CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES

First Preboard Solutions 89TH Batch – FEBRUARY 2021

1. B

2. A

3. D

4. D

5. B

6. B Profit before tax (P28,000/70%) P 40,000

Add fixed costs (P1,200,000/12) 100,000
Total contribution margin P140,000
÷ Units 17,500
CM per unit P 8
Add variable cost per unit 5
Selling price P13

7. B

8. D

Sales mix ratio: 2:6:1 for C1, C2, C3

C1 C2 C3
Selling price P50 P100 P60
X CMR 30% 25% 60%
CM per unit P15 P25 P36
X Sales mix ratio 2 6 1 (TOTAL OF 9)
Weighted CM per unit P30 P150 P36

Weighted Ave. CM/unit = (P30 + P150 + P36) ÷ 9 = P24

Composite BE = P108,000 ÷ P24 = 4,500

BEP in units for C3 = 4,500 x 1/9 = 500 units

9. B

10. A

11. C
Sales 100% P6,000,000
Var. Cost (50% + 20%) 70%
Contribution margin 30% 1,800,000
Fixed Cost (10% + 12%) 22% 1,320,000
Profit 8% P 480,000

BEP = P1,320,000 ÷ 30% = P4,400,000

Margin of Safety = P6,000,000 – P4,400,000 = P1,600,000

MSR = P1,600,000 ÷ P6,000,000 = 26.67%

12. B DOL = CM/P = P1,800,000/P480,000 = 3.75 times

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

13. D
Commission only: P800,000 x 8% = P64,000 per car (variable cost)
Fixed amount plus commission:
Fixed cost = P49,920 x 50 salespersons = P2,496,000
Variable = P800,000 x 2% = P16,000

Let x = number of cars to be sold to be indifferent between the two schemes

64,000x = 2,496,000 + 16,000x

X = 52 cars

Total sales = 52 cars x P800,000 = P41,600,000

14. C

15. A

Let x = number of boxes at which the two models would earn the same profit (loss)

100,000 + 3.2x = 70,000 + 3.5x

X = 100,000

16. C
CM = FX COSTS at the breakeven point.

CM = Fx Costs = 2,000 units x (P7,500 – P2,250) = P10,500,000

Profit P 5,040,000
Add Fixed Costs 10,500,000
Contribution margin P15,540,000
÷ CM per unit (P7,500 – P2,250) 5,250
Number of units sold last year 2,960

17. D

Margin of safety (2,960 units – 2,000 units) 960

÷ sales in units 2,960
Margin of safety ratio 32.43%

18. B

Contribution margin (2,960 x P5,250) P15,540,000

÷ Profit 5,040,000
Degree of operating leverage 3.08 times

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

19. B
LAST YEAR NEXT YEAR

Selling price P7,500 +P1,500 P9,000

Variable cost per unit 2,250 + 1/3 3,000
CM per unit P5,250 P6,000
Fixed cost P10,500,000 + 10% P11,550,000

CMR 70% 66.67%

Breakeven point - units 2,000 11,550,000/6,000 1,925

(decrease by 75 units)
Breakeven point – pesos P15,000,000 P17,325,000
(increase by P2,325,000)

20. A

21. C

22. C

Total costs per unit (P50 + P25 + P10 + P20) P105

Add desired profit (P1,000,000 x 30%) ÷ 10,000 units 30
Target selling price P135

23. B

24. D

25. B

26. A

27. C

CURRENT CMR = P80/P200 = 40%

New variable cost per unit = P120 + (P40 x 15%) = P126

Let x = new selling price

𝑥−126
CMR = CM per unit/Selling Price 0.40 =
𝑥

X = P210; Increase in selling price = P210 – P200 = P10

28. B
Current CM (9,250 units x P80) P740,000
Fixed costs 400,000
Current operating income P340,000

Required sales in units = (P400,000 + P340,000) ÷ (P200 – P126) = 10,000 units

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

29. B

Total units = 10,000 x 140% = 14,000CM per unit = P200 – P126 = P74

Additional fixed costs (depreciation) = P600,000 x 20% = P120,000

CM (14,000 units x P74) P1,036,000

Less fixed costs (P400,000 + P120,000) 520,000
Profit after increase in capacity P 516,000
Profit before increase in capacity 340,000
Increase in profit P 176,000

30. C
Depreciation = P18,000 ÷ 5 years = P3,600 per year or P300 per month.

Fixed costs (P700 + P200 + P300 depreciation) P1,200

÷ CM per unit [0.15 – (0.06 + 0.03) 0.06
Breakeven point in units per month 20,000

