Exam 16 April 2013, questions and answers PDF

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Overview Management advisory services The primary purpose of management advisory services is to A. conduct special studies, preparation of recommendations, development of plans and programs, and provision of advice and assistance in their implementation. B. provide services or to fulfill some social...

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MANAGEMENTADVI SORYSERVI CES

CP ARe v i e wSc h o o l o f t h ePh i l i p p i n e s

Ov e r v i e w Ma n a g e me n t a d v i s o r ys e r v i c e s 1 .T h ep r i ma r yp u r p o s eo f ma n a g e me n t a d v i s o r ys e r v i c e si st o A.c o n d u c ts p e c i a ls t u d i e s ,p r e p a r a t i o no fr e c o mme n d a t i o n s ,d e v e l o p me n to fp l a n sa n d p r o g r a ms , a n dp r o v i s i o no f a d v i c ea n da s s i s t a n c ei nt h e i ri mp l e me n t a t i o n . B.p r o v i d es e r v i c e so rt of u l fi l l s o mes o c i a l n e e d . C.i mp r o v et h ec l i e n t ' su s eo fi t sc a p a b i l i t i e sa n dr e s o u r c e st oa c h i e v et h eo b j e c t i v e so ft h e o r g a n i z a t i o n . D.e a r nt h eb e s tr a t eo fr e t u r no nr e s o u r c e se n t r u s t e dt oi t sc a r ewi t hs a f e t yo fi n v e s t me n t b e i n gt a k e ni n t oa c c o u n t a n dc o n s i s t e n t wi t ht h efi r m' ss o c i a l a n dl e g a l r e s p o n s i b i l i t i e s . 1 .T h ef o l l o wi n gc h a r a c t e r i z ema n a g e me n t a d v i s o r ys e r v i c e se x c e p t A.i n v o l v ed e c i s i o nf o rt h ef u t u r e B.b r o a d e r i ns c o p ea n dv a r i e di nn a t u r e C.u t i l i z emo r ej u n i o rs t a fft h a ns e n i o rme mb e r so f t h efi r m D.r e l a t et os p e c i fi cp r o b l e mswh e r ee x p e r t h e l pi sr e q u i r e d 2 . Wh i c ho f t h ef o l l o wi n gi sn o t c l a s s i fi a b l ea sama n a g e me n t a d v i s o r ys e r v i c eb yCP A? A.Sy s t e msd e s i g n . C.Ma k eo rb u ya n a l y s i s . B.Pr o j e c t f e a s i b i l i t ys t u d y . D.As s i s t a n c ei nb u d g e t p r e p a r a t i o n .

F i n a l Pr e b o a r dEx a mi n a t i o n

D.Ex t e r n a l u s e r so f fi n a n c i a l r e p o r t 3 .T h ef o l l o wi n ga r ec h a r a c t e r i s t i c so f fi n a n c i a l a c c o u n t i n g , e x c e p t ? A.Re p o r t i n go f h i s t o r i c a l i n f o r ma t i o n B.Co mp l i a n c et og e n e r a l l ya c c e p t e da c c o u n t i n gp r i n c i p l e s C.Co n t r i b u t i o na p p r o a c hi n c o mes t a t e me n t D.Ex t e r n a l u s e r so f fi n a n c i a l r e p o r t 4 T h ef o l l o wi n ga r ei n h e r e n t t oe i t h e rma n a g e me n t a c c o u n t i n go r fi n a n c i a l a c c o u n t i n g : 1 . Ex t e r n a l r e p o r t 2 . Hi s t o r i c a l i n f o r ma t i o n 3 . Co n t r i b u t i o na p p r o a c hi n c o mes t a t e me n t 4 . Ge n e r a l l ya c c e p t e da c c o u n t i n gp r i n c i p l e s 5 . Pr o s p e c t i v efi n a n c i a l s t a t e me n t s Wh i c ho ft h ef o r e g o i n ga r er e l a t e dt oma n a g e me n ta c c o u n t i n ga n dfi n a n c i a la c c o u n t i n g r e s p e c t i v e l y ? A. B. C. D. Ma n a g e me n t Ac c o u n t i n g 1 , 2 , 5 3 , 5 2 , 3 3 F i n a n c i a l Ac c o u n t i n g 3 , 4 1 , 2 , 4 1 , 4 , 5 1 , 2 , 4 , 5

