INTEGRATED REVIEW 2: Management Advisory Services (MAS)

#1 | Basic Framework of Management Accounting & Costs in Management Accounting

Solutions Manual

Problems Number (8-10)

8. B
Monthly budgeted fixed cost (72000/12) P 6,000
Variable cost based on actual units:
Number of hours allowed
(96,000 x 5/60) = 8,000 hours
Variable Cost: 8,000 x 1.60 12,800
Budgeted Overhead Cost P 18,800

9. D
b = (853,560 – 723,060) ÷ (540,000- 450,000)
= 130,500 ÷ 90,000
b = P 1.45

a= 853,560 – (540,000 x 1.45)

a= P70, 560

Y = 70,560 + 1.45b
= 70,560 + (470,000 x 1.45)
Y= P 752, 060
*b- variable cost per unit; a- total fixed cost; Y- Total cost

10. B
b = (8,500-6,750) ÷ (2,000- 1,500)
= 1,750 ÷ 500
b = P 3.50

a= 8500– (2,000 x 3.5)

a= 1,500

Y = 1,500 + 3.50X

Problems Number (24-30)

24. D
Cost Machine Hours
High (April) P 15,840 2190
Low (February) 10,720 1230
Differences P 5,120 960
Variable rate per hour = 5,120/960 = P 5.33/hr.

25. C
High Low
Total Cost P 15,840 P 10,720
Less variable Cost
(2190*5.33) (11,680)
(1230*5.33) (6,560)
Monthly Fixed Cost P 4,160 P 4,160

Average annual fixed maintenance cost = P 4,160 * 12 = P 49,920

26. B
Variable Cost (1500*5.33) P 8,000
Fixed Cost 4,160
Total Cost P 12,160
Divide by: Machine Hours 1,500
Average rate per hour P 8.11

27. A
Materials P 240
Labor 165
Factory Overhead 135
P 540
Multiply: # of Dresses 2,500
Total Cost P 1,350,000

Spoiled Goods (324*200) 64,800

Factory Overhead ((540-324) * 200) 43,200
Work in Process 108,000

Finished Goods (1,350,000 – 108,000) 1,242,000

Work in Process 1,242,000
Cost per unit under normal spoilage (1,242,000/2300) Php 540
28. C
Materials P 240
Labor 165
Factory Overhead 135
 P 540
Multiply: # of Dresses 2,500
Total Cost P 1,350,000

Spoiled Goods (324*200) 64,800

Work in Process 64,800

Finished Goods (1,350,000 – 64,800) 1,285,200

Work in Process 1,285,200
Cost per unit under normal spoilage (1,285,200/2300) Php 558.78

29. A

Materials Labor Factory Overhead

Beginning 2,400 1,500 760
Put into production 25,100 19,380 14,900
Total 27,500 20,880 15,660
Materials Conversion Cost
Units Completed and Transferred 4,800 4,800
Units, Ending 700 420
Total 5,500 5,220

Unit cost of material = 27,500/ 5,500 = Php 5.00

30. B
Completed and Transferred 4,800
Ending (700*.60) 420
Total 5,220

Problems Number (34-40)

34. C
 Direct materials P 5,000
Indirect materials 2,000
Direct labor 6,000
Indirect labor 1,000
Factory utilities 4,000
Overtime pay - factory workers 1,500
Rework cost on defective products 2,500
Total product cost P 22,000

35. B

Advertising costs P 8,000

Sales commission 12,000
Depreciation of administration building 3,000
Salaries of administrative personnel 20,000
Depreciation - delivery equipment 2,000
Total period cost P 45,000

36. A

Materials P60
Direct labor: Parts fabrication P40
Assembly P18 58
Total prime costs P118

37. C

Variable cost (2,000 units x 6 hrs x P5/h) P 60,000

Fixed cost 50,000
Total overhead cost P 110,000

38. B

Annual fixed overhead (P50,000 x 12) P 600,000

Divide by: Normal hours for one year (20,000 units x 6 hrs) 120,000
Fixed overhead rate per hour P5