31. B
Fixed costs per year (P1,200 x 12 months) P14,400
Add desired profit (P25,000 12%) 3,000
Total P17,400
÷ CM per unit 0.06
Required sales per year 290,000

32. A
Fixed costs (P1,200 + {P15 x 50 machines)) P1,950
÷ CM per unit (0.15 – 0.06) 0.09
New BEP in units per month 21,667
BEP based on original data 20,000
Increase in BEP in units per month 1,667

33. D

34. B

35. B

36. C

37. D

38. D

39. A

40. A

41. A

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

SOLUTIONS: 39 TO 41:

42. D

FIXED OH SPENDING VARIANCE (50,000 - 60,000) P10,000 F

VARIABLE OH SPENDING VARIANCE (65,000) – (18,000 x 1.50) (38,000 UF)
VARIABLE OH EFFICIENCY VARIANCE (18,000 x 1.50) – (10,000 x 4 x 1.50) 33,000 F
BUDGET VARIANCE P5,000 F

43. C

FIXED OH SPENDING VARIANCE (50,000-60,000) P10,000 F

VARIABLE OH SPENDING VARIANCE (65,000) – (18,000x1.50) (38,000 UF)
TOTAL SPENDING VARIANCE P28,000 UF

44. A

PRODUCT COST EXPENSED [(60K+90K+30K+210K)X25K/30K] P325,000

PERIOD COST EXPENSED (40K+50K+20K+15K) 125,000
TOTAL P450,000

45. D

46. C

OPERATING INCOME (ABSORPTION COSTING) P70,000

VOLUME VARIANCE (UF) (2,000 UNITS X 4) (8,000)
NET INCOME (ABSORPTION COSTING) 62,000
STD. FC ON E.I (2,500 units x 4) (10,000)
NET INCOME (VARIABLE COSTING) 52,000

47. D

STANDARD PRICE PER QTY = [((240x95%)+(100/50)]/20/4 = 2.875;

STANDARD QTY. PER UNIT = (9.2/92%x(6/5) = 12;
STANDARD COST PER UNIT (2.875 X 12) = P34.5

48. C

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

49. B

MATERIAL X [(2.50-2.00) X 25,000] MATERIAL Y [(0.90-1.00) X 20,000] = 10,500UF

50. B
(AQ x SP) – (AQ x WASP) [(70,000 – (45,000 X 1.60)] = 2,000 F

51. A

(AQ X WASP) - (TOTAL STD. COST/ACTUAL YIELD X STD. YIELD) (72,000 – 64,000) = 8,000 UF

52. B

53. D

54. B

COGS [(DM, DL & VOH per unit) x Units sold] (400 x 2,500 units) = 1,000,000

55. D

Sales (2,500 units x 750) P1,875,000

Cost of sales (2,500 units x 500) (1,250,000)
Gross Profit 625,000
Operating expense
Selling expense (200,000 + 50,000) (250,000)
Administrative expense (90,000 + 250,000) (340,000)
Net income before variance 35,000
Volume variance (50,000)
Net loss after variance (15,000)

56. D

57. C

58. B

59. D

(Avoidable FC/Purchase Price – VMC) [(30k + 30k)/ (P21 - P15)] = 10,000 UNITS

60. D

61. B

62. D

63. C

64. C

65. C

66. A

Incremental sales (400 units x P0.80) P320

Incremental costs:
Variable cost (400 units x 0.40) (160)
Opportunity costs (SQUEEZE) [267 units x (P1.00 – 0.40)] 160
Incremental profit -

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CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES
First Preboard Solutions 89TH Batch – FEBRUARY 2021

67. C

Incremental costs:
Variable cost (1,000 units x 42) P42,000

There is no opportunity cost since the company can increase its capacity up to 13,000 units.
Thus, accepting the order will not result to loss of regular sales. Instead, variable
manufacturing costs will increase by P14 per unit. The P42 per unit cost is computed as
[(P100,000 + P120,000 + P60,000) ÷ 10,000 units] + 14.00]

68. B

Product X Product Y
CM P50 P64
Scarce resource per unit 5 8
CM per scarce resource P10 P8
Order of Priority 1 2

CM of Product X (25,000 hours x 80% x P10) P200,000

CM of Product Y (25,000 hours x 20% x P8) 40,000
Total CM P240,000

69. D

(Avoidable FC + Shut down costs) / UCM

(10,000 (mftng) + 6,000 (non-mftg) + 5,000) / 12 = 1,750 units

70. C

Positive segment Margin of Product J (P145,000 – 170,000) (P35,000)

Increase in CM of other product lines 30,000
Net effect on income P 5,000

- END -

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