5 .T h ec o s t i n gme t h o dt h a t i sp r o p e r l yc l a s s i fi e df o rb o t he x t e r n a l a n di n t e r n a l r e p o t t i n gp u r p o s e s 2 . Wh i c ho f t h ef o l l o wi n gs t a t e me n t i sf a l s e ? i s A.CP A ’ sp r o v i d ema n a g e me n t s e r v i c e st og oa r o u n dt h ee t h i c a l c o n s t r a i n t sa sma n d a t e db y Ex t e r n a l r e p o r t i n g I n t e r n a l r e p o r t i n g t h eAc c o u n t a n c yAc t . Ac t i v i t y b a s e dc o s t i n g Y e s Y e s B.Bu s i n e s s e sh i r ema n a g e me n tc o n s u l t a n t st oh e l pd e fi n es p e c i fi cp r o b l e msa n dd e v e l o p V a r i a b l ec o s t i n g Y e s No s o l u t i o n s Pr o c e s sc o s t i n g No Y e s C.I n c l u d e di nt h ep r a c t i c eo fc o n s u l t i n gi st h ep r o v i s i o no fc o n fi d e n t i a ls e r v i c ei nwh i c ht h e St a n d a r dc o s t i n g Y e s No i d e n t i t yo f t h ec l i e n t i sc o n c e a l e d D.CP A ’ sp e r f o r mi n gma n a g e me n ts e r v i c e sma yb ec o n s i d e r e dt ob ei nt h ep r a c t i c eo f Qua l i t yCos t s ma n a g e me n t c o n s u l t i n g 6 .T h ec o s t o f s t a t i s t i c a l q u a l i t yc o n t r o l i nap r o d u c t q u a l i t yc o s t s y s t e mi s A.t r a i n i n gc o s t C.a p p r a i s a l c o s t Ma n a g e me n t a c c o u n t i n g&fi n a n c i a l a c c o u n t i n g B.i n t e r n a l f a i l u r ec o s t D.p r e v e n t i o nc o s t 1 . Wh i c ho f t h ef o l l o wi n gc h a r a c t e r i s t i c si si n h e r e n t t oma n a g e me n t a c c o u n t i n g ? A.Re p o r t i n go f h i s t o r i c a l i n f o r ma t i o n B.Co mp l i a n c et og e n e r a l l ya c c e p t e da c c o u n t i n gp r i n c i p l e s C.Co n t r i b u t i o na p p r o a c hi n c o mes t a t e me n t Ap r i l 1 6 , 2 0 0 5

Ac t i v i t y ba s e dCos t i ng 7 .T h el a s t s t e pi na c t i v i t y b a s e dc o s t i n gi st o A.i d e n t i t yt h ema j o ra c t i v i t i e st h a t p e r t a i nt ot h ema n u f a c t u r eo f s p e c i fi cp r o d u c t s Pa g e1o f 7 0

MANAGEMENTADVI SORYSERVI CES

CP ARe v i e wSc h o o l o f t h ePh i l i p p i n e s

B.a l l o c a t ema n u f a c t u r i n go v e r h e a dc o s t st oa c t i v i t yc o s t p o o l s C.I d e n t i f yt h ec o s t d r i v e r st h a t a c c u r a t e l yme a s u r ee a c ha c t i v i t y ’ sc o n t r i b u t i o nt ot h efi n i s h e d p r o d u c t D.As s i g nma n u f a c t u r i n go v e r h e a dc o s t sf o r e a c ha c t i v i t yc o s t p o o l t op r o d u c t s 8 . De s i g n i n ga n dr e d e s i g n i n ga r ea c t i v i t i e st h a t a r ec l a s s i fi e da s A.F a c i l i t yl e v e l C.Un i t l e v e l B.Ba t c hl e v e l D.Pr o d u c t l e v e l 9 .T h ee x a mp l e so f a c t i v i t i e sa t t h ep r o d u c t l e v e l i n c l u d e A.s c h e d u l i n g , s e t t i n gu p , a n dmo v i n g C.h e a t i n g , l i g h t i n g , a n ds e c u r i t y B.d e s i g n i n g , c h a n g i n g , a n da d v e r t i s i n g D.c u t t i n g , p a i n t i n g , a n dp a c k a g i n g 1 . Ex a mp l e so f a c t i v i t i e sa t t h eb a t c hl e v e l o f c o s t si n c l u d e A. s c h e d u l i n g , s e t t i n gu p , a n dmo v i n g C.h e a t i n g , l i g h t i n g , a n ds e c u r i t y B. d e s i g n i n g , c h a n g i n g , a n da d v e r t i s i n g D.c u t t i n g , p a i n t i n g , a n dp a c k a g i n g 2 . Sc h e d u l i n g , s e t t i n gu p , a n dmo v i n ga r ee x a mp l e so f a c t i v i t i e st h a t a r ec l a s s i fi e da s A. Ba t c hl e v e l C. Un i t l e v e l B. Pr o d u c t l e v e l D. F a c i l i t yl e v e l 1 0 .Ex a mp l e so f u n i t l e v e l a c t i v i t i e sa r e A.s c h e d u l i n g , s e t t i n gu p , a n dr e c e i v i n g B.d e s i g n i n g , c h a n g i n g , a n da d v e r t i s i n g

