Stracoma Finalss

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Managerial accounting is concerned with providing information to managers for

use
with-in the organization. It is also concerned with providing information to stock-
holders,
creditors, and others outside of the organization.
● True
● False
ChatGPT
This statement is false. Managerial accounting primarily focuses on providing
information and analysis to managers within the organization to aid in decision-
making, planning, and control. Its main goal is to assist internal stakeholders in
making informed business decisions. While managerial accounting may indirectly
influence information provided to external stakeholders like stockholders and
creditors, its primary emphasis is on internal management needs rather than
external reporting. External financial reporting, which includes providing
information to stockholders, creditors, regulatory bodies, and the public, is
typically associated with financial accounting.
You
Managers carry out three major activities in an organization: planning, directing
and
motivating, and controlling. Directing involves establishing a basic strategy,
selecting a
course of action, and specifying how the action will be implemented
● True
● False
ChatGPT
This statement is partly true but somewhat incomplete.
Managers do engage in various activities, commonly described as planning,

organizing, leading (which includes directing and motivating), and controlling.
https://chat.openai.com/c/70dfc927-95be-4b21-8e3d-ceb80499c2b5 1/53
12/17/23, 7:55 PM ChatGPT
"Directing" typically involves guiding and overseeing employees to achieve

organizational goals. While it does encompass elements of establishing strategies
and selecting courses of action, it primarily focuses on providing guidance,
instruction, and leadership to employees to ensure they understand their roles,
responsibilities, and how to achieve the goals set during the planning phase.
The part about establishing a basic strategy and selecting a course of action is
more aligned with the planning aspect of managerial activities. So, while directing
does involve aspects of strategy implementation and action specification, it's not
the primary focus of this managerial function.
You
The controller is responsible for providing timely and relevant data to support
planning
and control activities and for preparing financial statements for external users.
● True
● False
ChatGPT
This statement is partly true but a bit misleading. The controller does play a role
in providing timely and relevant data to support planning and control activities
within the organization. They oversee the management accounting function,
ensuring that the necessary financial information is available for internal decision-
making, budgeting, forecasting, and performance evaluation.
However, the responsibility for preparing financial statements for external users
(like investors, creditors, regulatory bodies) typically falls more under the domain
of the financial accounting function. Financial accountants are generally
responsible for the preparation of external financial statements, ensuring
compliance with accounting standards and regulations. While the controller may
oversee this process and collaborate with financial accountants, their primary
focus lies in the internal aspects of financial information for managerial decision-
making.
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You
In contrast to managerial accounting, financial accounting: (1) focuses on the
needs of
man-agers rather than outsiders; (2) emphasizes decisions affecting the future
rather
than the financial consequences of past actions; (3) emphasizes relevance rather
than
objectivity and verifiability; (4) emphasizes timeliness rather than precision; (5)
emphasizes the segments of an organization rather than summary data
concerning the
entire organization; (6) is not governed by GAAP; and (7) is not mandatory.
● True
● False
ChatGPT
Let's break this down:
Focuses on the needs of managers rather than outsiders: False. Financial

accounting primarily caters to external users such as investors, creditors,
regulatory bodies, etc., providing them with financial statements that follow
standardized formats to aid in decision-making.
Emphasizes decisions affecting the future rather than the financial
consequences of past actions: False. Financial accounting deals with reporting
past financial performance through financial statements like the income
statement, balance sheet, and cash flow statement. It doesn't focus on future
decisions but rather presents historical data.
Emphasizes relevance rather than objectivity and verifiability: False. Financial
accounting emphasizes objectivity and verifiability to ensure that the reported
financial information is reliable and can be independently confirmed. Relevance
is important but not at the expense of objectivity and verifiability.
Emphasizes timeliness rather than precision: False. Financial accounting places
a higher priority on precision and accuracy in reporting financial information
over timeliness. While timeliness is important, it cannot compromise the
accuracy of the reported data.
Emphasizes the segments of an organization rather than summary data
concerning the entire organization: False. Financial accounting typically
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consolidates and summarizes financial information concerning the entire

organization into comprehensive financial statements, rather than focusing
solely on segments.
Is not governed by GAAP: False. Financial accounting follows Generally
Accepted Accounting Principles (GAAP) to ensure consistency and comparability
in financial reporting.
Is not mandatory: False. For publicly traded companies and many private
entities, adhering to financial accounting standards and producing financial
statements according to regulations (such as the Securities and Exchange
Commission in the U.S.) is mandatory.
Therefore, the statement as a whole is mostly false as it mischaracterizes several

key aspects of financial accounting.
You
Managerial accounting must adhere to the Ethical Standard set forth for
accounting
profession.
● True
● False
ChatGPT
Absolutely true! Managerial accounting, just like any other aspect of accounting,
is held to ethical standards set forth by professional accounting bodies. These
ethical standards ensure that managerial accountants maintain integrity,
objectivity, confidentiality, and professional competence in their practices.
Adhering to these standards is crucial to maintaining trust, credibility, and the
reliability of managerial accounting information within an organization.
You
As the anticipated level of activity changes, the level of fixed costs needed to
support
operations may also change. Which means that, as activity exceeds outside the
relevant
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range, fixed cost in total may also change

● True
● False
ChatGPT
That's true! Fixed costs, in certain situations, can change as the level of activity
moves beyond a certain range. In some cases, the traditional assumption is that
fixed costs remain constant within a certain range of activity, but they can change
outside of that range.
For instance, a factory might have a certain capacity, and within that capacity, the
fixed costs stay the same. However, if production exceeds that capacity, the
company might need to invest in new equipment, hire more staff, or incur
additional expenses, thereby causing the fixed costs to change in total as the
activity level surpasses the usual or relevant range.
You
The contribution approach income statement organizes costs by behavior, first
deducting
variable expenses to obtain gross margin, and then deducting fixed
manufacturing
expenses to obtain net operating income.
● True
● False
ChatGPT
This statement is almost accurate but not entirely.
In a contribution margin income statement, variable expenses are deducted from

