MAS by Cabrera - Answers to Multiple Choice Questions

Answers to Multiple Choice Questions MAS by Cabrera Chapter 1: 1. D 2. D 3. D 4. B 5. D 6. A 7. B 8. D 9. D 10. A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

D D D A A A D A D D

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

B B A A B C B D B C

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

Chapter 2: 11. B 12. A 13. D 14. A 15. D 16. A 17. C 18. B 19. D 20. B

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

A B C D A A B C B A

31. B 32. C 33. C

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Chapter 4: 1. D 2. A 3. A 4. B 5. D 6. C 7. C 8. A 9. D 10. C

D C D B D B C B A A

41. 42. 43. 44. 45. 46. 47. 48. 49. 50.

A C D B C B A B C D

51. 52. 53. 54. 55. 56. 57. 58. 59. 60.

B B A C D C C C A B

Chapter 3: D 11. B D 12. C D 13. D B 14. A A 15. D B 16. A D 17. A C 18. B B 19. C C 20. C

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

B C A B A D B B D C

31. 32. 33. 34. 35. 36. 37. 38.

B D D D C A A C

11. A, C, D 12. B* 13. D

* (P400,000 – P160,000)  P160,000 = 150% Chapter 5: 1. A 2. C 3. D 4. B 5. A 6. D 7. C 8. D 9. A 10. B

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

C A C B D B A C A C

Chapter 6: 1. D 2. C 3. D Chapter 7: 1. B 2. B 3. C 4. D

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

4. 5. 6.

5. 6. 7. 8.

B D A C A C D A D A

D B D

A B B B

9. 10. 11. 12.

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

C D C A A C A A C C

7. 8. 9.

C B A

A A D* C

41. C

10. B 11. A 12. D

13. 14. 15. 16.

A D C A

17. 18. 19. 20.

A B C D

* Supporting computation for no. 11: Diluted EPS for 12/31/2006

= =

P3,500,000 + (P800,000 x 65%) 400,000 + 25,000 + 225,000 P4,020,000 or P6.18 650,000

21. C 22. A 23. B

Chapter 8: 1. B 2. D 3. B 4. A 5. C 6. D

7. 8. 9. 10. 11. 12.

C D C C A C

13. 14. 15. 16. 17. 18.

D † D † B † A † C C

19. 20. 21. 22. 23. 24.

A A* B B C C

25. 26. 27. 28. 29. 30.

C B B A ** A B

* Controllable costs are those costs that can be influenced by a specified manager within a given time period. ** The answer assumes absorption costing method is used. † Supporting Computations 14. P60 + P10 + P18 + P4 = P92 15. P32 + P16 = P48 Chapter 9: 1. A 2. D 3. B 4. A 5. B 6. B 7. C 8. D 9. C 10. A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

C* C* C A D C D B C C

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

16. P60 + P10 + P18 + P32 = P120 17. P4 + P16 = P20

C D C A D B D B A D

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

D B A B A D B C B D

41. B 42. D 43. C

* Supporting Computations: 11. (10,000 x 2) – (P3,000 x 2) – P5,000 = P9,000 12. [(P20 + P3 + P6) x 2,000 units] + (P10 x 1,000 units) = P68,000 Chapter 10: 1. D 2. D 3. D 4. C 5. D

6. 7. 8. 9. 10.

D A C C B

11. 12. 13. 14. 15.

A D B D C

16. 17. 18. 19. 20.

Chapter 11: 1. A 2. D 3. C 4. B 5. A 6. D 7. A 8. B 9. D 10. C

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

B D C A C D D C B A

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

D A B A B D B C A C

Chapter 12: 1. D 2. B 3. B 4. B 5. B 6. C 7. A 8. B 9. A 10. A

Chapter 13: 1. B 2. B 3. B 4. C 5. C Chapter 14: 1. C 11. 2. D 12. 3. A 13. 4. A 14. 5. C 15. 6. A 16. 7. D 17. 8. A 18. 9. C 19. 10. A 20.