C.h e a t i n g , l i g h t i n g , a n ds e c u r i t y D.c u t t i n g , p a i n t i n g , a n dp a c k a g i n g

3 . Ane x a mp l eo f an o n v o l u me r e l a t e do v e r h e a db a s ewo u l db e : A.Di r e c t ma t e r i a l sc o s t C.Di r e c t L a b o rc o s t B.Ma c h i n eh o u r s D.Nu mb e ro f i n s p e c t i o n s 1 1 .Cl a s s i f yt h ef o l l o wi n ga sv o l u me( u n i t )b a s eo r n o n v o l u me( a c t i v i t y )b a s e : 1 . Nu mb e ro f p u r c h a s eo r d e r si s s u e d 2 . Di r e c t l a b o rh o u r s 3 . Nu mb e ro f ma c h i n eh o u r s 4 . Nu mb e ro f s e t u p s 5 . Nu mb e ro f r e c e i v i n gr e p o r t si s s u e d

6. Direct material cost Ap r i l 1 6 , 2 0 0 5

A. Vo l u me( Un i t )Ba s e 1 , 4 , 5 , 6 No n v o l u me( Ac t i v i t y )Ba s e 2 , 3

F i n a l Pr e b o a r dEx a mi n a t i o n B. 1 , 4 , 5 2 , 3 , 6

C. 1 , 2 , 3 , 4 , 5 6

D. 2 , 3 , 6 1 , 4 , 5

1 2 .Mc Md ' ss t a n d a r dc o s tc a r di n d i c a t e st h a ti tt a k e st h r e eh o u r so fd i r e c tl a b o rt op r o d u c eo n e u n i to fp r o d u c t .Ar e c e n t l yc o n d u c t e dt i mea n dmo t i o ns t u d yr e v e a l e dt h a ti ts h o u l dt a k eo n e h o u rt op r o d u c et h es a meu n i t . L a b o r c o s t i sP1 5 0p e rh o u r . Mc Md ' sv a l u e a d d e d , a n dn o nv a l u e a d d e dc o s t swo u l db e A.P1 5 0a n dP0 C.P1 5 0a n dP3 0 0 B.P0a n dP1 5 0 D.P4 5 0a n dP0 1 3 .Mo o nCo mp a n yma k e st wop r o d u c t s ,Al p h aa n dBe t a .Al p h ai sb e i n gi n t r o d u c e dt h i sp e r i o d , wh e r e a sBe t ah a sb e e ni np r o d u c t i o nf o r2y e a r s .F o rt h ep e r i o da b o u t t ob e g i n , 1 , 0 0 0u n i t so f e a c hp r o d u c ta r et ob ema n u f a c t u r e d .T h eo n l yr e l e v a n to v e r h e a di t e mi st h ec o s to f e n g i n e e r i n gc h a n g eo r d e r s .Al p h aa n dBe t aa r ee x p e c t e dt or e q u i r ee i g h ta n dt woc h a n g e o r d e r s ,r e s p e c t i v e l y . Al p h aa n dBe t aa r ee x p e c t e dt or e q u i r e2a n d3ma c h i n eh o u r s , r e s p e c t i v e l y .T h ec o s t o f ac h a n g eo r d e ri sP6 0 0 . I f Mo o ni su s i n gd i r e c t t r a c i n g , t h ea mo u n t o f o v e r h e a dp e ru n i t t h a t wi l l b ea s s i g n e dt oAl p h a a n dBe t a , r e s p e c t i v e l y , a r e A.P2 . 