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MS 34MCQ1-17

This document contains information about management advisory services (MAS) modules covering topics like cost-volume-profit (CVP) analysis, variance analysis, and inventory valuation. Key relationships in CVP are outlined, including how contribution margin ratio, break-even point, and profit are related. Formulas for calculating volume and capacity variances based on actual vs. normal or budgeted production are also provided. Important notes indicate that volume variance is treated as a period cost under variable costing and variances are typically closed to cost of goods sold at the end of the period.

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Jane Michelle Eman
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72 views1 page

MS 34MCQ1-17

This document contains information about management advisory services (MAS) modules covering topics like cost-volume-profit (CVP) analysis, variance analysis, and inventory valuation. Key relationships in CVP are outlined, including how contribution margin ratio, break-even point, and profit are related. Formulas for calculating volume and capacity variances based on actual vs. normal or budgeted production are also provided. Important notes indicate that volume variance is treated as a period cost under variable costing and variances are typically closed to cost of goods sold at the end of the period.

Uploaded by

Jane Michelle Eman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MANAGEM ENT ADVISORY SERVICES

MAS Module 1: MAS - 01, 02 & 03


MAs-O1
23.Equation1:4,350=4a+180bEquation2:202'500=180a+8'600b
24.Equation1:1,0O0=10?+15?bEquation2 39'2OO=350a+14'250b
in the computation or the costs; instead'
" Ifrllt'i-1'r;r11911i'3J$0"0o)"ro error" are notbasedconsidered
on the relationshlp of costs'with the cost dt'iver'
they are consiaeieo in the interpretatiin of costs,

MAS-O2
18. Income = 110,000 (11'50 - 9)....(300,000
+ 100'000)
cost: -Profit
rrir before io,oo + (1 - 0'4) = p 59 ,000x
rax: 30'000
rrorarp tax:
22. Asindicated: consider only additionat-iixeo
(120,000+50'000*)+(14-?'35--;'-0''5)=28'333Jis':oo(roundedtothenearesthundred)
p selling, general and administrative expenses of P
1'5 M
23. Both fixed factory overhead of 2 M and fixedfixed cosls to consider must be: P 3'5 M x 12 months
are based on monthlyfixed costs. Hence, the
26. Unitseilingprice= unitcost+unitprofii unitprofitl tiS,OOO+(1'0o/o -4Oo/o)) +25'000u = P5
Unit cost I (+so,ooo + 25,000 u) + 16 = P 34
Break-even sales: 50,000 * 6oo/a = P 83,333
37. CMR: (10,000 + 50,000) + .100,000 =-60ozo
42.@P300,000sales:CMR=30o/o;profit:90,000=10=s,o0o;fixedcosts:90,000_9,000=81,000
6p360,00Orrf"i,CM=360,000x'iOo7o;bfOA,OOS;profit=108,000-81'000=P27'AOO
USEFUL CVP RELATIONSHIPS
(EmPhasis on the use of 'CM')

o CM Ratio = CM + Sales = ACM + ASales (Consider:


ASxCMR=
CM Ratio' then ^CM)
. Since Break-Even Sales = Fixed Cost =
CM Ratio = Fixed Cost + Break-Even Sales
CM Ratio.=-6-Fl1ed C-ost + A BreaklEven Sales
(See related item: MSQ - 02, no' 13)
o Given that Fixed Cost is constant"
/ AUnitSalesxunitcM = A Profit ) unitcM = AProfit+ aUnitSales
,/APesoSalesxCMR=AProfit)CMR=AProfit+APesoSales 5):
. Based on MAS - 02, item no. z lp.oring) and problem no.3 (requirement
,/ Margin of Safety x CM Ratio = Profit
./ Margin of Safety Ratio x CM Ratio = Profit Ratio
MAS-O3
ending inventory is expected to increase'
If a company produces more goods than what it sells, then Income under AC > Income under VC
Ending Inventory > Beginning tnrenioiy ) Production->
Sales
'
31. Ending inventory: 500irnits izo +{rso,o00-+-10'09?l^
(zo,ooo +. 10,000)
r^ ^n^\ =
- PD1^.
20,000 favorabld
32. Capacity or roir*u riri"n.", (11,00; - ro,ooo)
VOLUME VARIANCE

(AP - NP) x unit FFOH


.-.-.(ActualProduction-BudgetedProduction)xunitFFoH
Alternative formulas:
. ' APPlied FFOH - Budgeted FFOH
Where: > NP: Favorable (Over-aPPlied)
AP
NF - Normal Production AP < NP: Unfavorable (Under-applied)
AP - Actual Production
FFOH - Fixed FactorY Overhead
Unit FFOH = Total FFOH + Normal Producrion

Important notes:

as a periad cost under variable costing'


1) Volume r..i"n.u ii uased on rron, wtri.n-i. tri"tud product cost and therefore shall not be
ilOf treated as
2) FFOH under variable costing lsproduction' a
associated with actual or normal the period'
3) Variances are typically cl9s9! to tfrei.oit of goods sold" (CGS) account at the end of products
reflect pertaining to units or
cGS is an account used in rinanciii reportingito "*p"ni",
sold in the current Period'
"GAPACITY" varianCe.
> In cost accounting, ;orrn]e variance is also known as

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