6. 7. 8. 9. 10.

E D C C B C B A B A

B D B A D

11. 12. 13. 14. 15.

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

C B A D B A A B D A

B A A C D

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

16. 17. 18. 19. 20.

B D D D C D B D B D

D D D C D

21. 22. 23. 24. 25.

A D A C D

A D C B C

26. 27. 28. 29. 30.

Chapter 15: 1. B 2. B 3. C 4. E 5. C 6. C 7. D 8. C 9. A 10. D

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

B A C D B A C C B C

A B C B A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

C B C B D C A B E B

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

C C D C C C D A C D

Chapter 15: Supporting computations: Questions 16 to 20: Cost of sales Add: Desired Minimum Inventory Total Less: Beginning Inventory (1,400,000 x 0.3) Gross Purchases Less: Cash discount Net cost of purchases

(17) (16)

January P1,400,000 492,000 1,892,000 420,000 1,472,000 14,720 P1,457,280

February P1,640,000 456,000 2,096,000 492,000 1,604,000 16,040 P1,587,960

P874,368

P 952,776 582,912 P1,535,688

Payments of Purchases 60% - month of purchase 40% - following month Total

(18)

(19)

February Cash Discount

Gross Current month’s sales (with discount) 35% Current month’s sales (without discount) 15% Previous month’s sales (with discount) 4.5% Previous month’s sales (without discount) 40.5%

Net

P595,000

P11,900

P583,100

255,000

0

255,000

67,500

1,350

66,150

607,500 P1,525,000

P13,250

607,500 P1,511,750

(20)Total Collections in February Add: Cash sales Total (21)Estimated cash receipts Collections from customers Proceeds from issuance of common stock Proceeds from short-term borrowing Total Less: Estimated cash disbursements For cost and expenses For income taxes Purchase of fixed asset Payment on short-term borrowings Total Cash balance, Dec. 31 (22)Net income Add: Depreciation Working capital provided from operations Add: Increase in income taxes payable Increase in provision for doubtful accounts receivable Total Less: Increase in accounts receivable Decrease in accounts payable Increase in cash

P1,511,750 350,000 P1,861,750 P1,350,000 500,000 100,000 P1,950,000 P1,200,000 90,000 400,000 50,000 1,740,000 P 210,000 P120,000 65,000 P185,000 P 80,000 45,000 P 35,000 25,000

(23)Cash Receipts for February 2005 From February sales (60% x 110,000) From January sales Total (24)Pro-forma Income Statement, February 2005 Sales Cost of sales (75%) Gross profit Less: Operating expenses

125,000 P310,000 60,000 P250,000

P 66,000 38,000 P104,000

P110,000 82,500 P 27,500 16,500

Depreciation Bad debts Net operating income

5,000 2,200

23,700 P 3,800

(25)Accounts Payable on February 28, 2005 will be the unpaid purchases in February - (75% x P120,000) = P90,000. Questions 26 to 29: Net sales Less: Cost of sales Finished goods inventory, Jan. 1 Add: Cost of goods manufactured (Sch. I) Total available for sale Less: Finished goods inventory, Dec. 31 Gross Profit Less: Operating and financial expenses Selling Administrative Finance Net income before taxes *

P2,000,000 P 350,000 1,350,000 * P1,700,000 400,000 1,300,000 (26) P 700,000 P 300,000 180,000 20,000

500,000 P 200,000

Determined by working back from net income to sales.

