BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
1.
Answer: C
Oct.
Nov.
Dec.
Sales
200,000
210,000
220,500
Beginning inventory
(150,000)
(168,000)
(176,400)
Ending inventory: (210,000 x 80%)
168,000
(220,500 x 80%)
176,400
(220,500 x 1.05 x 80%)
______
______
185,220
Required production
218,000
218,400
229,320 =
665,700
2.
Amswer: C Nyclyn: 24 / 0.80 x 15
=
450
Salex: 19.2 / 0.80 x 21 =
504
Protet: 10 x 28
=
280
1,234
3.
Answer: D Spending: (AT x AVR) (AT x SVR)
[53,500 x (P315,000 / 53,500)] [(53,500 x (P3,600,000 / 600,000)]
P315,000 P321,000 = 6,000 F
Efficiency: (AT x SVR) (ST x SVR)
P321,000 [(26,000 units x 2 DLH) x P6] = 9,000 U
4.
Answer: C
Fixed Spending: (AFxOH BFxOH)
P260,000 (P3,000,000 / 12) = 10,000 U
Fixed Volume: [BFxOH (ST x SFxOH)]
P250,000 (26,000 x 2 x P5) = 10,000 F
5.
Answer: B
Budgeted Fixed Overhead
=
P108,000
Less: Std. Time x Std. Fixed Overhead: [24,000 x (108,000 / 27,000)
=
96,000
Unfavorable volume variance
P
12,000
6.
Answer: D
Variable production cost: Total variable cost variable selling expense
(50,000 30,000) = 20,000
Unit VC: (20,000 / 20,000) + (30,000 / 12,000) = 3.5
Variable income = 12,000 (12 -3.5) 100,000 = 2,000
7.
Answer: D

Variable costing: 7,000 [(22,500 / 7,500) + (30,000 / 7,500) + 2] = P63,000

Absorption costing: 7,000 [(22,500 / 7,500) + (30,000 / 7,500) + 2 + (40,000 /
8,000)] + 2,500* = P100,500
*Capacity (volume) variance: (NP AP) FFOH / u = (8,000 7,500) 5 = 2,500 U
8.
Answer: A
Absorption Costing: (25 16) 16,000 64,000 = 80,000 + 8,000 F** - 12,000 UF
= P76,000
** Favorable: Actual production > Normal Production
9.

BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
Answer: B
Relevant Cost to Make
Relevant Cost to Buy
Purchase price
P60
DM
P 6
DL
30
VOH
12
Relevant FOH
9
P57
P60
X no. of units
20,000
20,000
1,140,000
1,200,000 =
60,000
+ Savings
25,000
Relevant cost that would be saved
85,000
10.
Answer: A
PM
PR
SP/u
P50
P75
VC/u:
DM
26
38
DL
10
18
FOH
8
11
CM/u
P 6
P 8
Multiply by units produced / hr.
3
2
CM/hr.
P18
P16
Multiply by no. of hrs. available
2,000
Max. CM
36,000
11.
Answer: C (16 - 8) 4,000 = (18 8) X
x = 3,200 units
12.
Answer:
Sales (P4,000,000 x 162.5%)
P6,500,000
Less: Costs and Expenses:
Materials and labor
P4,000,000
Operating costs
1,500,000
5,500,000
Net income before tax
P1,000,000
Less: Income tax 35%
350,000
Net income
P 650,000
P650,000 / P6,500,000 = 10%
13.
Answer: Rate of return on average total assets is net income divided by average total assets
P650,000 / P2,600,000 = 25%
14.
Answer: P6,500,000 / P2,600,000 = 2.5 times
15.
Answer: Average total assets
P2,600,000
Less: Loan payable
520,000
Stockholders equity
P2,080,000
P650,000 / P2,080,000 = 31.25%
16.
Answer: D
17.