sales to get the contribution margin. However, instead of deducting fixed
manufacturing expenses directly after obtaining the gross margin, these fixed
expenses are deducted separately, usually below the contribution margin, to
calculate the net operating income.
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So, while it's correct that variable expenses are deducted to obtain the
contribution margin, the deduction of fixed manufacturing expenses occurs after
the calculation of the contribution margin, not directly after deducting variable
expenses to get the gross margin.
You
The traditional approach income statement organizes costs by function, such as
production, selling, and administration. Within a functional area, fixed and
variable costs
are intermingled.
● True
● False
ChatGPT
That statement is generally true. The traditional income statement typically
organizes costs by their functions, separating them into categories like
production, selling, and administration. Within each functional area, both fixed
and variable costs can be intermingled, making it challenging to distinguish
between them within these categories.
For instance, in the production function, costs like raw materials (usually variable)
and factory rent (often fixed) might be grouped together. Similarly, in selling or
administrative functions, expenses like sales commissions (variable) and
administrative salaries (fixed) might be combined within these categories on the
traditional income statement. This intermingling can make it difficult to clearly
identify and analyze fixed and variable costs within each functional area.
You
The formula for a mixed cost is Y = a + bX. In cost analysis, the “a” term
represents the
fixed costs, and the “b” term represents the variable cost in total.
● True
● False
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ChatGPT
That's partly true but slightly inaccurate. In the formula Y = a + bX , the "a" term
indeed represents the fixed cost component. However, the "bX" term doesn't
represent the variable cost in total; rather, it represents the variable cost per unit
of activity (X).
So, "a" signifies the fixed cost component (the cost that remains constant
regardless of the level of activity), while "b" represents the variable cost per unit
of activity (the additional cost incurred for each unit of activity). Multiplying the
variable cost per unit ("b") by the level of activity ("X") yields the total variable
cost associated with that level of activity.
You
The high-low method uses only two points to determine a cost formula. These
two points
are likely to be less than typical since they represent extremes of activity.
● True
● False
ChatGPT
That's true! The high-low method uses the highest and lowest activity levels and
their respective costs to estimate the fixed and variable components of a mixed
cost. However, these extreme points might not accurately represent typical or
normal levels of activity within a given range.
Because the high and low points are extremes, they might not capture the usual
fluctuations or variations in costs at more typical activity levels. This could
potentially lead to inaccuracies in estimating the fixed and variable components
of a cost, especially if there are significant fluctuations or non-linear patterns
between those extremes and typical activity levels.
You
For capital budgeting decisions, the payback period is superior to the simple rate
of
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return method.
● True
● False
ChatGPT
Comparing the payback period method and the simple rate of return method for
capital budgeting decisions can be subjective based on the specific context and
needs of a company.
The payback period method focuses on the time it takes to recover the initial
investment. It's straightforward and easy to understand but doesn't consider cash
flows beyond the payback period or the time value of money.
On the other hand, the simple rate of return method considers the average
income divided by the initial investment but doesn't consider the timing of cash
flows or the total profitability of the investment.
Neither method is universally superior. Each has its strengths and weaknesses.
The choice between them often depends on the preferences of the company
regarding the importance of quick payback, the project's risk, the need for
detailed cash flow analysis, and the consideration of time value of money.
So, the statement can't be conclusively labeled as true or false without more
specific context or criteria for evaluating superiority in a particular scenario. Both
methods have their utility and limitations in assessing capital budgeting
decisions.
You
An increase in the expected salvage value at the end of a capital budgeting
project will
have no effect on the accounting rate of return based on average investment for
that
project.
● True
● False
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ChatGPT
That statement is false. An increase in the expected salvage value at the end of a
capital budgeting project can affect the accounting rate of return based on the
average investment for that project.
The accounting rate of return (ARR) formula considers average investment, which
typically includes the initial investment and the salvage value at the end of the
project's life. The formula for ARR is average annual income divided by the
average investment.
If the expected salvage value at the end of the project increases, it would affect
the average investment. A higher salvage value means the asset is expected to
generate more revenue when it's disposed of, potentially reducing the average
investment and consequently impacting the accounting rate of return calculation.
So, an increase in the salvage value could potentially increase the accounting rate
of return if it reduces the average investment used in the calculation.
You
3. The payback method uses cash flows after tax in computing the recovered
period for a
capital investment project.
● True
● False
ChatGPT
Typically, the payback period method doesn't specifically consider cash flows
after tax when calculating the payback period for a capital investment project.
Instead, it focuses on the time it takes to recover the initial investment,
considering cash flows before tax.
The payback period method identifies the time it takes for the project's cash
inflows to equal the initial investment. It doesn't involve complex calculations or
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consider factors like the time value of money or cash flows after taxes, making it
a straightforward but somewhat limited method for evaluating investment
projects.
You
A loss in sale of old asset is considered to provide a tax shield on a company,
resulting
to decrease in overall capital cost for an investment project.
● True
● False
ChatGPT
When a company sells an old asset at a loss, it might be able to use that loss to
offset taxable income, providing a tax benefit or what is often referred to as a tax
shield. This could result in a decrease in the overall capital cost for an investment
project.
The tax shield occurs because the loss from the sale of the old asset reduces the
taxable income, thereby potentially lowering the taxes the company has to pay.
This reduction in tax liability effectively lowers the overall cost of the investment
project.
So, in essence, the statement is true in the sense that a loss in the sale of an old
asset can generate a tax shield, which, in turn, can reduce the overall capital cost
for an investment project by decreasing the tax burden.
You
When using the payback method, any cash flows for a project that occur after the
payback period are not considered in computing the payback period for that
project.
● True
● False
ChatGPT
12/17/23, 7:55 PM ChatGPT
That's true! The payback period method focuses solely on the time it takes to
recover the initial investment of a project. Any cash flows that occur after the
payback period is reached are not considered when computing the payback
period for that project.
This method disregards cash flows beyond the point at which the initial
investment is recovered, making it a simple but limited measure of a project's
profitability and risk.
You
The standard quantity or standard hours allowed refers to the amount of the
input that
should have been used to produce the actual output of the period
● True
● False
ChatGPT
That's true! The standard quantity or standard hours allowed represent the
amount of input (materials, labor, or overhead) that should have been utilized to
manufacture the actual output during a specific period. It serves as a benchmark
or standard against which the actual input usage is compared in variance analysis.
You
When the material price variance is recorded at the time of purchase, raw
materials are
recorded as inventory at actual cost.
● True
● False
ChatGPT
That's true! When the material price variance is recorded at the time of purchase,
the raw materials are typically recorded in inventory at their actual cost. The
variance between the actual price paid for materials and the standard price is
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often recorded separately as a part of cost accounting for analysis purposes. This
variance might affect the cost of goods sold or inventory valuation, but the initial
entry into inventory is usually at the actual cost paid for the materials.
You
The variance that is most useful in assessing the performance of the purchasing
department manager is the materials quantity variance
● True
● False
ChatGPT
While the materials quantity variance is indeed essential in evaluating the
performance of the purchasing department regarding how efficiently materials
were utilized in production, it might not solely determine the purchasing
department manager's performance.
The purchasing department is primarily responsible for acquiring materials at

favorable prices while maintaining quality and ensuring timely delivery. Hence,
the materials price variance might also be critical in assessing their performance
as it reflects how well they negotiated prices or managed supplier relationships.
Both the materials quantity variance (reflecting the efficiency of material usage)
and the materials price variance (indicating procurement efficiency) are valuable
metrics for assessing the purchasing department manager's performance.
Therefore, while the materials quantity variance is essential, it's not the sole
determinant in evaluating the purchasing department's performance.
You
Total Variable overhead variance will need actual rate used for actual hours
incurred in
the production, and the standard rate used for the standard hours expected from
actual
production.
● True
● False
12/17/23, 7:55 PM ChatGPT
ChatGPT
That's partially true, but let's clarify. The total variable overhead variance indeed
requires both the actual rate used for the actual hours incurred in production and
the standard rate used for the standard hours expected from actual production.
The total variable overhead variance is typically computed by multiplying the

difference between the actual hours worked and the standard hours allowed by
the standard variable overhead rate. This calculation aims to determine the
variance between the actual variable overhead costs incurred and the variable
overhead costs that should have been incurred based on the standard hours
worked.
So, the actual hours worked are paired with the actual rate, and the standard
hours allowed are paired with the standard rate to calculate the total variable
overhead variance.
You
Controllable Variance is equal to total actual fixed overhead less total budgeted
fixed
overhead.
● True
● False
ChatGPT
That statement is partially accurate, but it doesn't fully represent the concept of
the controllable variance for fixed overhead.
The controllable variance for fixed overhead is calculated as the difference

