HSQ-O1

= P,75,000
8. dross (profit) margin = selling expenses + incorne = P 55,000 + P 20,000
26. Equation1:4,350=4a + 180b EQuation2:202,5AO= 18Oa +8,600b
27. Equation1:'1,000= 10a + 35Ob Eguation2:39,2OO= 350a+ 14,250b
35.Y= 236,837+3.7625 (20,000)

MSQ-O2 ,'
20.income=110,O00(11.5o_6)-(30o,000+100,00o)
25. As hinted out, consiier only additiOnatfixed cost. Proflt before tax: 3O,00O* (1 - 0.4).= P 50,000*
(120,000+ so,ooox) + (14 - 3.25 - 4-O.75) 28,333 ) 28,300(roundedtothe nearesthundred)
-
26. Both fixed factory overhead of p 2 M and fixed selling, general and administralvq expelses of P 1.5 M
are based on monthly fixed costs. Henie, the fixed costs to considermust be: P 3.5 M x 12 mos.
40, CMR:(10,000 + 50,000) + 100,000 = 600/o Brgak-evensales: 50,000 + 6o0/o= P 83,333
45, @ P 300,000 sales: CMR = 3oo/o; fixed costs = P 81'000'
OpSOO,OO0sales:CM=360,000x30o/o=P108,00O;profit=108,O00-81,000=P27,OQO
5r. tnoifrerencepoint: x (3 - 1.8) - 960,000 = X (3 - 2.4)- 252,000 X = 1,180,000
56. Last yearrsCmn:.(Z.Sb - 2.25) + 7.50 = 7oo/o (VCR: 30o/o*) Target *: (2.25 + 0.75) * 30o/o*
year's rxc: (i.50 - 2.25) 20,000 * P 1o5,OO0 tsEP = 105,000 (1.1) + (9 - 3)
57. Last
58. Last year's pretax income: 5,040 + (1 - 0'4) = P 8;400*
Lastyear's unit eales:(105,000 + 8,400*) i (l -s - 2.25) = 21,600'
59. The term 'net incorne,'as suggestedby the dat€ in the problem, is meant to be afrer-tax.

USEFULCVP REIATIONS$IPS ]
(Emphasison the use of 'Cl4')
. CM Ratio,=CM + Sales= ACM + ASales (Consider:AS xCMR = ACM)
. Since Break:,EvenSales = Fixed Cost + Clf Ratlo, then '
CM Ratlo = Fixed Cost i Break-Even Safcs
CM Ratio = A Fixed Cost + A Break-Even Sales
(See related-item: MSQ - O2,no- 11)
Giventhtt Fb€d CPet is cllrrfarfi
/ AUnRSalesxCM/u =.AProfit + CFllu = AProfit + A UnitSales
/ APeso SalesxcMR = a P rofit ) c MR = A P ro f it + a P e s o s a le s
Based on MS - 02, item no. 3 (proving) and problem no' 4:
/ Margin of Safety x'CM Ratio = Profit
r' Margin of Safety Ratio x Ct4 Rttio = PtSt Ratio

rsefit
15,Endinqinventory:5OOunits (20 + 150,000/10,OOO)
26. If a cdnpany produceemorc goodsthan rthat it sells,ttren endinglnventor"yis expectedto increase'
Inventory> BeginningInventorY) Production> SEbsfly > VY
.--CotrsiCeitttrti,'Ending
(20,000/10,O00) = P 20,000favorable
33. &pacity or volumeJariance:(11,OOO - 1O,O0O)

Alternative formulas:
r (Actt"ldlFroduction - Budgeted Production) x FFOH/u
. Applied FFOH - Budgeted FFOH
Where:
NF - Normal Froductiwt
AP > NP: Favorable(Over-apPlied)
FFOH/u- Fixed Factory€verhead
VARIANCE
VOLUI'|E/CAPACITT
(A P -Fl P ) x F F O Hlu
AP * Actual Production
AP < NP: Unfavorable(Under-applied)
p€r Unit FFOH/u = Tota.lFFOH+ NormalProduction

NOTE: Volume varianceis computedonly under absorptioncosting method; since variable