39. C

Variable rate per hour P5

Fixed rate 5
Total predetermined factory overhead rate per hour P 10
40. B

Direct labor $16,000

Manufacturing overhead 37,000
Conversion costs $53,000

Problems Number (47-50)

47. C

Highest Level(18k x 4500 18,000 hrs

0.25)

Lowest Level (9k x 0.40) 3600 9000 hrs

Difference 900 9000 hrs

Variable Rate per hour ( 0.10

900 / 9000 hrs)

High Low

Total Cost 4500 3600

Variable Proportion

18k x 0.10 1800

9000 x 0.10 900

FIXED 2700 2700

PROPORTION/COST

FOR 13,000 hrs

Variable (13k x 0.10) 1,300

 Fixed 2700

TOTAL 4,000

49. C

Additional Fixed Cost 2,400

Variable Factory Overhead 1,200

[(102-90)x100]

TOTAL 3,600

50. C

Beginning WIP Inventory 300,000

Direct Labor Cost 800,000

Direct Materials 1,700,000

FOH 1,200,000

TOTAL 4,000,000

Orders Completed 2,400,000

Ending WIP Inventory 1,600,000

56. A
MPPV= pounds purchased x (standard price per pound- actual price per pound)
MPPV= 4,500 pounds x [ P4.00 - (P17,100/4500 pounds)]
 MPPV= 4,500 pounds x ( P4.00 - P3.80)
MPPV= 4,500 pounds x P0.20
MPPV= P900 favorable (a)

57. D
EV= standard direct labor hours - actual direct labor hours
EV= ( 2,100 units x 3 hours) - 6,400 hours
EV= 6,300 hours - 6,400 hours
EV= 100 hours inefficient (d)

58. B
Product X CM: P2
Product Y CM: P1
Wtd. ave. unit CM (3:1) = 75% (2) + 25% (1) = 1.75
Over-all BEP (units) = P210,000 / 1.75 = 120,000 units
Product X= 75% x 120,000 units = 90,000
Break-even CM= 90,000 units x 2 = P180,000 (b)

Problems Number (76-80)

76. B
The solution can be made using an equation approach:
a = y – bX
(P2,300,000 – 50,000X)1.25 = P2,800,000 – 60,000X
2,875,000 – 62,500X = 2,800,000 – 60,000X
2,500X = 75,000
X = P30
77. B
Contribution margin per unit:
(P154,000 + P26,000) ÷ 12,000 units = P15.00
Variable cost per unit: P20.00 – P15.00 = P 5.00
78. A
Change in cost ÷ Change in sales = Variable cost per peso sale
(P69,000 – P52,000) ÷ (P148,000 – P97,000)
 P17,000 ÷ P51,000 = P0.333.
79. D
Net income P 50,000
Add: selling and admin. Expense 120,000
Gross Margin 170,000
Add: excess of contribution margin over gross margin 15,000
Contribution Margin P185,000
80. A

(105,000 x P11.40) - (70,000 x P13.40)

b=
105,000 - 70,000

b = (P1,197,000 – P938,000) ÷ 35,000

b = P7.40

a = P938,000 – (70,000 x P7.40)

a = P420,000

Y = P420,000 + P7.40X
Y = P420,000 + (80,000 x 7.40)
= P1,012,000
Problems Number (86-90)

86. C

1.)
Fixed costs 600,000
Operating costs 120,000
Contribution margin 720,000

Unit contribution margin 720,000/ 400,000 1.8

Selling price (1.8 / 0.4) 4.5 C

87. B

2.)
Total Fixed cost 154,000
Operating profit 26,000
Total Contribution Margin 180,000

Selling price 20
Less: Contribution margin per unit (180,000 / 12,000) 15
Unit variable costs 5B

88. B

3.)
Contribution margin per machine
hour:
Contribution margin per unit x No. of units produced per machine
hours