between the total actual fixed overhead and the fixed overhead that was
budgeted or expected for the actual level of activity achieved.
So, the controllable variance for fixed overhead is indeed related to comparing
actual fixed overhead costs against the budgeted or expected fixed overhead for
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a specific level of activity, but it doesn't encompass all of the budgeted fixed
overhead. It specifically addresses the portion of fixed overhead that was
controllable or within the control of the responsible manager, typically excluding
elements that were not controllable by the manager, such as unavoidable fixed
costs or those beyond managerial influence.
You
An opportunity cost is the benefit that is lost or sacrificed when rejecting some
course of
action.
● True
● False
ChatGPT
That's true! Opportunity cost refers to the potential benefit or value that is
foregone when a decision is made that involves choosing one option over
another. It's essentially the value of the next best alternative that is not chosen.
When a particular course of action is selected, the opportunity cost is the value of
what you've given up by not choosing the next best alternative.
You
Variable costs are relevant costs only if they differ in total between the
alternatives under
consideration.
● True
● False
ChatGPT
That's partly true, but it's not the complete picture. Variable costs are indeed
relevant costs when comparing alternatives, especially in decision-making
scenarios. However, whether they differ in total between alternatives is just one
aspect of their relevance.
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Variable costs are relevant because they change in total between different
alternatives and directly vary with the level of activity or production. They are
crucial in making short-term decisions, like determining whether to accept special
orders or make changes in production levels, because they directly impact the
cost structure.
However, the fact that variable costs differ between alternatives is not the sole
criterion for their relevance. Their variability with activity level and their impact on
the overall cost structure are fundamental factors in considering them when
evaluating different options.
You
. In a decision of whether to drop or continue a product line, only those costs that
would
be avoided as a result of dropping the product line are relevant in the decision.
Costs
that will not differ regardless of whether the product line is retained or
discontinued are
irrelevant.
● True
● False
ChatGPT
That's true! When deciding whether to drop or continue a product line, only the
costs that would be avoided or saved by discontinuing the product line are
relevant. These costs are known as avoidable costs or differential costs.
Costs that will not change or differ regardless of whether the product line is
retained or discontinued, known as common costs or unavoidable costs, are
irrelevant to the decision. These costs would continue regardless of the decision
and therefore do not impact the decision-making process about the specific
product line.
You
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. If a company decides to make a part internally rather than to buy it from an

outside
supplier, then a portion of the company’s facilities have to used to make the part.
The
company’s opportunity cost is measured by the benefits that could be derived
from the
best alternative use of facilities.
● True
● False
ChatGPT
That's correct! When a company chooses to produce a part internally instead of
buying it from an external supplier, the opportunity cost associated with this
decision is indeed measured by the benefits that could have been gained from
the best alternative use of the facilities or resources.
The company has to allocate resources, such as facilities, labor, equipment, and
other overhead, to produce the part internally. The opportunity cost is essentially
the value or benefits that could have been obtained if those resources were
utilized in the next best alternative way, which might have generated a different
set of benefits or returns for the company.
You
All fixed cost are sunk cost, therefore, all fixed cost are irrelevant costs.
● True
● False
ChatGPT
The statement is partly true but not entirely accurate.
Fixed costs can be considered sunk costs in the short term because they're
incurred regardless of the level of production or the decision being made.
However, not all fixed costs are necessarily sunk costs.
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Sunk costs refer to costs that have already been incurred and cannot be changed
or recovered, regardless of future decisions. Since fixed costs are committed costs
in the short term (like rent, insurance, salaries), they can be considered sunk for
the current decision-making process.
However, in the context of future decisions, fixed costs might not always be sunk.
For instance, a fixed cost like a long-term lease could be considered a committed
cost in the short term (thus sunk for immediate decisions) but might become
avoidable or changeable in the long term if the company has the option to alter
or terminate the lease.
So, while fixed costs might behave as sunk costs in the short term, they might not
always be completely irrelevant in decision-making, especially in the long term
where there could be flexibility to change or avoid some fixed costs.
You
is it true that All fixed cost are sunk cost, therefore, all fixed cost are irrelevant
costs.
ChatGPT
It's not accurate to say that all fixed costs are sunk costs and therefore irrelevant.
While fixed costs can behave as sunk costs in certain situations (such as in the
short term where they are committed and cannot be changed), not all fixed costs
are necessarily sunk costs. Sunk costs specifically refer to costs that have already
been incurred and cannot be recovered, regardless of future decisions.
Fixed costs, like rent or salaries, might be committed in the short term and
behave as sunk costs for immediate decision-making. However, in the long term,
some fixed costs could potentially be avoided or changed based on decisions
made by a company. Hence, they might not always be irrelevant, especially in the
context of long-term planning or decisions that could impact fixed cost
structures.
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In summary, while fixed costs can sometimes resemble sunk costs, not all fixed
costs are inherently sunk, and they might have relevance in decision-making,
particularly in the context of long-term planning and strategy where some fixed
costs might be adjustable.
You
Shipping cost at Junk Food Imports is a mixed cost with variable and fixed
components.
Past records indicate total shipping costs was $18000 for 16,000 pounds shipped
and
$22,500 for 22,000 pounds shipped. Assuming that this activity is within the
relevant
range, if the company plans to ship 18,000 pounds next month, the expected
shipping
cost is.
ChatGPT
To estimate the expected shipping cost using the high-low method within the
relevant range:
First, calculate the variable cost per unit of activity (cost per pound):
Variable cost per pound = Change in total cost / Change in pounds shipped
Variable cost per pound = ($22,500 - $18,000) / (22,000 pounds - 16,000 pounds)
Variable cost per pound = $4,500 / 6,000 pounds
Variable cost per pound = $0.75 per pound
Now that we have the variable cost per pound, we can use it to calculate the total
expected cost for shipping 18,000 pounds:
Expected shipping cost = Variable cost per pound × Expected pounds to be

shipped
Expected shipping cost = $0.75 per pound × 18,000 pounds
Expected shipping cost = $13,500
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Therefore, based on the information and calculations within the relevant range,
the expected shipping cost for shipping 18,000 pounds next month is $13,500.
You
The following production and average cost data for a month’s operation have
been
supplied by a company that produces a single product.
Production volume ……. 1,000 units 2000 units
Direct materials ………… $ 5.00 per unit $ 5.00 per unit
Direct labor …………….. $ 5.50 per unit $ 5.50 per unit
Manufacturing overhead …. $ 10.00 per unit $6.20 per unit
The total fixed manufacturing cost is:
ChatGPT
To find the total fixed manufacturing cost, we can use the high-low method
based on the information provided for two different production volumes (1,000
units and 2,000 units).
Let's first calculate the variable manufacturing cost per unit:
Variable manufacturing cost per unit = Change in total manufacturing overhead

cost / Change in production volume
Variable manufacturing cost per unit = ($6.20 - $10.00) / (2,000 units - 1,000
units)
Variable manufacturing cost per unit = ($3.80) / (1,000 units)
Variable manufacturing cost per unit = $3.80 per unit
Now that we have the variable manufacturing cost per unit, let's find the fixed
manufacturing cost per unit by subtracting the variable cost per unit from the
total cost per unit:
Total cost per unit at the lower level of production (1,000 units) = Direct materials
+ Direct labor + Manufacturing overhead
Total cost per unit at 1,000 units = $5.00 + $5.50 + $10.00 = $20.50 per unit
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Variable manufacturing cost per unit = Total cost per unit - (Direct materials per
unit + Direct labor per unit)
$3.80 per unit = $20.50 per unit - ($5.00 per unit + $5.50 per unit)
$3.80 per unit = $20.50 per unit - $10.50 per unit
Fixed manufacturing cost per unit = Total cost per unit - Variable manufacturing
cost per unit
Fixed manufacturing cost per unit = $20.50 per unit - $3.80 per unit
Fixed manufacturing cost per unit = $16.70 per unit
Now, to find the total fixed manufacturing cost:
Total fixed manufacturing cost = Fixed manufacturing cost per unit × Production
volume at any level (either 1,000 units or 2,000 units)
Total fixed manufacturing cost = $16.70 per unit × 1,000 units
Total fixed manufacturing cost = $16,700
Therefore, based on the given data and calculations, the total fixed
manufacturing cost for the company is $16,700.
You
The following production and average cost data for a month’s operation have
been
supplied by a company that produces a single product.
Production volume ……. 1,000 units 2000 units
Direct materials ………… $ 5.00 per unit $ 5.00 per unit
Direct labor …………….. $ 5.50 per unit $ 5.50 per unit
Manufacturing overhead …. $ 10.00 per unit $6.20 per unit
The variable manufacturing cost per unit is:
ChatGPT
The variable manufacturing cost per unit can be calculated using the high-low
method based on the information provided for two different production volumes
(1,000 units and 2,000 units).
Let's first calculate the variable manufacturing cost per unit:

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Variable manufacturing cost per unit = Change in total manufacturing overhead

cost / Change in production volume
Variable manufacturing cost per unit = ($6.20 - $10.00) / (2,000 units - 1,000
units)
Variable manufacturing cost per unit = ($3.80) / (1,000 units)
Variable manufacturing cost per unit = $3.80 per unit
Therefore, based on the given data and calculations, the variable manufacturing
cost per unit is $3.80.
You
Gamad Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The
company
sells the product for $131.00 per unit.
Sales volume (units) ……… 3,000 5,000
Cost of sales………………… $262,800 $328,500
Selling and administrative …. $230,400 $244,500
The best estimate of the total monthly fixed cost is:
ChatGPT
To determine the total monthly fixed cost, we can use the high-low method
based on the provided cost data for two different levels of sales volume (3,000
units and 5,000 units).
Let's start by calculating the variable cost per unit using the information
provided:
Variable cost per unit = Change in total cost of sales / Change in sales volume
Variable cost per unit = ($328,500 - $262,800) / (5,000 units - 3,000 units)
Variable cost per unit = $65,700 / 2,000 units
Variable cost per unit = $32.85 per unit
Now that we have the variable cost per unit, we can find the total variable cost at
any level of sales volume. Using the cost of sales data provided at either level:
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Total variable cost at 3,000 units = Cost of sales - (Variable cost per unit × Sales
volume)
Total variable cost at 3,000 units = $262,800 - ($32.85 per unit × 3,000 units)
Total variable cost at 3,000 units = $262,800 - $98,550
Total variable cost at 3,000 units = $164,250
Now, to find the total fixed cost:
Total fixed cost = Total cost - Total variable cost

Total fixed cost at 3,000 units = $262,800 - $164,250
Total fixed cost at 3,000 units = $98,550
Therefore, based on the given data and calculations, the best estimate of the
total monthly fixed cost for Gamad Corporation is $98,550 at a sales volume of
3,000 units.
You
Gamad Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The
company
sells the product for $131.00 per unit.
Sales volume (units) ……… 3,000 5,000
Cost of sales………………… $262,800 $328,500
Selling and administrative …. $230,400 $244,500
The best estimate of the variable cost per unit is:
ChatGPT
To find the variable cost per unit, we'll utilize the high-low method based on the
provided cost data for two different levels of sales volume (3,000 units and 5,000
units).
The variable cost per unit can be determined by calculating the change in total
cost in relation to the change in sales volume.
Let's calculate the variable cost per unit:
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Change in total cost of sales = $328,500 - $262,800 = $65,700

Change in sales volume = 5,000 units - 3,000 units = 2,000 units
Variable cost per unit = Change in total cost of sales / Change in sales volume
Variable cost per unit = $65,700 / 2,000 units
Variable cost per unit = $32.85 per unit
Therefore, based on the provided data and calculations, the estimated variable
cost per unit for Gamad Corporation is $32.85.
You
Sorin Inc., a company that produces and sells a single product, has provided its
contribution format income statement for January.
Sales (4,000 units) $155,400
Variable expenses 100,800
Contribution margin 54,600
Fixed expenses 42,400
Net operating income $12,200
If the company sells 5,600 units, its total net income should be closest to:
ChatGPT
To calculate the total net income when the company sells 5,600 units, let's use the
information provided in the contribution format income statement.
First, let's find the contribution margin per unit:

Contribution Margin
Contribution Margin per Unit = Number of Units Sold

54,600
Contribution Margin per Unit = 4,000 units
Contribution Margin per Unit = $13.65 per unit
Now, let's calculate the total contribution margin when 5,600 units are sold:
Total Contribution Margin = Contribution Margin per Unit ×
Number of Units Sold
Total Contribution Margin = $13.65 per unit × 5, 600 units
Total Contribution Margin = $76, 440
Next, let's find the total fixed expenses for 5,600 units:
Since fixed expenses remain constant, they'll still be $42,400.
12/17/23, 7:55 PM ChatGPT
Finally, let's calculate the total net income:

Total Net Income = Total Contribution Margin − Total Fixed Expenses
Total Net Income = $76, 440 − $42, 400
Total Net Income = $34, 040
Therefore, if the company sells 5,600 units, its total net income should be closest
to $34,040.
You
Sorin Inc., a company that produces and sells a single product, has provided its
contribution format income statement for January.
Sales (4,000 units) $155,400
If the company’s fixed cost increases by 10% due to expansion, how much is the
new
computed net income based on 5,600 sold units?
ChatGPT
To calculate the new computed net income based on the increased fixed costs
and 5,600 units sold, let's first find the new fixed expenses after a 10% increase:
New Fixed Expenses = Old Fixed Expenses × (1 + Increase Percentage)

New Fixed Expenses = $42, 400 × (1 + 0.10)
New Fixed Expenses = $42, 400 × 1.10
New Fixed Expenses = $46, 640
Now, let's calculate the new net income using the provided information for 5,600
units sold and the adjusted fixed expenses:
First, calculate the contribution margin per unit:

Contribution Margin
Contribution Margin per Unit = Number of Units Sold
$54,600
Contribution Margin per Unit = 4,000 units

Contribution Margin per Unit = $13.65 per unit
12/17/23, 7:55 PM ChatGPT
Calculate the total contribution margin for 5,600 units:

Total Contribution Margin = Contribution Margin per Unit ×
Number of Units Sold
Total Contribution Margin = $13.65 per unit × 5, 600 units
Total Contribution Margin = $76, 440
Calculate the new net income:
New Net Income = Total Contribution Margin − New Fixed Expenses
New Net Income = $76, 440 − $46, 640
New Net Income = $29, 800
Therefore, if the company's fixed costs increase by 10% due to expansion and
5,600 units are sold, the new computed net income would be $29,800.
You
The BIGBANG Company reported the following information:
Sales (500 cases) $100,000
How much will the sale of one additional case add to net operating income?
ChatGPT
To find out how much the sale of one additional case will add to net operating
income, we can use the contribution margin per unit.
First, let's calculate the contribution margin per case:

Contribution Margin per Case = Contribution Margin
Number of Cases

$40,000
Contribution Margin per Case = 500 cases

Contribution Margin per Case = $80 per case
The contribution margin per case is $80.
Therefore, the sale of one additional case will add $80 to the net operating
income.
12/17/23, 7:55 PM ChatGPT
You
Sales (500 cases) $100,000
If peso sales will increase to P750,000 by next year, the contribution margin ratio
will be:
(answer in decimal)
ChatGPT
The contribution margin ratio can be calculated using the following formula:
Contribution Margin
Contribution Margin Ratio = Sales
× 100
Given:
Sales (500 cases) = $100,000
Contribution margin = $40,000
First, let's calculate the contribution margin ratio based on the given information:
40,000
Contribution Margin Ratio = 100,000 × 100
Contribution Margin Ratio = 0.4 × 100