Schedule I Raw materials used Raw materials inventory, Jan. 1 Add: Purchases Total available Less: Raw materials inventory, Dec. 31 Raw materials used Direct labor Manufacturing overhead Total Manufacturing Cost Add: Work-in-process inventory, Jan. 1 Total P1,670,000 Less: Work-in-process inventory, Dec. 31 Cost of goods manufactured

P 250,000 491,000 (29) 741,000 300,000 P 441,000 588,000 441,000 (28) P1,470,000 (27) 200,000 320,000 P1,350,000

(30)Variable factory overhead

P150,000 48,000

P3.125

Fixed factory overhead

P240,000 48,000

5.000

Total factory overhead

P8.125

Chapter 16: 1. C 2. C 3. A 4. B 5. A 6. B 7. C 8. C 9. B 10. B

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

B A B C A D D A D B

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

A C C C C D E B B A

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

A B B D B B C D D A

41. 42. 43. 44. 45.

B C D A B

Chapter 17: 6. A 7. A 8. B 9. B 10. B

6. 7. 8. 9. 10.

C B D A D

31. 32. 33. 34. 35.

B D C B A

41. 42. 43. 44. 45.

B C D D A

46. 47. 48. 49. 50.

B D B B D

Chapter 18: 1. C 2. B 3. D 4. B 5. D 6. C 7. A 8. A 9. A 10. C

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

D C A A A C C D C D

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

D C C D D B D E B A

31. 32. 33. 34. 35. 36. 37. 38.

C D A C D C D D

Chapter 19: 1. C 2. C 3. B 4. B 5. A 6. B 7. C 8. B 9. A 10. B

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

D A D A D C A C B C

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

D A D E B D D C A A

31. 32. 33. 34. 35.

A D C A C

Supporting computations for nos. 16 - 29: 16. Sales [(100,000 x 90%) x (P5.00 x 120%)] Less: Variable costs (P300,000 x 90%) Contribution margin Less: Fixed costs Operating income

P540,000 270,000 P270,000 150,000 P120,000

17. Direct materials Direct labor Overhead Selling cost Minimum selling price per unit

P 4 5 2 3 P14

18. Relevant cost to make (10,000 x P24) Purchase cost Less: Savings in manufacturing cost Avoidable fixed overhead Net purchase price Difference in favor of “buy” alternative

P240,000 P300,000 P45,000 50,000

19. Increase in sales (60,000 x P3) Less: Increase in variable cost (60,000 x P2.50) Net increase in income 20. Sales (10,000 x P20) Less: Variable costs R (P12 x 10,000) S (P 8 x 10,000) T (P 4 x 10,000) Contribution margin 21. Sales (P16 x 15,000) Less: Variable costs R (P12 x 15,000) S (P 8 x 15,000) T (P 4 x 15,000) Contribution margin Less: Fixed costs Operating income

R P200,000

95,000 P205,000 P 35,000 P180,000 150,000 P 30,000 S P200,000

T P200,000

120,000 80,000 P 80,000

P120,000

40,000 P160,000

R P240,000

S P240,000

T P240,000

180,000 120,000 P 60,000 40,000 P 20,000

P120,000 80,000 P 40,000

60,000 P180,000 120,000 P 60,000

22. Old operating income: Contribution margin Less: Fixed cost

P80,000 40,000 P40,000 20,000 P20,000

New operating income Difference - decrease 23. Sales Less: Variable costs Direct materials Direct labor Factory overhead Marketing expenses Administrative expenses Contribution margin Less: Fixed costs Factory overhead Marketing expenses Administrative expenses Increase in fixed costs Profit 24. Sales Less: Variable costs Direct materials Direct labor Factory overhead Marketing expenses Administrative expenses Contribution margin Less: Fixed costs Factory overhead Marketing expenses Administrative expenses Decrease in fixed costs (P25,000  4) Profit