;fi; t.eais Fron as a period cost, then there is no such thing as volume varianceunder
v.ariablecostingmethqd.
 October2013Batch
MS PracticeSefs ' ,&
MSQ-o4
38. CLARIFICATION! Some figuresregardingSegmentThree are unintentionally omitted.The rental income
is supposedto be P 23,470 (not P 3,470); expensesshouldbe P-2lipOq(not P O,bOO1. Thistest item is a
past'actual CPA board exam question with an official answer of l.etter"C." The key is to compute the
'segmentmargin'by adding baEkto profit the aliocatedoverheadcostson the basisof rental income.
Ale Iws lhree felr Erv-e
Profit (Loss) 2,000 (900) (2,530) (5,220) (2,350)
+ Allsqate_d-e-o-qt
. L600 L936 -3J55 1o-0_s _ 1,7_84
Segmentmargin (+) (+) (+ ) (-) (-)
41. D{FFERENTIAI-approach; West'ssegrnentmargin: 350.OOO:" 24O,OOO - 80,00O.= P30,0O0
Presentincome: 100,000 - 20,000 = 8O,000 Operatingincorne:80,000 - 30,000 * P 50,00O
TOTAI-approach:East'ssegrnentmargin - allocatedcosts = 220,000 - (120,000 + 50,000) = P 50,000
47.lndifferencepoint: 80,000 + 4.3 x = 110,000+ 3.5 x X = 37,500boxes
MSQ-O5
21. Auqust
. CGS:750,000x 4Ao/o= P 300,000
. Endinginventory: 25o/ox (825,000 x 4oo/o)= P 82,5O0
.. ' Beginninginventory: 25o/ox f75.0,000x 40o/o)= P 75,0O0
. ,P\rrchases: 3O0,000+ 82,500 - 75,000= P 307,500
22. Seotembel!-o,lalcash rece'pts
. September(cashsales): 825,000 x 2oa/o= P 165,000
' September(colldctionon account): (825,000 x S0%) x 4Oo/o= P 264,0O0
.: August (collectionon account).:(750,000 x B0o/o)x 57o/o= P 342,00O
43. March: 700,000-(.20o/p) + 7OO,O00 (80%) 3oo/<t= P 308,000
44. April: 625,000 (ZOo/o) + 625,000 (B0o/o)3oa/o* 700,000 (8oo/o)4ao/o* 650,000 (80o/o)23o/o:p 629,000
45. February
CGS:650,000 x 40olo= P 26O,O0O (basedon no. 46) ,
' Ending inventory: x
30o/o (700,000 x 40olo)= P 84,0bd
. Beginninginventory: 30o/ox (650,000 x 4Oo/o)= P 78,000
. Purchases:260,000 + 84,000 - 78,000 = P 266,0O0
47. Aoril disbur:Semenls
(700,000x10o/o)+(720,000+12)+(180,000+4)+(240,000+2)+(1,080,000+12)*P385,000
HSQ-O5
11. Material Price Varianceis preferably based on Matel"rirll
PurchasbPriceVariance (MPPV)since the variance
is u_suallycomputed at the date of purchase during whhh the entity has no knowledge of the actual
quahtity to use,. MPV) MPPV= AQ p,,.r,a.ed (AP - SP)
In the final analysis,however, Since the production costs are based on the actual quantity of materials
used; the materlal price usage variance(f.lPUV)will be eventually closed to the costs of goods sold.
lga)??l rotar
ilfiV"==,ffiff: DM Variance
21. Ffexiblebudget for part X LBagerefers to the startdardcost: (3,O00 x 3) x P 2.9O +P 26,1O0
24. See item.14 of MS - O6 wrap-up exercises.
25. LRV= AH x AR = 8i4OOF = 4O,0QO(AR - 6:50) ' AR = 6.29 (AR < SR)
Payroll = Ac,tualdir€ct fabor cost = AFIx AR = 40,0O0 (6.29) = P 251,6O0