Product
A P20 x 6 P120 B

Product
B P16 x 8 P128

89. C

4.)
Variable OH rate P2.00
Fixed OH rate ( 340,000 / 425,000) 0.8
Total OH rate P2.8 C

90. A
5.)
Safety ratio is the percentage about breakeven
400, 000 x 0.9 = 360,000 (breakeven sales)
At breakeven sales, amount of contribution margin equals fixed costs,
So fixed costs = 20% of breakeven sales,
360,000 x 0.2 = 72, 000 A
Problems Number (111-118)

111. B
Diff. in costs (P12,415 – P11,737) P 678
÷ diff. in hours (150 – 120) 30
Variable rate per hour P22.60
Total cost P12,415 P11,737
Less variable cost (22.60x150) 3,390 (22.60x120) 2,712
Fixed costs P 9,025

112. B
Variable cost (140 x P22.60) P 3,164
Fixed cost 9,025
Total cost P12,189
÷ number of hours 140
Cost per hour P 87.06

113. B

Prime costs P 900,000

Applied overhead (P600,000 / 75,000 DLH x 75,700) 605,600
Total cost P1,505,600
÷ Units produced 100,000
Unit cost P 15.06

114. B
Assembly department = P9/machine hour x 3 machine hours x 20 sets = P540

116. C

Projected sales (125,000 x P6) P750,000

Less contribution margin:
Income before tax (75,000/0.60) P125,000
Add fixed cost 250,000 375,000
Variable costs P375,000
÷ number of units 125,000
Variable cost per unit P 3.00

117. D
Let S = Sales; CM = 0.40S; NY = 0.10S
Fixed Cost = (0.40S – 0.10S) = 0.30S
Sales (P60,000 ÷ 0.30) P200,000
Less breakeven sales (P60,000 ÷ 0.40) 150,000
Margin of safety P 50,000

118. B

Increase in profit (P40,000 x 20%) P 8,000

÷ Present profit:
Contribution margin P40,000
Less fixed costs 30,000 10,000
% change in profit 80%

Problems Number (126-130)

126. B
Digicam Videocam Total
Sales (break-even) ₱ 1,620,000 (a) ₱ 3,420,000 (b) ₱ 5,040,000
Less: Variable costs 810,000 (c) 1,200,000 (d) 2,010,000
ContributionMargin ₱ 810,000 ₱ 2,220,000 ₱ 3,030,000
Divide by: total units 600 units
Weighted-average UCM ₱ 5,050
(WaUCM)

127. A
BEP = Fixed cost/WaUCM
Fixed costs = BEP x WaUCM
Fixed costs = (360 + 240) x ₱ 5,050
Fixed costs = ₱ 3,030,000

128. D
Quantity Price Total
Actual 6.900 ₱ 13.00 ₱ 89,700
Standard 6,300 ₱ 12.50 ₱ 78,750
Variance 600 U ₱ 0.50 U ₱ 10,950 U

129. B
Efficiency Variance = Difference in Quantity x Standard Price
Efficiency Variance = 600 U x ₱ 12.50
Efficiency Variance = ₱ 7,500 unfavorable

130. A
Spending Variance = Difference in Price x Actual Quantity
Spending Variance = ₱ 0.50 U x 6,900
Spending Variance = ₱ 3,450 unfavorable

Problems Number (136-140)

136. C
Direct materials and direct labor P120,000
Factory overhead P400 x 150 60,000
Total manufacturing cost P180,000

137. D

Beginning materials inventory P 20,000

Add Materials Purchased 140,000
Total cost of materials available for use 160,000
Deduct Materials inventory, End 10,000
Cost of materials used P150,000

138. A

Direct materials used P150,000

Direct labor 160,000
Overhead 200,000
Total manufacturing costs 510,000
Add Work in process, beginning 20,000
Total costs placed in process 530,000
Deduct Work in process, end 100,000
Cost of goods manufactured P430,000
139. B
 Cost of goods manufactured P430,000
Add finished goods inventory, beginning 40,000
Total cost of goods available for sale 470,000
Deduct finished goods inventory, end 50,000
Cost of goods sold P420,000
140. Answer: D
Overhead rate per hour (P60,000 ÷ 24,000) P2.50
Budgeted overhead (25,000 x P2.50) P62,500

