MAS ANSWER KEY

1. B
2. D
3. B
4. B
5. C.
Solution:
Cost per call (P175,000 / 5,000 calls) P35
Calls related to the Replacement Parts Line
(5,000 - 3,500) 1,450
Costs allocated to the Replacement Parts Line P50,750
6. C
7. A
Solution:
Avoidable revenue P120,000
Less avoidable cost: Variable P70,000
Fixed 35,000 105,000
Contribution of the department to total
P15,000
operations

8. D
9. B
10. C
Solution:
Present full-cost [(P15M + 5M) / 50,000 units] P400
Target cost:
Target price P450
Less: Target margin 80 370
Required reduction in full cost per unit P30
11. C
12. C
Solution:
2 360 ����
Annual interest rate - Alternative 2 98 � 30−10
36.73%
Annual interest rate - Alternative 1 12.00%
Savings in interest cost if
Alternative 1 is chosen 24.73%
13. D
14. C
15. D
Solution:
Increase in sales P1,500,000
Less:
Manufacturing and selling costs (65%) P975,000
Bad debts (10%) 150,000
Collection costs (5%) 75,000 1,200,000
Incremental profit before tax P300,000
Less: Tax (30%) 90,000
Incremental after-tax profit P210,000
16. D
17. B
Solution:
ROI = Operating Income
Investment or Assets
= P675,000 - P400,000 - P237,500
P750,000
= 5%
18. B
Solution:
Sales P675,000
Less: Costs and expenses (P400,000 / P237,500) 637,500
Actual income P37,500
Less: Desired income or imputed charge on investment
(P750,000 x 4%) 30,000
Residual income P7,500
19. C
20. A
21. B
22. A
Solution
The breakeven point in pesos is calculated using the formula:
���
BEPp = ���

Dark Co.: P50,000 / 40% = P125,000.00

Wild Co.: P70,000 / 52% = P134,615.38

23. A
24. A
Solution
Total standard cost P72,000
Divided by: Standard quantity for actual prod. (14,400x4) 57,600
Standard price per unit of materials P 1.25

25. C
Solution
Usage variance = difference in quantity x standard price
3,000 u = difference in quantity x P1.25 (see no. 24)
Difference in quantity = 3,000 / P1.25
= 2,400 unfavorable
If the difference in quantity is unfavorable, this means, the actual quantity is greater than the
standard quantity. Hence,

Standard quantity (14,400 x 4) 57,600

Add: Unfavorable difference in quantity 2,400
Actual quantity used 60,000

26. A
Solution
Price variance = (AP - SP) x AQ
= ([126,000 / 84,000] - P1.25) x 60,000
= P15,000 unfavorable

27. B
28. B
29. D
30. B
31. D
Solution for 30 and 31
Variable Throughput
Sales (7,000 x P75) P525,000 P525,000
COGS
7,000 x P20 140,000
7,000 x P12 84,000
Contribution margin/Throughput P385,000 P441,000
Less: Period costs
Other variable manufacturing costs
(9,000 x P8) - 72,000
Fixed manufac. costs (10,000 x P25) 250,000 250,000
Selling and admin. costs. 80,000 80,000
Income P 55,000 P 39,000

32. A
Solution
January February
Budgeted sales 90,000 120,000
Add: desired finished goods
ending inventory 24,0001 36,0002
Total 114,000 156,000
Less: finished goods beg. inv. 20,000 24,000
Budgeted production 94,000 132,000
Multiply by: qty of materials required
per unit 5 5
Materials to be used 470,000 660,000
Add: desired materials end. inv. 165,0003
Total 635,000
Less: materials beg. inv. 35,000
Budgeted purchases of materials 600,000

1
120,000 x 20%
2
180,000 x 20%
3
660,000 x 25%

33. D
Solution
Cash receipts in March will come from the January and February sales:

From January sales (P96,000 x 36%) P 34,560

From February sales (P168,800 x 60%) 101,280
Budgeted cash receipts in March P135,840

34. B
35. B
36. B
Solution
Customer demand 200
Less: beginning inventory 70
Planned production 130

37. C
38. C
Solution
Variable cost (2,000 u x 6 hours x P5/hour) P60,000
Fixed cost 50,000
Total overhead cost P110,000

39. B
Solution
Annual fixed overhead (P50,000 x 12) P600,000
Divided by: normal hours for one year
(2,000 u x 6 hours) 120,000
Fixed overhead rate per hour P5

40. C
41. A
42. A
Solution
Efficiency variance = difference in time x standard rate
2,400 = difference in time x P12
Difference in time = P2,400 / P12
= 200 unfavorable

When the difference is unfavorable, this means the actual time is greater than the standard time.
Hence,
Standard time 3,000 hours
Add: unfavorable difference in time 200
Actual hours worked 3,200 hours

43. D
44. D
45. C
Solution
Net income P195,000
Return on investment = = = 19.5%
Total assets P1,000,000

46. A
Solution
Cash flow from operations P25,000
Cash flow margin = = = 1.4%
Net sales P1,800,000

47. C
48. D
49. B
Solution
Dividends per share
Dividend payout ratio = Earnings per share

Let Y = earnings in 2021

0.50 Y = dividends paid last year
0.80 Y = earnings in 2022
0.90 x 0.50 Y = dividends paid in 2022

0.90 x 0.50 Y 0.45 Y

DPR in 2022 = = = 0.5625
0.80 Y 0.80 Y

50. C
51. A
Solution
Average sales per day P 90,000
Multiply by: increase in collection period 10 days
Increase in average A/R balance P900,000

52. B
Solution
Increase in average A/R balance (see no. 51) P900,000
Multiply by: short-term interest rate 9%
Increase in the company’s interest cost P 81,000

53. C
54. A
Solution
Shares held 30,000
Divided by: total shares of Hogwarts 200,000
Ownership percentage 15%
Multiply by: New stock issued 100,000
Such holder has the right to buy 15,000 shares

55. C
56. B
Solution
Cost of debt = 10% x (1 - 0.30) = 7%

57. A
58. D
Solution
Investment P120,000
Payback period = = = 4 years
Annual net cash inflow∗ P30,000

*Net income P10,000

Add: Depreciation (120k/6) 20,000
Annual net cash inflow P30,000

59. A
60. C
61. A
Solution
3 360 days
Annual interest rate = x
100−3 30 days − 10 days

3 360
Annual interest rate = 97
x 20
= 55.67%

62. B
63. D
Solution
Interest for 1 year (P500k x 10%) P 50,000
Compensating balance (P500k x 20%) 100,000

Interest P50,000
Effective rate = x = 14.29%
Usable amount P500,000 − P50,000 − P100,000

64. A
65. D
66. B
67. A
68. C
69. D
70. B