Answers to Multiple Choice Questions

MAS by Cabrera

Chapter 1:

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

D
D
D
B
D
A
B
D
D
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

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

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

D
C
D
B
D
B
C
B
A
A

Chapter 2:

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

B
A
D
A
D
A
C
B
D
B

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:

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

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

A
B
C
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

Chapter 4:

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

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

21.B
22.D
23.A
24.C
25.A
26.C
27.D
28.A
29.D
30.A

31.C
32.D
33.C
34.A
35.A
36.C
37.A
38.A
39.C
40.C

4. D
5. B
6. D
5.
6.
7.
8.

A
B
B
B

41. C

7. C
8. B
9. A
9.
A
10. A
11. D *
12. C

10. B
11. A
12. D
13. A
14. D
15. C
16. A

17. A
18. B
19. C
20. D

* Supporting computation for no. 11:

Diluted EPS for 12/31/2006

P3,500,000 + (P800,000 x
65%)
400,000
+
25,000 +
P4,020,00
0
650,000

21. C
22. A
23. B

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

7. C
8. D
9. C
10. C
11. A
12. C

or

13. D
14. D
15. B
16. A
17. C
18. C

19. A
20. A *
21. B
22. B
23. C
24. C

P6.18
25. C
26. B
27. B
28. A **
29. A
30. 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 16. P60 + P10 + P18 + P32 = P120
15. P32 + P16 = P48
17. P4 + P16 = P20
Chapter 11:
1. A
11. C *
2. D
6. C *
3. B
7. C
4. A
8. A
5. B
9. D
6. B
10. C
7. C
11. D
8. D
12. B
9. C
13. C
10. A
14. C

21. C
22. D
23. C
24. A
25. D
26. B
27. D
28. B
29. A
30. D

31. D
32. B
33. A
34. B
35. A
36. D
37. B
38. C
39. B
40. 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
6. D
2. D
7. A
3. D
8. C
4. C
9. C
5. D
10. B

11. A
12. D
13. B
14. D
15. C

16. A
17. D
18. A
19. C
20. D

Chapter 11:

1. A
2. D
3. C
4. B1.
5. A2.
3.
6. D
4.
7. A5.
8. B
9. D
10. C

Chapter 12:

11. B
12. D
13. C
6. A B
14.
7. C D
15.
8. B
16. D
9. A
17.
DD
10.
18. C
19. B
20. A

B
B
B
C
C

21. D
6. A
7. B
11.8.B A
12.9.A B
13. A
10. D
14. C
15.11.
D B
12. C
13. A
14. C

16. D
17. D
18. D
19. C
20. D

1. D
2. B
3. B
4. 21.
B A
22.
5. B D
23. C
6. C
24. B
7. 25.
A C
8. B
9. A
10. A

1. C 11. E
21. C 31. B
2. D 12. D 22. B
32. D
3. A 13. C 23. A
33. D
4. A 14. C 24. D 34. D
5. C 15. B
25. B
35. C
6. A 16. C 26. A
36. D
7. D 17. B
27. A
37. B
8. A 18. A
28. B
38. D
9. C 19. B
29. D 39. B
10. A 20. A
30. A
40. D
Chapter 15:
Supporting computations:
Questions 16 to 20:
Cost of sales
Add:
Total

Desired Minimum Inventory

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

11.
12.
13.
26.
14.A
27.
15.B
28. C
16.
29. B
17.A
30.
18.
19.
20.
B
B
C
E
C
C
D
C
A
D

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

B
A
C
D
B
A
C
C
B
C

Chapter 13:

C
B
C
B
D
C
A
B
E
B

Chapter
14:
Chapter 15:
21. C
22. C
23. D
24. C
25. C
26. C
27. D
28. A
29. C
30. D

January
P1,400,00
0
492,00
0
1,892,000

February
P1,640,00
0
456,00
0
2,096,000

Less:

Beginning Inventory (1,400,000 x 0.3)

(17)
Gross Purchases
(16)
Less:
Cash discount
Net cost of purchases
Payments of Purchases
60% - month of purchase

420,0
00
1,472,0
00
14,72
0
P1,457,28
0

492,00
0
1,604,00
0
16,04
0
P1,587,96
0

P874,368

P
952,77
6
582,91
2
P1,535,6
88

40% - following month

Total

(18)

(19)
Gross
Current months sales (with
discount) 35%
Current months sales
(without discount) 15%
Previous months sales
(with discount) 4.5%
Previous months sales
(without discount) 40.5%