4 0a n dP3 . 6 0 , r e s p e c t i v e l y C. P4 . 8 0a n dP1 . 2 0 , r e s p e c t i v e l y B.P3 . 6 0a n dP2 . 4 0 , r e s p e c t i v e l y D. P1 . 2 0a n dP4 . 8 0 , r e s p e c t i v e l y J u s t i nTi meMa nu f a c t ur i n gSy s t e m 1 4 .Wh i c ho ft h ef o l l o wi n gi sn o tat y p i c a lc h a r a c t e r i s t i co faj u s t i n t i me( J I T)p r o d u c t i o n e n v i r o n me n t ? A.L o t s i z e se q u a l t oo n e C.Pu s h t h r o u g hs y s t e m B.I n s i g n i fi c a n t s e t u pt i me sa n dc o s t s D.Ba l a n c e da n dl e v e l wo r k l o a d s Co s tBe ha v i or V a r i a b l eCo s t s 6 .T o t a lp r o d u c t i o nc o s t sf o rJ o r d a n ,I n c .a r eb u d g e t e da tP2 , 3 0 0 , 0 0 0f o r5 0 , 0 0 0u n i t so f b u d g e t e do u t p u t a n dP2 , 8 0 0 , 0 0 0f o r6 0 , 0 0 0u n i t so f b u d g e t e do u t p u t .Be c a u s eo f t h en e e df o r a d d i t i o n a l f a c i l i t i e s ,b u d g e t e dfi x e dc o s t sf o r6 0 , 0 0 0u n i t sa r e2 5p e r c e n tmo r et h a nb u d g e t e d fi x e dc o s t sf o r5 0 , 0 0 0u n i t s .Ho wmu c hi sJ o r d a n ’ sb u d g e t e dv a r i a b l ec o s t p e ru n i t o f o u t p u t ? A. P7 . 5 0 C. P3 0 . 0 0 B. P1 6 . 0 0 D. P6 2 . 5 0 Pa g e2o f 7 0

MANAGEMENTADVI SORYSERVI CES

CP ARe v i e wSc h o o l o f t h ePh i l i p p i n e s

1 5 .T o t a l p r o d u c t i o nc o s t sf o rCa r e r a ,I n c . a r eb u d g e t e da t P2 3 0 , 0 0 0f o r5 0 , 0 0 0u n i t so fb u d g e t e d o u t p u ta n dP2 8 0 , 0 0 0f o r6 0 , 0 0 0u n i t so fb u d g e t e do u t p u t .Be c a u s eo ft h en e e df o ra d d i t i o n a l f a c i l i t i e s ,b u d g e t e dfi x e dc o s t sf o r6 0 , 0 0 0u n i t sa r e2 5 % mo r et h a nb u d g e t e dfi x e dc o s t sf o r P5 0 , 0 0 0u n i t s . Ho wmu c hi sCa r e r a ’ sb u d g e t e dv a r i a b l ec o s t p e ru n i t o f o u t p u t ? A.P1 . 6 0 C.P3 . 0 0 B.P1 . 6 7 D.P5 . 0 0