29. LEV: (5,800 - 5,0OO).5= P 4i000 U Idle Time Variance:200 (5) = P 1,000U
NOTE: Labor efficierrcyvariance should not consider any resulting idle time due to non.controllable
events like power outage; idle time is separatelyaccogntedfor by computingthe idle time variance.
39. AFOH;', AFOH- L22,AO0= 1,00OU
BASH:122,000+ 50,000 + 4 (18,000)
44. SHSR:- : ,-- L22,AOO- SHSR= 500 U
41. 3 ways to comp{,Jte ttre volume or capacity variance:
. Input-based:BASH- SHSR
. Input-based(fixed):BASH(F)*SHSR(F)= (BH*SH)FR+(300-360)3= P lsofavorable
. Output-based: (Norrna{Production- Actual Production)FFOH/u
48. Output-basedcornputationof volume variance(see no. 41):
(15,000- 16,000)x (64,000/16,000)= P 4,000 unfavorable(AP'< NP)
50. OutpuFbasedcomputationof volume variance(see no.4l): 6,000 F = (39,000 - NP) x (150,0001NPi
58. Spendingvariance:8,000 U = AFOH- BAAH= 178;500- BAAH
BAAti= 170,500= 110,0O0+ 0.50 (AH) AH = 121,O00
= =
59..FOHvariance:6,000 U AFOH- SHSR 178,500- SllSR
'Sl-jlSR
* 172,500= SH (1.50) SH = 115,000
60. In standard costing, applied FOH is the standard FOH. If AFOH < SFOH, then FOH is over-applied
(favorable).If AFOH> SFOH,then FOHis under-applied (unfavorable).
71. Laboryieldvariance:(AQ - SQ) SP - (1,575 - 1,500)(2O/3)= P 500
72. Labor mix variance:(Computationis basedon MQV,where SQ,refersto Standard Mix)
(AQ . SQ) SP $D(Vaflsneq
Englneering: (550 - 525). 8 - 200u
Carpentry: .(650 - 525) 7 = 875U
I Masonry: (37_5 - 525) 5 = ___.-Z-58-..f*_.\
I
1,575 1,575 P325U ,,:1i1
 MSQ-10
L4. NEWMACHINE OLD MACHINE
Savings (before tax) P 100,000 Depreciation p 40,000
LesS:depteciation (60.000) Tax rate X 40oio
Income before tax P 40,000 Tax on Depreciation r) gJSJg!
Less:tax ( }oh) (16.000) I
Net income P 24,000 ;)- New Machine I p 94,000
Add: depreciation 60;000 | Oia mainine-<J (16,b00)
Net cash flows (after tax) P=q4;Qgq€ Net cash flows 9"0&AAg
NOTE:,Thetax on 'lost' depreciation (P 16,000) is a cash flow deduction since ttre oiil machine is to be
.replaced(i.e., the tax shield on depreciationof the old mdchine will be foregone).
AltqlDative.solulion: (100,000 - 20,000*) 6004 + 20,000* P 68,000
r Increasein depreciation:60,000 (ngw)-
- eb,OOO(otO)
23. Flotation cost i5 d€dtlcted from market price in computing the cost of common Stock; it is however
ignoredin computingthe cost of retainedearnings.
24. WACC* 4oo/a(l5o/o x 600/o)+ 600/o(10/100 + 2.5o/b)
WACCis prefefably based on market values (or targeted capital structure) rather than book values.
44.7,O00(1 - 0.35) + (120,0O0+ L2,OAO)/2
61. Refer to MSQ - 10, page 14 for the clarificationslsotutions
65. Refer to MSQ- 10, page 14 for the clarifications/sotutions
76. (80,000 - 27,27O- 29,736) + 0.751
87. Acceptableprojects: IRR > Cost of Capital. P 1,050,000 is based on projects B, D and E.
MtiQ-11

