sales Value Additional
Product Units Produced at Split-Off Costs Sales
Value
A1 3,000 P10,000 P2,500 P15,000
B2 5,000 30,000 3,000 35,000
C3 4,000 20,000 4,000 25,000
D4 6,000 40,000 6,000 45,000

If Product B2 is processed further, profits will

A. increase by P30,000.
B. decrease by P3,000.
C. increase by P32,000.
D. increase by P2,000.

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