Problem Number 157. B

Sales = ?
Variable Cost (VC) = 40% of Sales
Fixed Cost (FC)= 600,000
Net Income (NI) (Desired) = 60,000

Let x = Sales
X – VC – FC = NI
X - .4x – 600,000 = 60,000
X - .4X = 600,000 + 60,000
.6X = 660,000
X = 1, 100,000

Problem Number 166. D

Beginning finished goods inventory $74,000

Add: Cost of goods manufactured (squeeze) 351,000
Total goods available for sale 425,000
Less: Cost of goods sold ($438,000-$63,000) 375,000
Ending finished goods inventory $50,000

Problems Number (175-180)

175. C
Variable cost = (P130,000 – P115,000) ÷ (100,000 – 80,000)
 P15,000 ÷ 20,000 P0.75
176. A
Maintenance Cost= P130,000 – (10,000 x P0.75)
Maintenance Cost= P55,000
Total fixed overhead:
Maintenance Cost P 55,000
Depreciation 60,000
Total P115,000
177. B
Utilities 110,000 x P0.6 P 66,000
Maintenance P55,000 + (110,000 x P0.75) 137,500
Depreciation 60,000
Total P263,500
178. A & 179. B
Number of bed days based on occupancy rate of:
80% = 450 x 30 x 0.8 10,800
60% = 450 x 30 x 0.6 8,100

(10,800 x 32) - 326,700

b=
10,800 - 8,100

18,900 ÷ 2,700 P7

a = P326,700 – (8,100 x P7) P270,000

180. C
Number of bed days at 75% occupancy rate
0.75 x 30 x 450 = 10,125
Y = P270,000 + (10,125 x P7) P340,875
Problems Number (186-190)

186. B
Total fixed Cost P154,000
Operating Profit 26,000
Total Contribution Margin P180,000
Selling price P20
Contribution margin per units (180,000/12,000) 15
Unit variable cost P5

187. C
Fixed costs P600,000
Operating profit 120,000
Contribution margin 720,000
Unit contribution margin (720,000/400,000) 1.80
Selling Price (1.80 + 0.40) P4.50

188. B
Product A (P20 x 6) P120
Product B (P16 x 8) P128

189. A
Additional CM (30,000 units @ 10) P300,000
Less: Required profit 200,000
Maximum advertising cost P100,000

190. A
Margin of Safety = Budgeted sales – Breakeven sales
Breakeven sales: P400,000 – P40,000 P360,000
 Kieso & Weygandt 2016 Edition
Problems Number (216-220)

216. A

Selling Price P16.0

Original Cost (14.2)*
1.8 x 3,000 units = 5400 increase

*Variable manufacturing costs 288,000/ 24,000 units = P12.0

Variable selling costs 52,800/ 24,000 units = 2.2
P 12.2
217. B
Estimated Manufacturing Overhead
Estimated Machine Hours

= P25,000/ 20,000 machine hours

= P25 per machine hour

219. C
2000 favorable variance
(7000) unfavorable variable overhead variance
(5000)
2000 squeeze
(3000) total underapplied overhead
220. C
NOI Variable costing method P 9,100
NOI Absorption costing method (6,400)
2,700 / 3 = 900
2,100 Ending Inventory
3,000 Beginning Inventory

Problems Number (226-230)

226. D (P60 + P10 + P18 + P4 = P92)

227. B (P32 + P16 = P48)
228. A (P60 + P10 + P18 + P32 = P120)
229. C (P4 + P16 = P20)
230. A (Direct Labor = P10 X (45 hours – 5 hours – 3 hours) = P370
Manufacturing Overhead = [ (P15 X 5 hours) + (P10 X 3 hours)] = P105