7. (800,000+x) + (400,000+ x) = 1.5 x = p400,000

11. Requiredcurrent assets:900,000 (2) = P 1.8 pt Excesscash: 2.05 M - l.d M.= p 250,000
Dividend per share: p 250,000 + 100,000 shares
22. Square root of: 2 (2,000,000) 50 + 0.09 = p 50,000 2M + 50,000 = 40 transactions
' 360 days + 40 transactions = every 9 days
28. 8o/o[(90.000,000/360)3]: 20,000(4) * p 20,000loss
30. Standar,d:500(10o/o) + 12[10+Ci.1(90)]= p 266 Premium:2,500(109o)= P 250
36. AgeofAR:60Yo {10) + 40ph (30) t 18duys AR o'15O (300) x lE * P'8i0,@0
39, OLD:76.8Mx (30/360) t{EW:(76.8Mx 1.3) x (it5/3€O)
41. {271{l+ 360) x 6 daysx 8olo
= P144,000._-
42. Benefit:7TO,qOA72.Oolo
,_ Cost: 72A,A00/360)x75daysxg0o/ox 20eto7p24,O&
50.carryingcosttstock-outcost:100u(50x20oto)+(100x5)10(15o/o)=p'L,75a
- -''-'

3.
l^2yLT,e:j!.Pe" ! 3 sltort-tglrnunsecuredldeElnstrffrIntissuedin targetbnominatioRs
by
-l"J-major
compani€a with exceflent credit ratings. Having no active socondary nnencit *.tt.t *
qompen$*ingbalancer€S,tirernents,it usualtyhas a lower cost of financingthan bank loans.
5. (100o/o - 6no- L.4olo)
100,000- 92,600(15%) (60/360)
7. Interegti80,000x |o% x (30/360) = 666.7 . chargcs: 100,000x 29o= 2,000
cost of financins(ractolng), tpp-6,! 2,000 - (181060112)l
; s0,o0ox ttobTlol ,
_+
9. Non-freetiacfecredit: (1,080,000/360)x (40-10) * p 90.O-dO
10. Loan: 10/90 = 11.19o Credit: 2/98x 360/60 * L2.24o/o
13. 60,000+ (1,0001000 - 200,0001= 7.5o/o 7.SVo(360/180) x 15o/o
Assuminginterest'iscompund4r.\W efrectiveannualraie (EAR)wouldhavebeefl:

!orE:Unress
inor."[L**:HJ:ilL;,1; l3;]1-?,tobenon-co
14. Int€rest = 20O,000x 10016 x 60/360 = 3,333
hwu*,ecr.
[3,333 + (200,000 -40,000- 3,333)] x 360/60 = IZ.7ffh
15. (1.00o/o
- 180,6- 15o/o)Prirrcipal= p 1,000,000 i
19. [qe" (2s0,00o)-,2yo(50,01rc - z5,ooo)]+ tltg,-0-0g.---(50,000
- 2s,000)l= 6.44a/o
17.(5Mx 98o/o) x t2chx 15/360= p 24,500vs.p'lbO,ooO.= SMx Z %'
] f 'flc le a g e i n s a l e s :2 Mx2 5 %=P 5 0 0 ,o,0 0AFN=( 659o - 2} 0/0) 500,000*( 2M +0-(5M ) 4oo/
72oh)
?!' ltua= .3 financing charges: 6,000+ (2,000+ 0.6) DFL= 1o3,ooo-- iepoo) + -'g,:tji
lso,ooo
?? . q14 Q 0 , 0 0 ( 20- 1.5 )= 1 5 0 ,0 0 0 .-D -rL* 150,O00 + ( i50,000 - sr i,ooo_20,d00)r .gzs'
*
34. 10 + (101 - 5) = LO. Zo/o
38. Currentprice =. I.2 + (L3o/o- g%) Refer to MSQ *. 10, page 4 on Dividend 1rowth Modet
40. t2.2 (1.06) + 40 (959/o)l+ 60lo Refer to MSQ * 10, page 4 an Dividend Growth Madel
43. (3 + 50) + 10q1o = 15o/o
44. 13 + (60 x 80o/o)l* 10o/oo L5.25o/o
45. 3,000,000+ 600/o= P 5,000,000
46. WACC:IAo/o(2.8/7.)+ L!% (3/7) + 760/o (!.2/7)
47. WACC: Lpo/o(40%) + 160lo(600/o)
5a' 60/o'+ 1'25 (t4o/o - 60/o) Refer to MsQ - 10, page 4 on Capitat Assetpricing Model (CAIM)
53. B.5olo+ 1.15 (12.4a/o - B.5olo)
54.Let'x'bethecostof eouitv (2/7\Bo/^Io6\+11l?\w
 @ Octufter
2013
$atcfr's
WfutA S
Lr'"o 4a4 d'a
z,'"c 4{t x62.A 82'rE
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ei{ g
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{9
TP.y
x48. C
X4e. Y
svy
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88.,A
89.r C
90. 0
t'{fr 5l/ Dr 7{.A
t4n 52-4 t{o
1'6' g-{ 73vP
rK.g-B *o 74{ B
t{o T5S. A zar--'O
td* )66.
' s { ,A 76:- A
fl(a * z 7c
x18. D s{.> 79,' A
{.9. A'- >9g.-g s{e /9. "*
z{a MA \60. B 8*' D
Briefjarifications/cxolariatioqg tg *hed itrf
20. Electronk data interdtangp (EDI) ls a systcrlr tft* pcrmRszupflfers and bnryersto have dlr€ct arcs to
portions of each dhers' databascs, indudng Cata to citrance scwki ard delivcrks (i.e., the
@mmunkatlon d elklnonic documenb dhectly frrorn one comF"ter In orE €fruty to a conputer In
anotherentrty).
22.ln a competluve rnarket br labor in whlcfi d3m.'d is stable, total wag€s carxtd lncrGafc. lf m
w(frtgs donq€Fio ffi{-wigc+ EE imcrtr-ffiirciry rimrmtrt?t€lEtr 6r.
25. The cost of retatned eamirps is usrl.fy mr $il it ort of qtcmal @fnflDill equtty; thfs b A|Q kr n
absenceof fiotatlon or lssue costs in rut*rad aarr*nt.
29. Selffrlggpwmment s€curlths wlll decrcrc tte moncy supply tn ftc tdomy so that peopb do not frvc
any rncailBto buy 9006.
31. An EXPERT(not EIS) qEt"m prwlfts adyic and ancw€rsto top managpmGntlhorn a knowledge-bascd
systcm. Soc rdaitetl rflu in ilS-D.
ge. S€e rdated r& ln tts-El ql stndirral vs. qpilcd rr. frtcilond urffiffincrt:
48. Elcctmnlc Fund TrarFr (CFI) is a scrvioe proU*O by lkrandat lrHlttpns Slat B- based on EDI
t€dmology. EfT trafErc0qr orts arE lovrcr thm t'|*r marnrd.sl,sterts dre dmrr*ton of busineSs
doqrncnts and humen intGnEntion.
58. Leadsa|tl la95 tre oonsHer€dh hrdg€ttng prrntts€c of n&rlab as needd in ttre prodtrction.Question
is b6ed ofi least ruhvffi'to br(ts arxt Lgs.
60. Cost aFocatlon ls lcre lbr l*Ernal p|rrpoocs bccace reepofisbfifty aocounting systems
enphasize controilabifty (i.c., co6B afiE mn-coltr$abb. m6ts).
78. Engfiwrd coets b|r en observ#lc and lspun rl'*iocenF b a Srantffia& activlty base and have a
clear relatloncfiF to ot$lt. Dffcct nf.tslab nedd be an exarnpb of an qnnolU cdst.

NOTE:'Endocedln parcrthesis is the nurnberdf pqgcs of tfie correspondfrqg

hardsut.

1) MS - 01 (4) A HSQ- 01 (4) 13) MS- A( /+ )

2) MS - 02 (3) & r.tSQ- 02 (8) 14) MS- B( 4)
3) MS - 03 (4) & MSQ- 03 (4) ls) MS- C( 2)
4) MS - 04 (6) A MSQ- 04 (10) 16) MS- D( 8) .
5) MS - 05 (4) & MSQ= 05 (5) 17) , MS- El (8)
6) MS- 06 (6) & MSQ- 06 (10) 18) MS- E2 (8)
7' MS - 07 (6) & MSQ- 07 (6) 19) MS- F( 4)
8) MS- 08 (4) & MSQ- 08 (10) 2A) MS PracticeSets A to F (4,4,4,4,4,2)
9) MS 09 (6) & MSQ- 09 (10) 21) MSQuizzes1to 5 (4,4,4,'2,61
10) MS -- 10 (8) A MSQ" 10 (14) 22) MS Solutions& CtarificaUons
11) M S- 1 1 ( 1 2 )& MS Q- 1 1 (1 2 ) 23) MS First& FinalPreboardExams*
L2) MS - 12 (10) A MSQ- 12 (8) ' 24) MS Preweek- Theories& Problems*
 October2013Batch
i...:";,,fi
MS Quizzers