[(34,000 4,000) 21,000] / (50,000 20,000) = .30

Chk: Y = (15,000 +4,000) + .30(30,000)

BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
Answer: C
y = a + bx or
a = y bx
(230,000 50,000b) 1.25 = 280,000
60,000b
287,500 62,500b = 280,000 60,000b
=
b=3
18.
Answer: A
CMR = FxC / BES
CMR = FxC BES = 78,750 (975,000 750,000) = 35%
BES: FxC CMR
FxC = BES x CMR = 975,000 (35%) = 341,250
19.
Answer: B
CMR x MSR = NPR 20% x 33.33% = 6.67%
S= 5,000 6.67% = 75,000
CM = 15,000
FC = 10,000 BES =
50,000
20.
a
21.
b
22.
Answer: D
(4,000 3,525 75) / (625 + 1,775) = 16.67%
23.
C
24.
Answer: C
2,000,000 = (30M COST) 15% (1.8M + 17.2M) = P25.15M
25.
A
26.
Answer: B
Costs (cash outflows): 50,000 + 2,000
= P52,000
Savings (cash inflows): 11,000 + 0.35 (15,000 11,000) + 2,000 (1-0.35) =
(13,700)
P38,300
27.
Answer: C
28.
B
29.
Answer: D
Required: The cost estimation method that should be used to generate a function expressed
as Y=a+bX
Discussion: Regression analysis can be used to find an equation for the linear relationship
among variables. However, multiple regression is not used to generate an equation of the
type Y=a+bX because multiple regression has more than one independent variable. In other
words, a multiple regression equation would take the form:Y=a+bX1+cX2+dX3n . . .
30.
Answer: B
Required : The actual finished goods ending inventory using absorption costing.
Discussion : Under the absorption method unit cost is P30 (P12 direct materials+P9 direct
labor+ P4 variable overhead + P5 fixed overhead). Given beginning inventory of 35, 000
units, the ending inventory equals 40,000 units (35,000 BI + 130, 000 produced 125, 000
sold. Hence, ending inventory was P1, 200, 000 (P30x40, 0000 units).
31.
Answer : C
Required: The actual finished goods ending investment using variable costing.
Discussion : Using variable costing, the unit cost of ending inventory is P25 (P12 direct
materials + P9 direct labor + P4 variable overhead). Given beginning inventory 35, 000 units,
the ending inventory equals 40, 000 units (35, 000 PI + 130, 000 produced 125, 000 sold).
Thus, ending inventory was P1, 000, 000 (P25x 40, 000)
32.
Answer : A
Required: The true statement comparing absorption costing and variable costing income.
Discussion: Absorption costing results in a higher income figure than variable costing
capitalizes some fixed factory overhead as part of inventory. These cost are expensed during
the period incurred under variable costing. Consequently, variable costing recognizes greater

BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
expenses and lower income because some fixed costs of previous periods absorbed by the
beginning inventory are expensed in the current period is never burdened with fixed costs of
previous periods
33.
A
34.
D
35.
A
36.
B
Required: The difference between absorption costing and variable costing income
Discussion : The difference is caused by the capitalization of some of the fixed manufacturing
overhead. When inventories increase during the periods, the absorption method capitalizes
that overhead and transfer it to future periods. The variable costing method expenses it in the
current period. Inventories increased by 5, 000 units during the period, and each of those
units would have included P5 of fixed manufacturing overhead under absorption costing.
Accordingly, P25, 000 of fixed manufacturing overhead would have been capitalized.
Recognizing P25, 000 of fixed cost in the balance sheet instead of the income statement
results in a P25, 000 difference in income between the two costing methods.
37.
B
Discussion: The production control supervisor has the most control over the material usage
variance. The material usage variance measures the excess amount of materials used over
the amount specified in the standards. The materials usage (or material quantity) variance,
when unfavorable, is often attributable to waste, shrinkage, or theft in the production areas.
The excess usage occurs under the supervision of the production department.
38.
D
39.
C
40.
Answer B
41.
C
42.
D
43.
Answer: D
44.
D
45.
B
46.
B
47.
A
48.
A
49.
D
50.
A
51.
D
52.
The primary objective of management accounting is C
53.
Which of the following is true of managerial accounting rather than financial accounting?
D
54.
B
55.
In a broad sense, cost accounting can be defined within the accounting system as C
56.
Traditional managerial accounting systems are often criticized for A
57.
Strategic cost management has emerged from a blending of D
58.
Answer: D
Processing hours per unit: XY 7:
0.75 / 1 = 0.75 or 45 minutes
BD 4: 0.20 / 1 = 0.20 or 12 minutes
Additional contribution margin using 100,000 hours: XY 7:
100,000 / 0.75 x P1 =
P133,333
BD 4: 100,000 / 0.20 x P0.50 = P250,000
59.
Answer: B

BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
Units sold to earn P1M = (1,000,000 + 1,000,000) / 5.25 = 380,952
The use of P1M fixed costs will require 380,952 units which are within the first range.
60.
Answer: C
Std. unit cost: Variable (7,000,000 x 0.60) / 140,000
P30
Fixed OH (11,200,000 x 0.50) / 160,000
35
Std. unit cost
P65
61.
Answer: B
Budgeted fixed overhead (30,000 x 2)
60,000
Applied FOH (25,000 x 2)
50,000
Unfavorable volume variance
10,000
62.
The best characterization of an opportunity costs is that it is A
63.
Answer: C
Direct material
2.00
Direct labor
2.40
Variable overhead
1.60
Avoidable marketing cost (0.7 x 2.50) 1.75
Relevant cost to make
7.75
The maximum purchase price, if ever the company has to decide buying the product, is P6.75.
Any amount higher than P6.75 will necessarily increase the unit cost of the product.
64.
Answer: D
Direct materials
4.50
Direct labor
10.00
Variable overhead
3.00
Variable selling expense
1.00
Additional profit (40,000 / 5,000)
8.00
Required selling price
26.50
65.
Which of the following statement is true? A
66.
Answer: C
Before-tax cash flow
100,000
Less annual depreciation (500,000 / 8)
62,500
Book income before tax
37,500
Less income tax (37,500 x 0.3)
11,250
Net book income
26,250
Add back depreciation
62,500
Annual after-tax cash inflow

88,750

Alternative computation for ATCF: (100,000 x .70) + (62,500 x .30) = P88,750

Computation of net present value:
PV of ATCF: 88,750 x 5.747
510,046
PV of after-tax salvage value: 20,000 x 0.70 x 0.54
7,560
Total
517,606
Investment
500,000
Net present value
17,606
The problem assumed that the salvage value is ignored in the computation of annual
depreciation so that the annual cash inflows will be greater. The problem did not include
among the choices the assumption that salvage value will be deducted from the cost in
computing the amount of annual depreciation.
67.

BALIUAG UNIVERSITY

CPA REVIEW 2013-14

MANAGEMENT ADVISORY MANAGEMENT FIRST PRE-BOARD
JACF
EXAM
__________________________________________________________________________________________________
Answer: D
The amount of investment: the PV of annuity at IRR = 4.355 x 6,000 =
26,130
68.
Answer: A
Annual sales 360 days x 100,000
36.0M
Inventory turnover 36M / 5M
7.2x
Inventory conversion period 360 / 7.2 = 50.0 days
69.
70.
Answer: B Since the expected value is positive, the company should expect to make a profit if
the product is introduced. Given the relationship between stock age and stock quality, the
number regarding the age of the inventory for specific qualities are irrelevant. Accordingly, one
would expect that the proportion of low- quality items among those aged 6 12 months would be
the same as the proportion for the entire sample (30 / 130 = 23%). The expected number of lowquality items aged 6 12 months is 10.4 (45 x 23%).
END

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Accou
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B 4
4
D 5
4
B 6
4
B 7
4
B 8
4
A 9
5
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D
A
D
D
D
C
D
C
D

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8
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91

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10
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