Practice Free BUS105 Managerial Accounting (SAYA-0009) Exam Exam Questions Answers With Explanation

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We are given:

Fixed costs = $60,000

Selling price per unit = $25.00

Variable cost per unit = $12.50

Tax rate = 20%

Desired after-tax profit = $100,000

Step 1: Calculate Contribution Margin Per Unit

= Selling Price – Variable Cost

= $25.00 ? $12.50 = $12.50

Step 2: Convert After-Tax Profit to Before-Tax Profit

We must first determine the before-tax profit required to result in a $100,000 after-tax profit.

Before-tax profit = After-tax profit ÷ (1 ? tax rate)

= $100,000 ÷ (1 ? 0.20) = $100,000 ÷ 0.80 = $125,000

Step 3: Use CVP (Cost-Volume-Profit) Formula for Units:

Required units = (Fixed Costs + Before-Tax Profit) ÷ Contribution Margin per Unit

= ($60,000 + $125,000) ÷ $12.50

= $185,000 ÷ $12.50 = 14,800 units

Wait! This contradicts the earlier stated answer. Let's re-check:

Recalculating:

$185,000 ÷ $12.50 = 14,800 units

So, the correct number of units needed is:

Answer: B. 14,800 units?

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Apologies for the initial misstatement. Let's now fix that:

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Final Corrected Answer: B

Contribution Margin per Unit = $25 – $12.50 = $12.50

Required before-tax profit = $100,000 ÷ (1 ? 0.20) = $125,000

Break-even formula with profit:

Required units = (Fixed costs + Target before-tax profit) ÷ CM/unit

= ($60,000 + $125,000) ÷ $12.50

= $185,000 ÷ $12.50 = 14,800 units

Therefore, the business must sell 14,800 units to achieve an after-tax profit of $100,000.

Comprehensive and Detailed Explanation:

The Manufacturing Overhead account is used to track both actual and applied overhead. At the end of the period, the difference is calculated:

If actual > applied ? underapplied (debit balance)

If applied > actual ? overapplied (credit balance)

Answer: A

The Statement of Cash Flows is divided into three sections:

Operating Activities

Investing Activities

Financing Activities

Financing activities include transactions related to:

Issuing or repurchasing stock

Borrowing or repaying debt

Paying dividends (including to noncontrolling interests)

Let’s review the choices:

A. Cash receipts from customers ? Operating activity

B. Increase in accounts receivable ? Operating activity (non-cash adjustment)

C. Purchase of property and equipment ? Investing activity

D. Cash dividends paid to noncontrolling interests ? Financing activity?

Per Saylor Academy – Managerial Accounting (BUS105), Unit 11:

“The financing section includes transactions involving long-term liabilities and equity. Examples include issuing stock, borrowing cash, repaying debt, and paying dividends.”

Comprehensive and Detailed Explanation:

The HR Manager's role is not directly tied to the production process, nor is it part of factory operations. It is part of corporate administration.

Direct Labor: Involves hands-on work on the product.

Indirect Labor: Involves factory support staff (e.g., supervisors).

Manufacturing Overhead: Includes costs related to the factory (e.g., factory maintenance).

General and Administrative Costs: Includes HR, accounting, legal.

Since HR is a support service, it falls under G&A.

Answer: D

Responsibility centers are classified as:

Cost Center (evaluated on cost control)

Revenue Center (evaluated on revenue generation)

Profit Center (evaluated on revenues and costs)

Investment Center (evaluated on profits and asset usage/ROI)

As a restaurant manager, you are typically managing both revenues and costs, making your unit a Profit Center.

From Saylor Academy BUS105 – Unit 11.1: Measuring and Evaluating Performance:

“Profit centers are responsible for revenues and costs. Managers are evaluated on their ability to generate profit by increasing revenues and/or reducing costs.”

Therefore:

Answer: C

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Return on Investment (ROI) is a performance measure used to assess how effectively a division is using its assets to generate operating income. ROI = Operating Income / Average Operating Assets. According to Saylor Academy BUS105, Unit 11.2 – Measuring Performance:

“ROI provides a way to evaluate how well managers use the assets at their disposal to generate profits.”

All components used in the denominator (cash, accounts receivable, property, plant, and equipment, and inventory) are operating assets, so they are valid for ROI calculation.

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To compute the total current period manufacturing costs, we use the formula:

Total Manufacturing Costs =

Direct Materials Used + Direct Labor + Manufacturing Overhead Applied

Let’s break it down step-by-step.

Step 1: Compute Direct Materials Used

Direct Materials Used =

Beginning Raw Materials Inventory + Raw Materials Purchases ? Ending Raw Materials Inventory

= $9,000 + $150,000 ? $5,000 = $154,000

Step 2: Add Direct Labor and Manufacturing Overhead

Direct Labor = $50,000

Manufacturing Overhead Applied = $400,000

Step 3: Compute Total Manufacturing Costs

Total Manufacturing Costs =

Direct Materials Used + Direct Labor + Manufacturing Overhead

= $154,000 + $50,000 + $400,000 = $604,000

Note:

Selling and General & Administrative expenses are period costs and are excluded from the Schedule of Cost of Goods Manufactured.

Beginning and ending work-in-process inventories are used to compute the total cost of goods manufactured, not the total current period manufacturing costs.

Therefore:

Answer: B. $604,000

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Option 1:

Monthly lease: $225

Included: 1,500 copies/month = 18,000 copies/year

Additional: $0.15 per copy over 18,000

Option 2:

Monthly lease: $250

Included: 1,800 copies/month = 21,600 copies/year

Additional: $0.02 per copy over 21,600

Total copies expected: 22,500

Option 1:

Annual lease = $225 × 12 = $2,700

Extra copies = 22,500 – 18,000 = 4,500 × $0.15 = $675

Total cost = $2,700 + $675 = $3,375

Option 2:

Annual lease = $250 × 12 = $3,000

Extra copies = 22,500 – 21,600 = 900 × $0.02 = $18

Total cost = $3,000 + $18 = $3,018

Savings = $3,375 ? $3,018 = $357

This is a classic cost comparison decision problem where the differential costs are evaluated to determine the lower-cost alternative. Based on cost-volume information and break-even comparison logic, Option 2 provides the lowest cost.

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Step 2: Calculate Differential Profit

However, notice that the result is negative $550, which matches answer A, not B. Let's verify the available choices:

A. A differential profit of ($550) — This means a loss of $550, which matches our calculation.

B. A differential profit of ($700) — This would mean a loss of $700.

C & D refer to differential contribution margin (which excludes fixed costs).

Since the differential profit is negative $550,the correct answer is A.