HSQ-O7
r+. (lrt,ooo - 25o,ooo
-'so,ooo)+ 4o,0oo
rs. (+,ooo-3,szs- 7s')+ (ezsi t,tts,
zz. (soo,ooo - 4s0;6o0:-
90,000)+ (5ot),000
+ ?ao,ooo)/2
23.60,000- LSVI(600,000)
25. 2,000,099= (30,000,000: costs)- t5:o/o (1.8M+ 17.2M)
28. EVA(EconomicValueA&led) = 4tt't(1. 0.25) - 9% (4M +-16M- 2il)
33. No alfticationto co-servlcedepartmentunderdlrect method
34. (7,2AO+ 0.3) xO.7 = P 16,800
35. A .= 4OO+ 309o B B = 800 + z0olnA:
38. Letter B referc to goal corgruence.Letter D refers ta mahagerlal efott,
43. MinimumTransfeiPrlce(at capacity):P 50,000+ 1,000un'iE= P 50
44. Ldtef.A refqrs W rlrat*et prtce.lett€r C.re$ersto Ml abfir?lt,c,ncost Letbr D r€lbrs to aostdcrs.
48. 35 (5,004/15,@) + 23 (10,ffi/15,000) * P 27
FO.sals.- Costs= Pioftt ' 5O,OO0 (SP): 550,000 o 2096[ltrt]+ O.2 (5OrOmSF)l

rsQ-o8
2L. Mrtefial rnovesshall be uscdas the cost drlver fur the materialhancilingcosts: 100,0m (10/50) + 100 u
22. Numberof inptions shall be used as ttre cost driver for the insgcctioncosts.
l5.,Consurpptiooratlos (numberof setups):Y - 10OI5OOO - 150/5@ U - 250/5OO
28. 5O,0OO (?0014@)+ 25 = P 1,000 .
29. 50,OOO (312O).+25 = P 500
32. ABC:f 2 (12) + 17,50O(0.14)+ 77 (3O)= P 4,904
Traditional:159h(3O,OOO) = P 4,500
35. Actfvlty!; Appliedcost (ABC)+ 2,2fi (61,3t7 + 2,3OO)= P 61,120.10 Actudtcost + p 61,392
41. NOTE:FOHis amlied on the basison ditmt labor cost.
AppffiedFOH:270;000(500,0m + 250,S0) P g4O,0OO
Adual FOtf: P 525,O@ -
ft|H: P 15,000wer-applied
42. AppfiedfuH: lO,O@(4) = P 40,000 ActualFoH: P 40,000 - 3,000
43, grltlgctd Sff: 9$,0ff1(8 - 3) P 450.@O- -^
.44. App'$ed.f(}ll:144,O0r0 6,0@ *- P 138,000 *lfurl trou*n: 138,OgOi 6
-
45. ApdicatianRate: 120,000* 48,(x)o= P 2.5q hrdget€d FOH:50,O00(2.5)
46.I{OTE: FQHis dppll€Uen tfie hsls On dtt|'* ,.M cffi.
ApglredFoH:270,ooo(5oo,ooo+ 250,ffF) P 54o,o0o
Achi;| fofl: p 525,gOO ' - FOH:P 15,O0O
over-applhd
Items 17'f649 are b*c6on th€

42. itafil<etCzcv|drre;-(2rfiX)p(X) : 1,5ffi,0OO)6t& r P I = F-24O,(il0faaolbte

48. Marketshgr€wrience: 21000,000(59l - 6%) x P 8 = P 160,000unfarorabte
49. Sabs guffrtk-yvariarcc: (l00.tl0O.- 9O,OOO) x P I * P 8O,O0O favtrabt€
81. Preventlocre8ts: ernpfql4lEtrdnirlg-costs and ayriprnert rnaintenance
Appr.abaloets : prti<*uctteeting
Internal frllure co$:, rewor*

liSQ - ll$ (tlOTE: rotutbns were dlscussdddudng lectrfc)

