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
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
P185,000
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
120,000
95,000
P205,000
P 35,000
P180,000
150,000
P 30,000
S
P200,000
T
P200,000
80,000
P 80,000
P120,000
40,000
P160,000
R
P240,000
S
P240,000
T
P240,000
180,000
P 60,000
40,000
P 20,000
120,000
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
60,000 
10,000 =
Financial partial productivity
6.0
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
64,000 
10,847 =
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
0.2
(a) Total units manufactured
(b) Total variable manufacturing costs
incurred
(c) Total productivity (a)  (b)
(d) Decrease in productivity
2006
Cost of
Input
Partial
Units of
Resource Productivit
Output
Used
y
64,000  P609,280 = 0.1050
64,000  P347,104 =
2005
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
=
(8) Financial 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
=
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
(14)
Actual units sold
Budgets sales unit
Differences in sales units
Budgeted contribution margin per
unit
Sales volume contribution margin
variance
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
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