P1,200,000 P300,000 400,000 80,000 70,000 50,000

P 50,000 30,000 20,000 10,000

110,000 P 190,000 P1,200,000

P275,000 375,000 80,000 70,000 50,000

850,000 P 350,000

P 50,000 30,000 20,000

25. Direct materials (P2 x 5,000) Direct labor (P8 x 5,000) Variable overhead (P4 x 5,000) Total variable costs Add: Avoidable fixed overhead Total 26. Avoidable fixed overhead Direct materials Direct labor Variable overhead Total Multiplied by: Number of units to be produced Total relevant costs to make the part 27. Purchase cost (P1.25 x 10,000) Variable costs to make Savings of making the blade 28. Selling price per unit Less: Variable costs of goods sold per unit ([P320,000 - P80,000]  20,000 units) Contribution margin per unit Multiplied by units to be sold under Special Order Increase in operating income 29. Budgeted operating income: Contribution margin (P2,000,000 x 30%) Less fixed costs Net operating income Operating income under the proposal:

900,000 P 300,000

(6,250)

93,750 P 256,250 P10,000 40,000 20,000 P70,000 10,000 P80,000 P 4 4 16 18 P42 20,000 P840,000 P12,500 10,000 P 2,500 P17 12 P 5 2,000 P10,000

P600,000 400,000 P200,000

Sales P2,000,000 Less Variable costs ([70% x P2,000,000] x 80%) Contribution margin Less fixed costs Increase in budgeted operating profit Chapter 20: 1. D 2. C 3. B 4. B 5. A 6. C 7. D 8. B 9. B 10. A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Chapter 21: 1. B 2. C 3. B 4. B 5. B

6. 7. 8. 9. 10.

A C B D C

Chapter 23: 6. D 7. D 8. C 9. A 10. A

11. 12. 13. 14. 15.

C D C D A

Chapter 24: 1. A 2. B 3. C 4. C 5. D 6. B 7. A 8. C 9. B 10. A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

B D C A C C A C B A

D D D C C D D B A A

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

11. A 12. B

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

C D C A C D A C D D

Chapter 25: 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: Operational partial productivity 2005 Input Partial Resource Productivit Output Used y X-45 0.8 60,000  75,000 = Direct labor

1,120,000 P 880,000 520,000

360,000 P160,000

C B C D C C D B D A

31. 32. 33. 34. 35. 36. 37. 38. 39. 40. Chapter 22: 1. A 2. B 3. C 4. D 5. D

31. 32. 33. 34. 35. 36. 37.

D C C D D B B B D B

6. 7. 8. 9. 10.

A B D A C

11. 12. 13. 14. 15.

A A B A C B D

2006 Input Partial Resource Productivit Output Used y 64,000  89,600 = 0.7143

( 60,000 

10,000 =

Financial partial productivity

6.0

1 10,847 =

64,000 

)

( 2 )

5.9002

D D B C A

X-45

2005 Cost of Input Partial Units of Resource Productivit Output Used y 0.1111 60,000  P540,000 =

Direct labor 60,000  300,000 = Total productivity in units

2006 Cost of Input Partial Units of Resource Productivit Output Used y 64,000  P609,280 = 0.1050

( 3 = 64,000  P347,104

0.2

(

(a) Total units manufactured (b) Total variable manufacturing costs incurred (c) Total productivity (a)  (b) (d) Decrease in productivity

)

2005 4 60,000

)

0.1844 2006 64,000

P840,000 P956,384 0.071429 (5) 0.066919 0.071429 – 0.066919 = 0.00451 (6)

Total productivity in sales pesos 2005 P1,500,000

(a) Total sales (b) Total variable manufacturing costs incurred (c) Total productivity (a)  (b) (d) Decrease in productivity (7) Operational partial productivity: Operational Partial Productivity

=

2006 P1,600,000

P840,000 P1.7857 (5) P1.7857 – P1.6730 =

P956,384 P1.6730 P0.1127 (6)

Actual Production Actual Input

=

(8) Financial partial productivity: 2005 400,000

2006 486,000

160 x P3,375 P540,000

180 x P3,125 P562,500

0.7407

0.864

10,000 x P26 P260,000

13,500 x P25 P337,500

1.5385

1.44

2005 400,000

2006 486,000

Direct materials

P540,000

P562,500

Direct labor cost (2) Total cost (3) Total productivity (1) (2)

260,000 P800,000 0.5

337,500 P900,000 0.54

(1) Output (2) Direct materials: Quantity Unit cost Total direct materials cost (3) DM financial partial productivity (1) (2) (4) Direct labor: Hour spent Hourly wage Total direct labor cost (5) DL financial partial productivity (1) (4) (9) Total productivity: (1) Output Total cost: cost

Market Share

Actual Budget 1. 2. 3.

