63. Answer: d. RST Ltd. has sufficient capacity to fill the order; therefore, there are no opportunity costs.

Desired contribution margin = $48,000/20,000 units = $2.40/unit Variable costs = ($2,000,000/125,000

units) + ($8,000/20,000 units) = $16.00 + $0.40 = $16.40 Therefore, the sales price should be $16.40 +
$2.40 = $18.80 per unit. Choice a) $40.00 is the regular sales price per unit. Choice b) Regular sales price
less fixed manufacturing costs less fixed selling and administrative costs less sales commissions saved: =
$40.00 - [($1,250,000 + $950,000)/125,000 units] - ($2.60 - $0.40) = $40.00 - $17.60 - $2.20 = $20.20
Choice c) Includes all the manufacturing costs: = ($2,000,000 + $1,250,000)/125,000 units + $0.40 +
$2.40 = $26.00 + $0.40 + $2.40 = $28.8

68. Answer: c. Units CC Beginning WIP (20% converted) 40,250 32,200 Units started and completed1
49,750 49,750 Spoiled units2 (60% converted) 300 180 Ending WIP (80% converted) 34,950 27,960 Total
Units Accounted For 125,250 110,090 1 Units started and completed = 85,000 - 34,950 - 300 = 49,750 2
Spoiled units: 40,250 + 85,000 - 90,000 - 34,950 = 300 Choice a) Multiplies beginning WIP by 20%: Units
CC Beginning WIP (20% converted) 40,250 8,050 Units started and completed 49,750 49,750 Spoiled
units 300 180 Ending WIP (80% converted) 34,950 27,960 Total Units Accounted For 125,250 85,940
Choice b) Ignores spoiled units: Units CC Beginning WIP (20% converted) 40,250 32,200 Units started and
completed 49,750 49,750 Ending WIP (80% converted) 34,950 27,960 Total Units Accounted For 109,910
Choice d) Assumes completed units are 100% converted this period and ignores spoiled units: Units CC
Beginning WIP (20% converted) 40,250 32,200 Units started and completed 90,000 90,000 Ending WIP
(80% converted) 34,950 27,960 Total Units Accounted For 150,160 2013 Sample Entrance Examination
CMA Canada Page 62 69. Answer: b. Equivalent units of work done in May: Units A B Beginning WIP (20%
converted) 40,250 40,250 40,250 Units started and completed 49,750 49,750 49,750 Spoiled units 300
300 0 Ending WIP (80% converted) 34,950 34,950 34,950 Total Units Accounted For 125,250 125,250
124,950

69. Answer: b. Equivalent units of work done in May: Units A B Beginning WIP (20% converted) 40,250
40,250 40,250 Units started and completed 49,750 49,750 49,750 Spoiled units 300 300 0 Ending WIP
(80% converted) 34,950 34,950 34,950 Total Units Accounted For 125,250 125,250 124,950 Cost per EU
of A: $220,000/125,250 = $1.76 Cost per EU of B: $350,000/124,950 = $2.80 Choice a) Excludes
beginning WIP in calculation for A: A Beginning WIP (20% converted) 0 Units started and completed
49,750 Spoiled units 300 Ending WIP (80% converted) 34,950 Total Units Accounted For 85,000 Cost per
EU of A: $220,000/85,000 = $2.59 Choice c) Excludes beginning WIP in calculation for A and ignores
ending WIP for B: B Beginning WIP (20% converted) 40,250 Units started and completed 49,750 Spoiled
units 0 Ending WIP (80% converted) 0 Total Units Accounted For 90,000 Cost per EU of B:
$350,000/90,000 = $3.89 Choice d) Uses units completed as denominator: Cost per EU of A:
$220,000/90,000 = $2.44 Cost per EU of B: $350,000/90,000 = $3.89 70. Answer: a. Normal costing uses
the estimated overhead allocation rate and the actual quantity of the allocation base. 71. Answer: d.
Static-budget variance = flexible-budget variance + sales-volume variance Flexible-budget variance =
$50,000(F) - $60,000(F) = $10,000(U)