F i n a l Pr e b o a r dEx a mi n a t i o n

Gr a p h3

Gr a p h4

T o t a l u n i t sp r o d u c e s

T o t a l u n i t sp r o d u c e d

3 .T o t a l p r o d u c t i o nc o s t sf o rL a g u n a ,I n c . a r eb u d g e t e da t P2 3 0 , 0 0 0f o r5 0 , 0 0 0u n i t so f b u d g e t e d A.Gr a p h2 C.Gr a p h4 o u t p u ta n dP2 8 0 , 0 0 0f o r6 0 , 0 0 0u n i t so fb u d g e t e do u t p u t .Be c a u s eo ft h en e e df o ra d d i t i o n a l B.Gr a p h3 D.Gr a p h1 f a c i l i t i e s ,b u d g e t e dfi x e dc o s t sf o r6 0 , 0 0 0u n i t sa r e2 5 % mo r et h a nb u d g e t e dfi x e dc o s t sf o r 5 0 , 0 0 0u n i t s .Ho wmu c hi sL a g u n a ’ st o t a l b u d g e t e dv a r i a b l ec o s t a t 6 0 , 0 0 0u n i t s ? F i x e dCo s t s A.P9 6 , 0 0 0 C.P1 8 0 , 0 0 0 9. Parts Company wishes to determine the fixed portion of its maintenance B.P1 0 0 , 2 0 0 D.P1 0 0 , 0 0 0 expense (a semi-variable expense), as measured against direct labor hours for 1 6 .Mu l v e yCo mp a n yd e r i v e dt h ef o l l o wi n gc o s tr e l a t i o n s h i pf r o m ar e g r e s s i o na n a l y s i so fi t s mo n t h l yma n u f a c t u r i n go v e r h e a dc o s t : C=P8 0 , 0 0 0+P1 2 M Wh e r eC=mo n t h l yma n u f a c t u r i n go v e r h e a dc o s t M=ma c h i n eh o u r s T h es t a n d a r de r r o r o f t h ee s t i ma t eo f t h er e g r e s s i o ni sP6 , 0 0 0 . T h es t a n d a r dt i mer e q u i r e dt oma n u f a c t u r eo n es i x u n i tc a s eo fMu l v e y ' sa n g l ep r o d u c ti s4 ma c h i n eh o u r s . Mu l v e ya p p l i e sma n u f a c t u r i n go v e r h e a dt op r o d u c t i o no nt h eb a s i so f ma c h i n e h o u r sa n di t sn o r ma l a n n u a l p r o d u c t i o ni s5 0 , 0 0 0c a s e s Mu l v e y ' se s t i ma t e dv a r i a b l ema n u f a c t u r i n go v e r h e a dc o s tf o ramo n t hi nwh i c hs c h e d u l e d p r o d u c t i o ni s5 , 0 0 0c a s e swo u l db e A.P8 0 , 0 0 0 C.P2 4 0 , 0 0 0 B.P3 2 0 , 0 0 0 D.P3 6 0 , 0 0 0 1 . Wh i c ho f t h ef o l l o wi n gg r a p h si l l u s t r a t e st h eb e h a v i o ro f at o t a l v a r i a b l ec o s t ?( E) Gr a p h1 Gr a p h2

T o t a l u n i t sp r o d u c e d Ap r i l 1 6 , 2 0 0 5

T o t a l u n i t sp r o d u c e d

the first three months of the year. The inspection costs are fixed; the adjustments necessitated by errors found during inspection account for the variable portion of the maintenance costs. Information for the first quarter is as follows: Di r e c t L a b o rHo u r s Ma i n t e n a n c eCo s t s J a n u a r y 3 4 , 0 0 0 P6 1 , 0 0 0 F e b r u a r y 3 1 , 0 0 0 5 8 , 5 0 0 Ma r c h 3 4 , 0 0 0 6 1 , 0 0 0 Wh a ti st h efi x e dp o r t i o no fPa r t sCo mp a n y ’ sma i n t e n a n c ee x p e n s e ,r o u n d e dt ot h en e a r e s t p e s o s ? A.P2 8 , 3 3 0 C. P3 7 , 2 0 0 B.P3 2 , 7 8 0 D. P4 0 , 8 0 0 5 .L a r g oCo mp a n ywi s h e st od e t e r mi n et h efi x e dp o r t i o no f i t sma i n t e n a n c ee x p e n s e( as e mi v a r i a b l ee x p e n s e ) , a sme a s u r e da g a i n s t d i r e c t l a b o rh o u r sf o r t h efi r s t t h r e emo n t h so f t h e y e a r .I n f o r ma t i o nf o rt h efi r s t q u a r t e ri sa sf o l l o ws : Di r e c t L a b o rHo u r s Ma i n t e n a n c eCo s t s J a n u a r y 2 5 , 0 0 0 P2 1 0 , 0 0 0 F e b r u a r y 3 0 , 0 0 0 2 4 0 , 0 0 0 Ma r c h 2 7 , 0 0 0 2 2 2 , 0 0 0 Wh a t i st h efi x e dp o r t i o no f L a r g oCo mp a n y ’ sma i n t e n a n c ee x p e n s e ? Pa g e3o f 7 0