Contribution Margin Ratio = 40%
Now, if peso sales increase to P750,000, and assuming the relationship between
sales and contribution margin remains consistent:
New Contribution Margin = Contribution100
Margin Ratio
× New Sales
40
New Contribution Margin = 100 × 750, 000
New Contribution Margin = 0.4 × 750, 000

New Contribution Margin = 300, 000
The new contribution margin is 300,000 pesos.
The new contribution margin ratio, considering the increased sales of 750,000
pesos, would be:
New Contribution Margin
New Contribution Margin Ratio = New Sales
× 100
300,000
New Contribution Margin Ratio = 750,000
× 100
12/17/23, 7:55 PM ChatGPT
New Contribution Margin Ratio = 0.4 × 100

New Contribution Margin Ratio = 40%
Therefore, even with the increase in sales to P750,000, the contribution margin
ratio remains at 40%.
You
Sales (500 cases) $100,000
If Net Operating income will increase by 20%, the expected increase in revenue
will be in
what percentage: (answer in decimal)
ChatGPT
Let's calculate the expected increase in revenue based on the given information
and the increase in net operating income.
The current net operating income is $5,000, and if it increases by 20%, the new
net operating income would be:
New Net Operating Income = Old Net Operating Income +

(Old Net Operating Income × Increase Percentage)
New Net Operating Income = $5, 000 + ($5, 000 × 0.20)
New Net Operating Income = $5, 000 + $1, 000
New Net Operating Income = $6, 000
Now, let's find the expected increase in revenue to achieve this new net operating
income.
Net Operating Income = Sales - Variable Expenses - Fixed Expenses

$5,000 = $100,000 - $60,000 - $35,000
Let "x" be the new sales required to achieve a net operating income of $6,000.
12/17/23, 7:55 PM ChatGPT
$6,000 = x - $60,000 - $35,000

$x = $6,000 + $60,000 + $35,000
$x = $101,000
Therefore, the expected increase in revenue would be $101,000 - $100,000 =

$1,000.
Now, to find the percentage increase in revenue:

Percentage Increase in Revenue = Increase in Revenue
Original Revenue
× 100
$1,000
Percentage Increase in Revenue = $100,000 × 100
Percentage Increase in Revenue = 1%
Hence, the expected increase in revenue to achieve a 20% increase in net

operating income is 1% in decimal.
You
Garner Company’s variable expenses are 60% of sales. At a $600,000 sales level,
the
degree of operating leverage is 10.
If sales increase by $60,000, the degree of operating leverage after the increase
will be:
ChatGPT
The degree of operating leverage (DOL) can be calculated using the following
formula:
Percentage Change in Net Operating Income

DOL = Percentage Change in Sales
Given that the degree of operating leverage (DOL) at a $600,000 sales level is 10
and the variable expenses are 60% of sales, let's first find the current net
operating income at the $600,000 sales level.
At $600,000 sales level:

Variable expenses = 60% of $600,000
Variable expenses = $360,000
12/17/23, 7:55 PM ChatGPT
Contribution margin = Sales - Variable expenses

Contribution margin = $600,000 - $360,000
Now, use the degree of operating leverage formula to find the percentage
change in net operating income:

DOL = 10 = Percentage Change in Sales

To calculate the percentage change in sales, use the contribution margin:

Percentage Change in Sales = Change in Sales
Original Sales
× 100
$60,000
Percentage Change in Sales = $600,000 × 100
Percentage Change in Sales = 10%
Given that the degree of operating leverage (DOL) is 10, it indicates that a 10%
change in sales results in a 100% change in net operating income.
Now, if sales increase by $60,000, the new sales level will be $600,000 + $60,000
= $660,000.
Let's calculate the new net operating income using the degree of operating
leverage formula:
Percentage Change in Net Operating Income = DOL ×

Percentage Change in Sales
Percentage Change in Net Operating Income = 10 × 10%
Percentage Change in Net Operating Income = 100%
At a 10% increase in sales, the percentage change in net operating income is

100%. Therefore, if sales increase by $60,000, the degree of operating leverage
after the increase will remain at 10.
You
the
The net income prior to increase in sales is:
12/17/23, 7:55 PM ChatGPT
ChatGPT
The degree of operating leverage (DOL) is given as 10 at a sales level of $600,000.
The formula for the degree of operating leverage is:
Degree of Operating Leverage (DOL) =


Given that the variable expenses are 60% of sales, the contribution margin (Sales
- Variable Expenses) would be 40% of sales.
At the current sales level of $600,000:

Contribution margin = Sales - Variable expenses
Contribution margin = $600,000 - (60% * $600,000)
Contribution margin = $600,000 - $360,000
Now, we know that the degree of operating leverage (DOL) at this sales level is
10. The DOL formula indicates that a 10% change in sales results in a 100%
change in net operating income.
Let's calculate the net operating income at the current sales level:
DOL = Percentage Change in Net Operating Income


10 = Percentage Change in10%

Net Operating Income

This suggests that a 10% change in sales results in a 100% change in net
operating income. Therefore, the net operating income at the current sales level
can be calculated as:
Net Operating Income = Contribution Margin × DOL

Net Operating Income = $240,000 × 10
Net Operating Income = $2,400,000
Hence, the net income prior to the increase in sales is $2,400,000.
12/17/23, 7:55 PM ChatGPT
You
the
The net income after increase in sales is
ChatGPT
The degree of operating leverage (DOL) is a measure of how a percentage
change in sales will affect the percentage change in net operating income. It's
calculated by dividing the percentage change in net operating income by the
percentage change in sales.
Given:
Variable expenses are 60% of sales.

At a $600,000 sales level, the degree of operating leverage (DOL) is 10.
At a 60% variable expense rate, the contribution margin (Sales - Variable

Expenses) would be 40% of sales.
Given that the DOL is 10, it indicates that a 10% change in sales results in a 100%
change in net operating income.
Let's calculate the net income after an increase in sales:
If the degree of operating leverage (DOL) is 10, a 10% increase in sales would
result in a 100% increase in net operating income.
Net Operating Income = Contribution Margin × DOL

Contribution Margin = Sales - Variable Expenses
Contribution Margin = $600,000 - 60% * $600,000
Contribution Margin = $600,000 - $360,000
Contribution Margin = $240,000
Net Operating Income = $240,000 × 10 (from DOL)

Net Operating Income = $2,400,000
12/17/23, 7:55 PM ChatGPT
Therefore, after an increase in sales, if the degree of operating leverage remains

constant at 10, the net income would be $2,400,000.
You
A company makes a single product that it sells for $16 per unit. Fixed costs are
$76,800
per month and the product has a contribution margin ratio of 40%.
If the company’s actual sales are $240,000, its margin of safety is:
ChatGPT
The margin of safety represents the amount by which sales can drop before the
company reaches its breakeven point. It's calculated by:
Margin of Safety = Actual Sales − Breakeven Sales
To find the breakeven sales, we'll first calculate the breakeven point in sales using
the contribution margin ratio.
The contribution margin ratio is 40%, which means that 40% of sales contributes
toward covering fixed costs and generating profit.
Let's calculate the breakeven sales:
Contribution Margin
Contribution Margin Ratio = Sales