February
Cash
Discount

Net

P595,000

P11,900

P583,100

255,000

255,000

67,500

1,350

66,150

607,50
0
P1,525,00
0

(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

P13,250

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

(22)Net income
P120,000
Add: Depreciation
65,000
Working capital provided from operations
P185,000
Add: Increase in income taxes payableP 80,000
Increase in provision for doubtful
accounts receivable
45,000
125,000
Total
P310,000
Less: Increase in accounts receivableP 35,000
Decrease in accounts payable 25,000
60,000
Increase in cash
P250,000
(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
16,500

P 66,000
38,000
P104,000
P110,000
82,500
P 27,500

607,50
0
P1,511,75
0

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
P2,000,000
Less: Cost of sales
Finished goods inventory, Jan. 1 P 350,000
Add: Cost of goods manufactured (Sch. I) 1,350,000
*
Total available for sale
P1,700,000
Less: Finished goods inventory, Dec. 31
400,000 1,300,000 (26)
Gross Profit
P 700,000
Less: Operating and financial expenses
Selling
P 300,000
Administrative
180,000
Finance
20,000
500,000
Net income before taxes
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
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
P1,670,000
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

11. D
12. C

21. D
22. C

31. C
32. D

3. D
4. B
5. D
6. C
7. A
8. A
9. A
10. C

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

23. C
24. D
25. D
26. B
27. D
28. E
29. B
30. A
D
A
D
A
D
C
A
C
B
C

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

33. A
34. C
35. D
36. C
37. D
38. D

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

P540,000
270,000
P270,000
150,000
P120,000
P 4
5
2
3
P14

18. Relevant cost to make (10,000 x P24)

Purchase cost
Less: Savings in manufacturing cost P45,000
Avoidable fixed overhead
50,000
Net purchase price
Difference in favor of buy alternative

P240,000
P300,000
95,000
P205,000
P 35,000

19. Increase in sales (60,000 x P3)

P180,000
Less: Increase in variable cost (60,000 x P2.50)
Net increase in income
P 30,000
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)

R
P200,000

T
P200,000

120,000
80,000
P 80,000

P120,000

40,00
0
P160,000

R
P240,000

S
P240,000

T
P240,000

180,000

Contribution margin
Less: Fixed costs

P 60,000
40,000

Operating income

P 20,000

22. Old operating income:

S
P200,000

150,000

120,000
P120,000
80,00
0
P 40,000

60,00
0
P180,000
120,00
0
P 60,000

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
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

P1,200,000
P300,000
400,000
80,000
70,000
50,000
P 50,000
30,000
20,000
10,000

900,000
P 300,000

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
(6,250)

93,750
P 256,250
P10,000
40,000
20,000
10,000
P80,000

P70,000

26. Avoidable fixed overhead

P 4
Direct materials
4
Direct labor
16
Variable overhead
18
Total
P42
Multiplied by: Number of units to be produced
20,000
Total relevant costs to make the part
P840,000
27. Purchase cost (P1.25 x 10,000)
P12,500
Variable costs to make
10,000
Savings of making the blade
P 2,500
28. Selling price per unit
P17
Less: Variable costs of goods sold per unit
([P320,000 - P80,000] 20,000 units)
12
Contribution margin per unit
P 5
Multiplied by units to be sold under Special Order
Increase in operating income
P10,000
29. Budgeted operating income:
Contribution margin (P2,000,000 x 30%) P600,000
Less fixed costs
400,000
Net operating income
P200,000
Operating income under the proposal:
Sales
P2,000,000
Less Variable costs
([70% x P2,000,000] x 80%) 1,120,000
Contribution margin
P 880,000

2,000

Less fixed costs

520,000 360,000
Increase in budgeted operating profit
P160,000
Chapter 20:
1. D
2. C
3. B
4. B
5. A
6. C
7. D
8. B
9. B
10. A

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

Chapter 21:
1. B
6. A
2. C
7. C
3. B
8. B
4. B
9. D
5. B
10. C

21. C
22. B
23. C
24. D
25. C
26. C
27. D
28. B
29. D
30. A

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

11. A
12. B

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

B
D
C
A
C
C
A
C
B
A

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

Chapter 25:
1. A
11.
A
21.
2. C
12.
B
22.
3. B
13.
A
23.
4. D
14.
B
24.
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

X-45

C
D
C
A
C
D
A
C
D
D

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

A
A
B
A
C
B
D

A
D
C
D

2005
2006
Input
Partial
Input
Partial
Resourc Product
Resourc Product
Output e Used
ivity
Output e Used
ivity
0.8
0.7143
60,000 75,000
64,000 89,600
=
=

Direc
t
60,000 10,000 =
lab
or

(1)
6.0

10,847 =

5.9002

(2)

Financial partial productivity

2005
Units of Cost of

64,000

Partial

2006
Units of Cost of

Partial

11.
12.
13.
14.
15.