MANAGEMENTADVI SORYSERVI CES A.P6 0 , 0 0 0 B.P3 0 , 0 0 0

CP ARe v i e wSc h o o l o f t h ePh i l i p p i n e s C.P9 0 , 0 0 0 D.P1 2 0 , 0 0 0

T o t a l Co s t s 1 7 .Mo l d sCo r p o r a t i o nh a sd e v e l o p e dt h ef o l l o wi n gfl e x i b l eb u d g e t f o r mu l af o ra n n u a l i n d i r e c t l a b o r c o s t s : T o t a l Co s t =P3 0 0 , 0 0 0+P5 . 0 0p e r ma c h i n eh o u r Op e r a t i n gb u d g e t sf o rt h ec u r r e n t mo n t ha r eb a s e du p o n1 8 , 0 0 0ma c h i n eh o u r so f p l a n n e d ma c h i n et i me . I n d i r e c t l a b o rc o s t si n c l u d e di nt h i sp l a n n i n gb u d g e t a r e : A.P3 0 0 , 0 0 0 C. P9 0 , 0 0 0 B.P3 9 0 , 0 0 0 D. P1 1 5 , 0 0 0 8 . Ar e n sCo r p o r a t i o nh a sd e v e l o p e dt h ef o l l o wi n gfl e x i b l eb u d g e t f o r mu l af o ra n n u a l i n d i r e c t l a b o r c o s t s : T o t a l Co s t =P4 8 0 , 0 0 0+P5 . 0 0p e r ma c h i n eh o u r Op e r a t i n gb u d g e t sf o rt h ec u r r e n tmo n t ha r eb a s e du p o n2 0 , 0 0 0ma c h i n eh o u r so fp l a n n e d ma c h i n et i me .I n d i r e c t l a b o rc o s t si n c l u d e di nt h i sp l a n n i n gb u d g e t a r e : A.P4 8 , 3 3 3 C. P1 0 0 , 0 0 0 B. P5 8 0 , 0 0 0 D. P1 4 0 , 0 0 0 2 . Bo y&Mi l l i eCo mp a n yu s e sa na n n u a l c o s t f o r mu l af o ro v e r h e a do f P7 2 , 0 0 0+P1 . 6 0f o re a c h d i r e c tl a b o rh o u rwo r k e d .F o rt h eu p c o mi n gmo n t hKa r l ap l a n st oma n u f a c t u r e9 6 , 0 0 0u n i t s . Ea c hu n i t r e q u i r e sfi v emi n u t e so f d i r e c t l a b o r .Bo y&Mi l l i e ’ sb u d g e t e do v e r h e a df o rt h emo n t h i s A.P1 2 , 8 0 0 C. P8 4 , 8 0 0 B.P1 8 , 8 0 0 D. P7 7 4 , 0 0 0 2 . Sa l d u aCo mp a n yu s e samo n t h l yc o s tf o r mu l af o ro v e r h e a do fP5 0 , 0 0 0+P3 0 . 0 0f o re a c h d i r e c tl a b o rh o u rwo r k e d .F o rt h ec o mi n gy e a r ,Sa l d u ap l a n st oma n u f a c t u r e2 0 0 , 0 0 0u n i t s . Ea c hu n i tr e q u i r e sfi v emi n u t e so fd i r e c tl a b o r . Sa l d u a ’ st o t a lb u d g e t e do v e r h e a df o rt h e c o mi n gy e a r i s A.P 5 5 0 , 0 0 0 C.P1 , 2 0 0 , 0 0 0 B.P1 , 1 0 0 , 0 0 0 D.P 6 5 0 , 0 0 0 6 . The following cost functions were developed for manufacturing overhead Ap r i l 1 6 , 2 0 0 5