40% = Sales−Variable
Sales
Costs

40% = $16 - Variable

$16
Costs

Rearranging the equation to solve for variable costs:

60
100
× $16 = $16 − Variable Costs

$9.60 = $16 − Variable Costs

Variable Costs = $16 − $9.60
Variable Costs = $6.40
Now that we know the variable cost per unit is $6.40 and the contribution margin
ratio is 40%, we can find the breakeven sales:
12/17/23, 7:55 PM ChatGPT
Fixed Costs
Breakeven Sales = Contribution Margin Ratio

$76,800
Breakeven Sales = 40%

$76,800
Breakeven Sales = 0.40

Breakeven Sales = $192, 000
Now, let's calculate the margin of safety using the actual sales figure:
Margin of Safety = Actual Sales − Breakeven Sales

Margin of Safety = $240, 000 − $192, 000
Margin of Safety = $48, 000
Therefore, the margin of safety for the company is $48,000. This means the
company's sales can decrease by $48,000 before reaching the breakeven point.
You
The management of Skollin Corporation is investigating purchasing equipment
that
would increase sales revenues by $269,000 per year and cash operating expenses
by
$156,000 per year.
The equipment would cost $294,000 and have a 6 year life with no salvage value.
The
accounting rate of return on investment is closest to:
ChatGPT
The accounting rate of return (ARR) is calculated by dividing the average annual
accounting profit by the initial investment cost and then expressing it as a
percentage.
Average Annual Accounting Profit

ARR = Initial Investment
× 100
The average annual accounting profit can be calculated as the increase in sales
revenue minus the increase in cash operating expenses.
Increase in sales revenue = $269,000 per year

Increase in cash operating expenses = $156,000 per year
12/17/23, 7:55 PM ChatGPT
Average Annual Accounting Profit = Increase in sales revenue - Increase in cash

operating expenses
Average Annual Accounting Profit = $269,000 - $156,000
Average Annual Accounting Profit = $113,000
Now, let's find the initial investment cost:
Initial Investment = Equipment Cost

Initial Investment = $294,000
Finally, let's calculate the accounting rate of return:
ARR = Average Initial

Annual Accounting Profit
Investment
× 100
$113,000
ARR = $294,000 × 100
ARR ≈ 38.44%
Therefore, the accounting rate of return on investment for the equipment is

approximately 38.44%.
You
The management of Skollin Corporation is investigating purchasing equipment
that
would increase sales revenues by $269,000 per year and cash operating expenses
by
$156,000 per year. The equipment would cost $294,000 and have a 6 year life
with no
salvage value.
The increase in incremental revenue from this capital investment project is:
ChatGPT
The increase in incremental revenue from the capital investment project can be
calculated as the difference between the increase in sales revenue and the
increase in cash operating expenses.
Given:
Increase in sales revenues per year = $269,000
12/17/23, 7:55 PM ChatGPT
Increase in cash operating expenses per year = $156,000
Increase in Incremental Revenue = Increase in Sales Revenues - Increase in Cash

Operating Expenses
Increase in Incremental Revenue = $269,000 - $156,000
Increase in Incremental Revenue = $113,000
Therefore, the increase in incremental revenue from this capital investment

project is $113,000 per year.
You
If an investment of $90,000 made now has annual cash operating inflows of
5,000 while
net income before tax for this project is $3,500, and if the tax rate it 40%, then the
after-tax cash operating inflow each year would be:
ChatGPT
To find the after-tax cash operating inflow, we'll consider the net income before
tax and adjust it for taxes.
Given:
Net Income Before Tax = $3,500
Annual Cash Operating Inflows = $5,000
Tax Rate = 40%
The after-tax cash operating inflow can be calculated by adjusting the net income
before tax for taxes:
Tax Paid = Net Income Before Tax × Tax Rate

\text{Tax Paid} = $3,500 \times 0.40
\text{Tax Paid} = $1,400
Now, to find the after-tax net income:

After-Tax Net Income = Net Income Before Tax − Tax Paid
\text{After-Tax Net Income} = $3,500 - $1,400
\text{After-Tax Net Income} = $2,100
12/17/23, 7:55 PM ChatGPT
Therefore, the after-tax cash operating inflow each year would be $2,100.
You
. If the $3,500 is a net income after tax, the after tax cash inflow for the year
would be
(round off to two decimal places)
ChatGPT
If the $3,500 is the net income after tax, then to find the after-tax cash inflow,
we'd need to add back the tax paid to the net income after tax.
Given:
Net Income After Tax = $3,500
Tax Rate = 40%
Let's calculate the tax paid:
Tax Paid = Net Income After Tax − Net Income Before Tax
Tax Paid = Net Income After Tax − (Net Income After Tax/(1 −
Tax Rate))
Tax Paid = $3, 500 − ($3, 500/(1 − 0.40))
Tax Paid = $3, 500 − ($3, 500/0.60)
Tax Paid = $3, 500 − $5, 833.33
Tax Paid = −$2, 333.33
The negative value indicates an issue with the calculation. Let's recompute the tax
paid.
If $3,500 is the net income after tax, then the tax paid can be found using the
formula:
Tax Paid = Net Income Before Tax × Tax Rate

Tax Paid = $3, 500/0.60 × 0.40
Tax Paid = $5, 833.33 × 0.40
Tax Paid = $2, 333.33
This means the tax paid would be $2,333.33.
12/17/23, 7:55 PM ChatGPT
Now, to find the after-tax cash inflow:
After-Tax Cash Inflow = Net Income After Tax + Tax Paid

After-Tax Cash Inflow = $3, 500 + $2, 333.33
After-Tax Cash Inflow = $5, 833.33
Therefore, if the $3,500 is the net income after tax, the after-tax cash inflow for
the year would be $5,833.33 (rounded to two decimal places).
You
Chararat Company has gathered the following data on a proposed investment
project:
Investment required in equipment $250,000
Annual cash inflows $50,000
Salvage value $0
Life of the investment 8 years
Required rate of return 10%
The payback period for the investment is closest to: (only numerical answer, do
not type
the word years):
ChatGPT
To find the payback period, we'll determine the time it takes to recover the initial
investment. The formula for payback period is:
Initial Investment
Payback Period = Annual Cash Inflows

Given:
Initial Investment = $250,000
Annual Cash Inflows = $50,000
$250,000
Payback Period = $50,000
=5
Therefore, the payback period for the investment is 5 years.
You
12/17/23, 7:55 PM ChatGPT
The following materials standards have been established for a particular project:
Standard quantity per unit of output 2.8 grams
Standard price $12.50 per gram
The following data pertain to operations concerning the product for the last
month:
Actual materials purchased 6,200 grams
Actual cost of materials purchased $81,530
Actual materials used in productions 5,700 grams
Actual output 1,800 units
What is the materials price variance for the month? (just indicate the value, do
not
indicate if favorable or unfavorable, answer key will read only numerical answers)
ChatGPT
The materials price variance is calculated using the formula:
Materials Price Variance = Actual Quantity Purchased ×

(Actual Price per Unit − Standard Price per Unit)
Given:
Actual materials purchased = 6,200 grams

Actual cost of materials purchased = $81,530
Standard quantity per unit of output = 2.8 grams
Standard price = $12.50 per gram
First, let's calculate the actual price per gram:
Actual Cost
Actual Price per Gram = Actual Quantity

$81,530
Actual Price per Gram = 6,200 grams
Actual Price per Gram ≈ $13.15
Now, let's compute the materials price variance:
Materials Price Variance = Actual Quantity Purchased ×