Firm 100,000 90,000

/ /

Total Market 2,000,000 = 1,500,000 =

Market Share 5% 6%

Market size variance: (2,000,000 – 1,500,000) x 0.06 x P8 = P240,000 F (10) Market share variance: (5% - 6%) x 2,000,000 x P8 = P160,000 U (11) Sales quantity variance: (100,000 – 90,000) x P8 = P 80,000 F (12)

9,500 8,950

= 1.06

(13) Budgeted sales unit Budgeted contribution margin per unit Budgeted total contribution margin Budgeted average contribution margin per unit

Product A 30,000

Product B 60,000

Total 90,000

x P4.00 P120,000

x P10.00 P600,000

P720,000 P8.00

(14) Actual units sold Budgets sales unit Differences in sales units Budgeted contribution margin per unit Sales volume contribution margin variance

Product A 35,000 – 30,000 5,000

Product B 65,000 – 60,000 5,000

x

x P10.00

P4.00 P20,000 F

Total

P50,000 F

P70,000 F

Sales mixes:

Product A Product B TOTAL

Budgeted Unit % 30,000 1/3 60,000 2/3 90,000 100

Actual Unit 35,000 65,000 100,000

% 35 65 100

(15)Sales mix contribution margin variance: Product A: (0.35 – 1/3) x 100,000 x P4 = Product B: (0.65 – 2/3) x 100,000 x P10 = Total sales mix contribution margin variance

P 6,667 F 16,667 U P10,000 U

(16)Sales quantity contribution margin variance: Product A: (100,000 – 90,000) x 1/3 x P4 = Product B: (100,000 – 90,000) x 2/3 x P10 = Total sales quantity contribution margin variance

P13,333 F 66,667 F 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:

Product A Product B TOTAL

Total Contribution margin Actual Operating Flexible Budget Result 35,000 x P3 = 35,000 x P4 = P105,000 P140,000 65,000 x P12 = 65,000 x P10 = P780,000 P650,000 P885,000 P790,000

(20)Total contribution margin price variance (given) Sales price variance: Product A: (P12 – P10) x 35,000 = Product B: (P24 – P25) x 65,000 = Total sales price variance Total variable cost price variance (21)Total flexible budget contribution margin variance Total contribution margin price variance (given) Total variance cost efficiency variance

Flexible Budget Contribution Margin Variance P 35,000 U P130,000 F P 95,000 F P50,000 F

P70,000 F P65,000 U – 5,000 F P45,000 F P95,000 F 50,000 F P45,000 F

(22)Sales mix ratio: Actual Quantity 1,000 1,000 2,000

R66 R100 TOTAL

Budget Quantity 1,200 400 1,600

Ratio 0.50 0.50 1.00

Ratio 0.75 0.25 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: R100: Total Chapter 26: 1. C 2. A 3. D 4. C 5. B 6. D 7. D 8. A 9. D 10. B

(1,000 – 1,200) x P10 = (1,000 – 400) x P70 =

11. C 12. B 13. D 14. B 15. A 16. D 17. C 18. B 19. B 20. B

21. 22. 23. 24.

C D B D

P 2,000 U 42,000 F P40,000 F

Chapter 27: 1. C 2. B 3. C 4. D 5. D 6. A 7. C 8. C 9. D 10. D

11. C 12. A 13. C 14. B 15. C 16. D 17. D 18. D 19. A 20. A