6. 8
8.A
FERTne$ru& fol trtSQf0g-itcm,7:

o
11. D
18. A
z?.c
32.8" F (4)
33. A trr
|'
53. B
54. D
o+ra'o c(7,
>o:=qq+o
59. B
'tr. A
68. D
69. A 'H (s)
70. c
77. A
78. C
79. B
 @ Octoiler2013 gytseiz 3
Gatcfi's
1. B " 7. C 13. C 19. C 25. A
2.8 8.A 14. C 20. A 26. D
, 3. C 9.A 15. D 27. C 27. C
4. C 10. D 16. C 22. A 2BA
5.D 11. B L7. B 23. D 29. A
6. D L2. D 18. D 24. C 30. D
Brief explanations/solutionsto selectediterns '
1 EOQis the quantitative techniqueappropriatefor choic''.sA and D while probabitity'a,natysr.; for choice C.
2. Return on investment (RoI) = l'larnrJin x Turnover 'Margin'is a percentageot profif based on sales
4. Choice'rY is an example of an external failure cost Choice'B' is an exampie of an appralsal cost
Choice'C'is an exampleof an internalfailure cost Choice'D'is an exampleof a prevenfloncost
6. Referto MS - E1 handoutson lrlacrocconomics (i.e., inflation)
10. Four (4) pe'spectivesof the BalancedScorecard:(1) Financialperspective1r, Customerperspective(3)
Internal BusinessP:'ocesses perspective(4) Leai-ning& Growth perspective-
12. Referto MS - El handoutson Macroeco:tomics (i.e., GDP- final goodsvs. intermediategoods)
13. Reorderpoint = averagedaily usaEe;:maximurr leadtime
14. contribution ,nargirr- traceable (direct) fixed expenses= segment margin
15. Referto MS - El handoutson lriacroeconomics(i.e., fiscal policy) -
17. ORDERINGCOSTSinclude purchasing costs, shipping & handling cosfg set up cos;ts;for prcduction nrn,
and quantitJ discount lost
CARRYINGCOSTSusually Consistof storage, re:tfsecurit1,, interest (opportunity ccs7cost of capitat),
spoilage, deprecia1on, obsolescence,insurance, and propery, taxes.
r 9.
-:e-> *: E(6)>o
q)
-;"i*
\-/ D (Z)
Criticalpath: A - C - E -=---'>
) 15 days
20. ManufacturinoCycleEfficiency(MCE)ratio: 6 + (G + 1 + 1 + 1) = 0.62
21. Total input costs:900 (1.5) + 600 (1.75) + 600 (15) = p 12,000
Total producti'/ity factcr: 3,000 units + p 12,000 = o.25 unlts per peso input
22. AppliedFOH= P 176,000(P240,000+ P 160,000)= p264,000 vs. nctuatFOH= p256,000
Cost is over-applied by P 8,OOO€ 264,000 - 256,000
23. Sales= Cost r.profit = p !,720,}eQ= [600,000+ 25 (40,000)]+ Lio/o(g00,000)
seflingPrice:P 7,72a,ooo+ 40,00c units = p4-a Mark-up:(43 - 2s) + 2s = 72o/o
24. Traditionatcosting: P 10,000x 350o/o= p 35,000
ABC:10,000(30/300)+800(so0/20)+100(100/10)+L2(2oJ/2)+5(20/1)+18G8A/12)=p24,O2O
Cost under ABC is lower by P 1O,9.gO€ p 35,00C - p 24,OZO
25. Referto MSQ- 09, item 54:
fso-utts DL&f/EAH-I@SO"a) pL & VFOH(@7Oolor
Direct materials P 4,500 Units Averaoe Total uolts aygage Total
Direct labor 1 50 u 250 12,500 50 u 250- rz,soo
ls soo*
LJ'rvv
variable ove.head J 100u 200 20,000 100rr r7s :,7,500
Fixedoverhe,ad ____?,.199_ 200u 160 32,000 200u rzz.s 24,5ogx*
TOI-AL P 26,40A x32,000 - 12,500
26.DL &VFOH: (24,5U0**- 12,500)+- (S.5 + 4) = 960 hours r o
960 hrs + 150 urtits = 6.4 hrs per gnit
27. Usethe averageof each range: (10 x 10o/o)+ (30 x 4Oo/o)+ (50 x 30o/o)+ (7O xZ0o/o)
28. Total orderingcosts: (18,000/600) 15 = 450
Total carryingcosts: (600/2) 1.50 = 450