CERTIFIED ACCOUNTING TECHNICIAN LEVEL 2

MODULE 1

Key to Correction
E1
1. F 4. M 7. F
2. M 5. M 8. M
3. Fi 6. F 9. M

E2
1.FALSE - Costs can be classified into different categories for different purposes: (1) function,
(2) ease of traceability, (3) timing of charge against revenue, (4) behavior in accordance with
activity, and (5) relevance to decision making.
2.TRUE
3. TRUE
4. FALSE- Internal financial statements can be prepared without using generally accepted
accounting principles.

5. TRUE
6. FALSE - Management by objectives (MBO) is a systematic and organized approach that aims
to increase organizational performance while Management by Exception (MBE) is a "policy by
which management devotes its time to investigating only those situations in which actual
results differ significantly from planned results.’’
7. FALSE – Traditional income statement / income statement by function of expense

8. TRUE
9. FALSE - A professional examination exists to test the competence of financial accountants,
but not of managerial accountants.
10. FALSE - Managerial accountants should, but have no obligation to, maintain their
professional skills.

E3
1. FA 6. CA
2. CA 7. FA
3. CA 8. CA
4. FA 9. FA
5. CA 10. FA

E4
1. Replace
2. Efficiency
3. Corrective action
4. Material losses
5. Reconciliation statements
E5
A. PC, V C. MOH, F E. MOH, V G. PC, F I. MOH, F
B. MOH, F D. DL, V F. DM, V H. PC, F

E6
A. Total manufacturing costs ₱104,000
Less: Raw material used ₱27,000
Direct labor 35,000 62,000
Manufacturing overhead ₱ 42,000

B. Total manufacturing costs ₱104,000

Add: Work-in-process inventory, 1/1 19,000
₱123,000
Less: Cost of goods manufactured 100,000
Work-in-process inventory, 12/31 ₱ 23,000

C. Cost of goods available for sale ₱175,000

Less: Cost of goods manufactured 100,000
Finished-goods inventory, 1/1 ₱ 75,000

F. Cost of goods available for sale ₱175,000

Less: Finished-goods inventory, 12/31 60,000
Cost of goods sold ₱115,000

G. Sales revenue ₱300,000

Less: Cost of goods sold 115,000
Gross margin ₱185,000

H. Gross margin ₱185,000

Less: Selling and administrative expenses ₱125,000
Income tax expense 18,000 143,000
Net income ₱ 42,000

D. Raw materials used ₱27,000

Direct labor 35,000
Prime cost ₱ 62,000

E. Factory overhead ₱42,000

Direct labor 35,000
Conversion cost ₱ 77,000

E7
Constant Constant
1. Direct labor – V = per unit 5. Depreciation – F = total cost
2. Indirect labor – M = none 6. Utilities – M = none
3. Property taxes – F = total cost 7. Direct mat – V = per unit
4. Maintenance – M = none
E8
1. Variable cost per unit is computed as follows:
Total cost of highest activity − Total cost of lowest activity
Variable cost per unit =
Highest activity unit − Lowest activity unit
72,300 − 66,300
Variable cost per unit =
123,000 − 63,000
6,000
Variable cost per unit =
60,000
Variable cost per unit = 0.10
Fixed cost is computed as follows:
y = a + bx
72,300 = a + 0.10(123,000)
72,300 = a + 12,300
72,300 − 12,300 = a
a = 60,000

The equation form for the problem will be:

𝐲 = 𝟔𝟎, 𝟎𝟎𝟎 + 𝟎. 𝟏𝟎𝐱

2. The energy cost for a month with 78,000 is computed as:

y = 60,000 + 0.10(78,000)
𝐲 = 𝟔𝟕, 𝟖𝟎𝟎

E9
a.)
a. 56,000 - same with the cost @700 units of mufflers
b. 56,000 - same with the cost @700 units of mufflers
c. 24,000 - P28,000 / 700u x 600 = P24,000
d. 32,000 - P28,000 / 700u x 800 = P32,000
e. 80,000 – (a + c = e) = P56,000 + P24,000 = P80,000
f. 88,000 – (b + d = f) = P56,000 + P32,000 = P88,000
g. 93.33 - P56,000 / 600 = P93.33
h. 80 - P56,000 / 700 = P80
i. 70 - P56,000 / 800 = P70
j. 40 - P24,000 / 600 = P40
k. 40 - P28,000 / 700 = P40
l. 40 - P32,000 / 800 = P40
m. 133.33 – (g + j = m) = 93.33 + 40 = P133.33
n. 120 – (h + k = n) = 80 + 40 = P120
o. 110 – (i + l = o) = 70 + 40 = P110

b.)
Revenue (₱120 x 730) ₱87,600
Variable cost(₱40 x 730) 29,200
Fixed Cost 56,000
Income ₱ 2,400