F i n a l Pr e b o a r dEx a mi n a t i o n

costs: Ma n u f a c t u r i n gOv e r h e a dCo s t s Co s t F u n c t i o n El e c t r i c i t y P1 0 0+P2 0p e rd i r e c t l a b o rh o u r Ma i n t e n a n c e P2 0 0+P3 0p e rd i r e c t l a b o rh o u r Su p e r v i s o r s ’ s a l a r i e s P1 0 , 0 0 0p e r mo n t h I n d i r e c t ma t e r i a l s P1 6p e r d i r e c t l a b o rh o u r I fJ u l yp r o d u c t i o ni se x p e c t e dt ob e1 , 0 0 0u n i t sr e q u i r i n g1 , 5 0 0d i r e c tl a b o rh o u r s ,e s t i ma t e d ma n u f a c t u r i n go v e r h e a dc o s t swo u l db e A.P1 0 9 , 3 0 0 C.P7 6 , 3 0 0 B.P9 9 , 0 0 0 D.P1 0 , 3 6 6 7 . ElNo c h e ,I n c .h a sat o t a l o f2 , 0 0 0r o o msi ni t sn a t i o n wi d ec h a i no fh o t e l s .Ont h ea v e r a g e , 7 0 %o ft h er o o msa r eo c c u p i e de a c hd a y . Th ec o mp a n y ’ so p e r a t i n gc o s t sa r eP2 1p e r o c c u p i e dr o o mp e rd a ya tt h i so c c u p a n c yl e v e l ,a s s u mi n ga3 0 d a ymo n t h .Th i sP2 1fi g u r e c o n t a i n sb o t hv a r i a b l ea n dfi x e dc o s te l e me n t s .Du r i n gOc t o b e r ,t h eo c c u p a n c yd r o p p e dt o o n l y4 5 %.At o t a l o f P7 9 2 , 0 0 0i no p e r a t i n gc o s t wa si n c u r r e dd u r i n gt h emo n t h . Wh a two u l db et h ee x p e c t e do p e r a t i n gc o s t s ,a s s u mi n gt h a tt h eo c c u p a n c yr a t ei n c r e a s e st o 6 0 %d u r i n gNo v e mb e r ? A.P1 , 0 5 6 , 0 0 0 C.P8 4 6 , 0 0 0 B.P7 5 6 , 0 0 0 D.P8 2 9 , 5 0 0 Co s t Vo l ume Pr ofi tRe l a t i o ns h i p Ba s i cCo n c e p t s 2 . Wi t ht h ea i do fc o mp u t e rs o f t wa r e ,ma n a g e r sc a nv a r ya s s u mp t i o n sr e g a r d i n gs e l l i n gp r i c e s , c o s t s ,a n dv o l u mea n dc a ni mme d i a t e l ys e et h ee ff e c t so fe a c hc h a n g eo nt h eb r e a k e v e n p o i n t a n dp r o fi t . Su c ha na n a l y s i si sc a l l e d : ( E) A." Wh a t i f "o r s e n s i t i v i t ya n a l y s i s C.c o mp u t e ra i d e da n a l y s i s B.v a r yt h ed a t aa n a l y s i s D.d a t ag a t h e r i n g Br e a k e v e nAn a l y s i s–Si n g l ePr o d u c t Sa l e sAmo u n t 2 0 .Sc r a mb l e dBr a i nCo mp a n yh a sfi x e dc o s t so fP9 0 , 0 0 0 .Atas a l e sv o l u meo fP3 0 0 , 0 0 0 ,r e t u r n o ns a l e si s1 0 %;a taP5 0 0 , 0 0 0v o l u me ,r e t u r no ns a l e si s2 2 %.Wh a ti st h eb r e a k e v e n v o l u me ? A.P1 2 0 , 0 0 0 C.P2 2 5 , 0 0 0 B.P2 0 0 , 0 0 0 D.P4 5 0 , 0 0 0 Pa g e4o f 7 0

MANAGEMENTADVI SORYSERVI CES

CP ARe v i e wSc h o o l o f t h ePh i l i p p i n e s

Un i t sSo l d 1 8 .Atas a l e sv o l u mel e v e l o f2 , 2 5 0u n i t s ,L u z o nCo mp a n y ’ sc o n t r i b u t i o nma r g i ni so n ea n do n e h a l fo ft h efi x e dc o s t so fP3 6 , 0 0 0 .Co n t r i b u t i o nma r g i ni s3 0 %.Ho wma n yu n i t smu s tb es o l d b yt h ec o mp a n yt ob r e a k e v e n ? A.1 , 2 5 0 C.2 , 5 8 0 B.1 , 5 0 0 D.2 , 5 2 0 8 . At4 0 , 0 0 0u n i t so fs a l e s ,Sn a i l Co mp a n yh a da no p e r a t i n gl o s so fP3 . 0 0p e ru n i t .Wh e ns a...