(Actual Price per Gram − Standard Price per Gram)
Materials Price Variance = 6, 200 grams × ($13.15 − $12.50)
Materials Price Variance ≈ 6, 200 grams × $0.65
Materials Price Variance ≈ $4, 030
12/17/23, 7:55 PM ChatGPT
Therefore, the materials price variance for the month is approximately $4,030.
You
The following materials standards have been established for a particular product:
Standard quantity per unit of output 2.8 grams
Standard price $12.50 per gram
The following data pertain to operations concerning the product for the last
month:
Actual materials purchased 6,200 grams
Actual cost of materials purchased $81, 530
Actual materials used in production 5,700 grams
Actual output 1,800 units
How much is the Standard cost of materials used in the actual production?
ChatGPT
The standard cost of materials used in actual production can be calculated by
multiplying the actual quantity of materials used in production by the standard
price per gram.
Given:
Actual materials used in production = 5,700 grams

Standard price = $12.50 per gram
Standard Cost of Materials Used in Production =

Actual Materials Used in Production × Standard Price per Gram
Standard Cost of Materials Used in Production = 5, 700 grams ×
$12.50 per gram
Standard Cost of Materials Used in Production = $71, 250
Therefore, the standard cost of materials used in the actual production is $71,250.
You
MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix
them
together to create the final product. The following are the standard costing
12/17/23, 7:55 PM ChatGPT
created for
standard production.
Standard Quantity Total Standard Cost
Material 1 80 Liters P800
P1,240
These standard costing has a yield percentage of 86.96%
In computing the SOQ or the Standard output quantity, round off the SOQ to two
decimal
places (you’ll get a whole number)
Round off ASIC, to two decimal places.
Actual Costing made within the month is as follows:
Actual Price Total Actual cost
Material 1 P9.9 P990
P5,850
Actual output quantity has been 3 times the standard output quantity
This is a straight problem question. please try to compute all variances so you will
be
prepared to answer the next questions
How much is the Total Material Variance? (just indicate the value, do not indicate
if
favorable or unfavorable, answer key will read only numerical answers)
ChatGPT
To calculate the Total Material Variance, we'll first find the Standard Cost of Actual
Input (SCAI) and then use it to determine the Total Material Variance.
Given:
Material 1: 80 Liters at P800
12/17/23, 7:55 PM ChatGPT

Total Standard Cost: P1,240

Material 1: P9.9 at P990
Material 2: P7.0 at P3,500
Total Actual Cost: P5,850
Actual output quantity = 3 times the standard output quantity
First, let's calculate the Standard Cost of Actual Input (SCAI):
Standard Cost of Actual Input (SCAI) = Standard Quantity × Actual Price

SCAI for Material 1 = 80 Liters × P 9.9 = P 792
Total SCAI = P792 + P350 + P48 + P120 = P1,310
Now, let's calculate the Total Material Variance:
Total Material Variance = Total Standard Cost − SCAI

Total Material Variance = P 1, 240 − P 1, 310
Total Material Variance = −P 70
Therefore, the Total Material Variance is -P70.
You
them
created for
12/17/23, 7:55 PM ChatGPT

P1,240
decimal
P5,850
be
How much is the Average Standard Output Cost (ASOC)? (just indicate the value,
do not
ChatGPT
To find the Average Standard Output Cost (ASOC), we need to calculate the
Standard Cost of Actual Input (SCAI) and the Standard Output Quantity (SOQ)
first. Then, we'll use these values to determine the ASOC.
Given:
Yield Percentage: 86.96%
12/17/23, 7:55 PM ChatGPT

First, let's calculate the Standard Output Quantity (SOQ):
Actual Output Quantity

SOQ = Yield Percentage

3×Standard Output Quantity

SOQ = 0.8696
= 3.45 × Standard Output Quantity
Given that the SOQ is 3.45 times the Standard Output Quantity, we'll round it off
to the nearest whole number.
Next, let's calculate the Standard Cost of Actual Input (SCAI):
SCAI = Actual Price × Actual Output Quantity

SCAI for Material 1 = P 9.9 × 80 Liters = P 792
Total SCAI = P792 + P350 + P48 + P120 = P1,310
Now, let's calculate the Average Standard Output Cost (ASOC):
Total SCAI
ASOC = SOQ

P 1,310
ASOC = 3.45
≈ P 380.29

Therefore, the Average Standard Output Cost (ASOC) is approximately P380.29.
You
them
12/17/23, 7:56 PM ChatGPT
created for
P1,240
decimal
P5,850
be
How much is the Average Standard Input Cost (ASIC)? (just indicate the value, do
not
round
off to two decimal places
ChatGPT
To find the Average Standard Input Cost (ASIC), we'll calculate the Standard Cost
of Actual Input (SCAI) and the Standard Input Quantity (SIQ) first, and then use
these values to determine ASIC.
Given:
12/17/23, 7:56 PM ChatGPT


Let's first calculate the Standard Input Quantity (SIQ):
SIQ = Total Standard Cost / (1 - Yield Percentage)

SIQ = P1,240 / (1 - 0.8696)
SIQ = P1,240 / 0.1304
SIQ ≈ P9,496.93
Next, let's calculate the Standard Cost of Actual Input (SCAI):
SCAI = Total Actual Cost / Actual Output Quantity

SCAI = P5,850 / (3 x SOQ)
Now, the ASIC can be determined:
ASIC = SCAI / SIQ

ASIC ≈ (P5,850 / (3 x SOQ)) / P9,496.93
ASIC ≈ P0.1947 / SOQ
However, without knowing the precise value of SOQ, it's not possible to calculate
ASIC. If you have the exact value of the Standard Output Quantity (SOQ), you can
substitute it into the ASIC equation to find the value.
12/17/23, 7:56 PM ChatGPT
You
them
created for
P1,240
decimal
P5,850
be
How much is the Material Rate Variance? (just indicate the value, do not indicate
if
favorable or unfavorable, answer key will read only numerical answers)
ChatGPT
The Material Rate Variance can be calculated using the formula:
Material Rate Variance = Actual Quantity × (Actual Price −

Standard Price)
Given:
12/17/23, 7:56 PM ChatGPT
Actual Price of Material 1: P9.9

Standard Price of Material 1: P800 / 80 Liters = P10 per liter
Let's calculate the Material Rate Variance for each material:
Material 1:
Material Rate Variance for Material 1 = 80 Liters × (P 9.9 − P 10) = −P 8
Material 2:
Material Rate Variance for Material 2 = 50 Liters × (P 7.0 − P 6) = P 50
Material 3:
Material Rate Variance for Material 3 = 40 Liters × (P 1.2 − P 2) = −P 32
Material 4:
Material Rate Variance for Material 4 = 60 Liters × (P 2.0 − P 1) = P 60
Total Material Rate Variance:

Total Material Rate Variance = (Material Rate Variance for Material 1) +
(Material Rate Variance for Material 2) +
(Material Rate Variance for Material 3) +
(Material Rate Variance for Material 4)
Total Material Rate Variance = (−P 8) + (P 50) + (−P 32) + (P 60)
Total Material Rate Variance = P 70
Therefore, the Total Material Rate Variance is P70.
You
them
created for
12/17/23, 7:56 PM ChatGPT
P1,240
decimal
P5,850
be
How much is the Mix variance? (just indicate the value, do not indicate if
favorable or
unfavorable, answer key will only read numerical answers)
ChatGPT
The Mix Variance can be computed by finding the difference between the actual
mix of inputs used and the standard mix of inputs for the actual output quantity.
Given:
12/17/23, 7:56 PM ChatGPT