D
D
B
C
A

Input
Resourc Product
e Used
ivity

X-45

Input
Resourc Product
Output
Output e Used
ivity
0.1050
60,000
64,000
P540,00 0.1111
P609,28
0
=
0
=

Direc
t
60,000 300,000 =
lab
or

(3)
0.2

64,000 P347,104
=
(4)

Total productivity in units

2005
60,000

(a)
Total
units
manufactured
(b)
Total
variable
manufacturing costs incurred

2006
64,00
0

P840,000

0.071429 (5)
(c)
Total productivity (a)
(b)
(d)
Decrease
in
0.071429
productivity
0.066919
=
Total productivity in sales pesos

(a)

2005
P1,500,000

Total sales

(b)
Total
variable
manufacturing costs incurred

0.1844

P956,3
84
0.066
919
0.0045
1 (6)
2006
P1,600
,000

P840,000

P1.7857 (5)
(c)
Total productivity (a)
(b)
(d)
Decrease
in P1.7857 P1.6730
productivity
=

P956,38
4
P1.673
0
P0.1127
(6)

(7) Operational partial productivity:

Operational Partial Productivity
(8)

(1)
(2)

(1)

Financial partial productivity:

Output
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)

Actual Production
Actual Input

2005
400,000

2006
486,000

160

180

x P3,375
P540,000

x P3,125
P562,500

0.7407

0.864

10,000

13,500

P26

P25

P260,000

P337,500

1.5385

1.44

2005
400,000

2006
486,000

P540,000

P562,500

Total productivity:

Output
Total cost:
Direct

9,500
8,950

= 1.06

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

260,000

337,500

P800,000
0.5

P900,000
0.54

Market Share

Actual
Budget

Firm
100,000
90,000

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

1. Market size variance:

P240,000 F
2. Market share variance:
P160,000 U
3. Sales quantity variance:
80,000 F
(12)

(13)

Budgeted sales unit

Budgeted contribution
margin per unit
Budgeted total contribution
margin
Budgeted average
contribution margin per unit
(14)

Actual units sold

Budgets sales unit
Differences in sales units
Budgeted contribution
margin per unit
Sales volume contribution
margin variance
Sales mixes:

Product A
Product B
TOTAL

Market Share
5%
6%
(2,000,000 1,500,000) x 0.06 x P8 =
(10)
(5% - 6%) x 2,000,000 x P8 =
(11)
(100,000 90,000) x P8
=
P

Product
A
30,000
x
P4.00
P120,0
00

Product
B
60,000
x
P10.00
P600,0
00

Total
90,000
P720,0
00
P8.00

Product
A
35,000
30,000
5,000

Product
B
65,000
60,000
5,000

x P10.00

P4.00
P20,000 F

P50,000 F

Budgeted
Unit
%
30,00
1/3
0
60,00
2/3
0
90,00
100
0

(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

Total

P70,000 F

Actual
Unit
%
35,00
35
0
65,0
65
00
100,0
100
00
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 =
P13,333 F
Product B: (100,000 90,000) x 2/3 x P10 =
66,667 F
Total sales quantity contribution margin varianceP80,000 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:

Total Contribution margin

Product A
Product B
TOTAL

Actual Operating
Result
35,000 x P3 =
P105,000
65,000 x P12 =
P780,000
P885,000

Flexible Budget
35,000 x P4 =
P140,000
65,000 x P10 =
P650,000
P790,000

Flexible
Budget
Contributi
on
Margin
Variance
P 35,000
U
P130,000 F
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
Total sales price variance
5,000 F
Total variable cost price variance
P45,000 F
(21)Total flexible budget contribution margin variance
P95,000
Total contribution margin price variance (given)
50,000 F
Total variance cost efficiency variance
P45,000 F
(22)Sales mix ratio:

Actual
Quantit
Ratio
y
1,000
0.50
1,000
0.50
2,000
1.00

R66
R100
TOTAL

Budget
Quantit
Ratio
y
1,200
0.75
400
0.25
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:
R100:
Total
Chapter 26:
1. C
11.
2. A
12.
3. D
13.
4. C
14.
5. B
15.
6. D
16.
7. D
17.
8. A
18. B
9. D
19.
10. B
20. B

(1,000 1,200) x P10 =

(1,000 400) x P70 =

C
B
D
B
A
D
C
B

21.
22.
23.
24.

C
D
B
D

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

Chapter 27:
1. C
11.
2. B
12.
3. C
13.
4. D
14.
5. D
15.
6. A
16.
7. C
17.
8. C
18.
9. D
19. A
10. D
20.

C
A
C
B
C
D
D
D
A