First, let's calculate the Standard Input Mix (SIM) for each material:
Material 1: 80 / (80 + 50 + 40 + 60) = 0.32

Material 2: 50 / (80 + 50 + 40 + 60) = 0.20
Material 3: 40 / (80 + 50 + 40 + 60) = 0.16
Material 4: 60 / (80 + 50 + 40 + 60) = 0.24
Now, let's calculate the Actual Input Mix (AIM) based on the actual cost incurred:
Actual Cost Proportion for Material 1: 990 / 5850 = 0.169

The Mix Variance is the difference between the Standard and Actual Mix:
Mix Variance for Material 1: SIM - AIM = 0.32 - 0.169 = 0.151

Mix Variance for Material 2: SIM - AIM = 0.20 - 0.598 = -0.398
Mix Variance for Material 3: SIM - AIM = 0.16 - 0.164 = -0.004
Mix Variance for Material 4: SIM - AIM = 0.24 - 0.068 = 0.172
Total Mix Variance = (Mix Variance for Material 1) + (Mix Variance for Material 2)
+ (Mix Variance for Material 3) + (Mix Variance for Material 4)
Total Mix Variance = 0.151 - 0.398 - 0.004 + 0.172 = -0.079
Therefore, the Mix Variance is approximately -0.079.
12/17/23, 7:56 PM ChatGPT
You
. MESTIZA Company manufactures Substance X. It needed 4 chemicals and mix
them
created for
P1,240
decimal
P5,850
be
How much is the Yield Variance? (just indicate the value, do not indicate if
favorable or
unfavorable, answer key will only read numerical answers)
ChatGPT
The Yield Variance can be calculated using the following formula:
Yield Variance = Standard Cost for Actual Output −

Actual Cost for Actual Output
12/17/23, 7:56 PM ChatGPT
Given:

First, let's calculate the Standard Cost for Actual Output using the standard
quantities and costs:
Standard Cost for Material 1: 80 Liters * (P800 / 80 Liters) = P800

Total Standard Cost for Actual Output: P800 + P300 + P80 + P60 = P1,240
Now, let's calculate the Yield Variance:
Yield Variance = Total Standard Cost for Actual Output - Total Actual Cost
Yield Variance = P1,240 - P5,850 = -P4,610
Therefore, the Yield Variance is -P4,610.
You
12/17/23, 7:56 PM ChatGPT
Raven Company (a multi-product firm) produces 5,000 units of Product X each

year.
Each unit of Product X sells for $8 and has a contribution margin of $5. If Product
X is
discontinued, $18,000 of fixed overhead would be eliminated.
As a result of discontinuing Product X, the company’s overall operating income
would:
ChatGPT
To determine the impact of discontinuing Product X on the company's overall
operating income, let's analyze the current situation and the changes that would
occur.
Given:
Product X:
Sells 5,000 units/year
Sales price per unit = $8
Contribution margin per unit = $5
Discontinuing Product X would eliminate $18,000 of fixed overhead.
Current contribution margin from Product X:

Contribution Margin = Unit sales × Contribution margin per unit
\text{Contribution Margin from Product X} = 5,000 \times $5 = $25,000
Fixed overhead saved if Product X is discontinued = $18,000
The current contribution margin from Product X is $25,000, and discontinuing

Product X would save $18,000 of fixed overhead.
Overall impact on operating income:

Overall Impact = Contribution Margin from Product X −
Fixed overhead saved
\text{Overall Impact} = $25,000 - $18,000 = $7,000
Discontinuing Product X would decrease the company's overall operating income

by $7,000.
12/17/23, 7:56 PM ChatGPT
You
Brown Company plans to discontinue a division that generates a total
contribution
margin of $20,000 per year. Fixed overhead associated with this division is
$50,000, of
which $5,000 cannot be eliminated.
The effect of this discontinuance on Brown’s operating income would be an
increase of:
ChatGPT
Let's break down the impact of discontinuing the division on Brown Company's
operating income.
Given:
Total contribution margin of the division to be discontinued = $20,000 per year

Fixed overhead associated with the division = $50,000
$5,000 of this cannot be eliminated
The contribution margin from the division being discontinued is $20,000 per year.
Fixed overhead that cannot be eliminated = $5,000
Fixed overhead that can be eliminated = Total fixed overhead - Unavoidable fixed
overhead
Fixed overhead that can be eliminated = $50,000 - $5,000 = $45,000
The overall effect on operating income:

Overallimpact = Contributionmarginf romthedivision −
F ixedoverheadthatcanbeeliminated
Overall impact = $20,000 - $45,000 = -$25,000
The discontinuance of the division would decrease Brown Company's operating

income by $25,000.

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12/17/23, 7:55 PM ChatGPT

Managerial accounting is concerned with providing information to managers for

Managers do engage in various activities, commonly described as planning,

"Directing" typically involves guiding and overseeing employees to achieve

Focuses on the needs of managers rather than outsiders: False. Financial

consolidates and summarizes financial information concerning the entire

Therefore, the statement as a whole is mostly false as it mischaracterizes several

range, fixed cost in total may also change

In a contribution margin income statement, variable expenses are deducted from

The purchasing department is primarily responsible for acquiring materials at

The total variable overhead variance is typically computed by multiplying the

The controllable variance for fixed overhead is calculated as the difference

. If a company decides to make a part internally rather than to buy it from an

Expected shipping cost = Variable cost per pound × Expected pounds to be

Let's first calculate the variable manufacturing cost per unit:

Variable manufacturing cost per unit = Change in total manufacturing overhead

Now, to find the total fixed manufacturing cost:

Let's first calculate the variable manufacturing cost per unit:

Variable manufacturing cost per unit = Change in total manufacturing overhead

Now, to find the total fixed cost:

Total fixed cost = Total cost - Total variable cost

Let's calculate the variable cost per unit:

Change in total cost of sales = $328,500 - $262,800 = $65,700

First, let's find the contribution margin per unit:

Contribution Margin per Unit = $13.65 per unit

Finally, let's calculate the total net income:

New Fixed Expenses = Old Fixed Expenses × (1 + Increase Percentage)

First, calculate the contribution margin per unit:

Contribution Margin per Unit = $13.65 per unit

Calculate the total contribution margin for 5,600 units:

First, let's calculate the contribution margin per case:

Contribution Margin per Case = $80 per case

The contribution margin per case is $80.

Contribution Margin Ratio = 0.4 × 100

New Contribution Margin = 0.4 × 750, 000

The new contribution margin is 300,000 pesos.

New Contribution Margin Ratio = 0.4 × 100

New Net Operating Income = Old Net Operating Income +

Net Operating Income = Sales - Variable Expenses - Fixed Expenses

$6,000 = x - $60,000 - $35,000

Therefore, the expected increase in revenue would be $101,000 - $100,000 =

Now, to find the percentage increase in revenue:

Percentage Increase in Revenue = 1%

Hence, the expected increase in revenue to achieve a 20% increase in net

Percentage Change in Net Operating Income

At $600,000 sales level:

Contribution margin = Sales - Variable expenses

Percentage Change in Net Operating Income

To calculate the percentage change in sales, use the contribution margin:

Percentage Change in Sales = 10%

Percentage Change in Net Operating Income = DOL ×

At a 10% increase in sales, the percentage change in net operating income is

Degree of Operating Leverage (DOL) =

At the current sales level of $600,000:

DOL = Percentage Change in Net Operating Income

10 = Percentage Change in10%

Net Operating Income = Contribution Margin × DOL

Hence, the net income prior to the increase in sales is $2,400,000.