2019 AICPA BEC Questions – Question

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  • May 20, 2019 at 8:40 pm #2415627
    nat
    Participant

    can anyone help me get to these answers?

    A company purchased $10,000 of merchandise inventory on May 1. The terms of the purchase were
    2/10, net 30. The company would pay what amount on May 9?
    A.$7,000
    B.$9,800
    C.$9,980
    D.$10,000

    answer B

    A company has a static budget at 10,000 units of production, which shows direct material cost of $80,000,
    direct labor cost of $60,000, and factory overhead costs of $37,000. Factory overhead costs are 40%
    fixed. At 6,000 units of production, a flexible budget would include which of the following amounts as total
    production costs?
    A.$106,200
    B.$112,120
    C.$115,080
    D.$121,000

    answer B

    Nat
Viewing 4 replies - 1 through 4 (of 4 total)
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  • May 21, 2019 at 2:51 am #2416035
    Fk
    Participant

    @ Nat MCQ 1 – 2/10 net 30 means the company will get 2% discount, if they pay within 10 days or pay full amount if they pay in 30 days . Since the company is paying within 10 days , they get a 2 % discount , that is 10,000 * 2 % = 200 , hence they will pay , 10,000-200 = 9,800

    MCQ 2 – You have to segregate variable and fixed cost

    10,000 units

    Material Cost 80,000

    Direct Labour 60,000

    Factory overhead Var (60% of 37,000) 22,200
    Total Variable Cost (80,000+60000+22200) 162,200 Therefore Variable cost per unit 162,200/10,000 = 16.22

    Factory Overhead fixed (40% of 37,000) 14,800

    Total Cost = Fixed Cost + VC per unit (x)
    14,800 + 16.22 ( 6,000)
    14,800 + 97,320 = 112,120

    Fk
    May 21, 2019 at 11:36 am #2416617
    nat
    Participant

    Wow! thank you so much @Fk – if anyone can help solve the below 3 i would greatly appreciate it!

    Milo Corp. sells washers for $350 per unit and incurs product costs of $300. Prime costs for the washers are $150 and the fixed portion of the overhead is $90. Milo receives a special order for 2,000 washers from Adobe. Additional variable manufacturing costs to meet Adobe specifications are $40 per unit. Milo has sufficient excess capacity and has determined that this sale will not interfere with regular business. What price must Milo charge Adobe to obtain a 20% markup on variable manufacturing costs?

    A.$300 B.$252 C.$250 D.$210

    answer A

    The following information was taken from Culver Co.'s financial statements for the current year ending December 31:

    Current assets $11,000,000

    Noncurrent assets 14,000,000

    Total stockholders' equity 10,000,000

    Total operating expenses 20,000,000

    What was Culver's debt ratio as of December 31?

    A.40% B.50% C.60% D.250%

    Answer c

    As part of the annual budgeting process, Fair Theatre Company compiled the following information for its next play production:

    Fixed expenses $48,000

    Variable expenses $10 per ticket

    Ticket price $16

    How many tickets would Fair need to sell for the play's run to obtain a $24,000 profit?

    A.4,500 B.7,200 C.8,000 D.12,000

    answer d

    Nat
    May 21, 2019 at 12:30 pm #2416707
    Fk
    Participant

    @ Nat – In decision Making process, variable cost and Market price plays the key role. the following point should be kept in mind while solving decision making question – if the Company has a excess capacity, which means that the Company has enough capacity to accommodate more orders. Minimum Price they can Charge is Variable cost and the Maximum Price they can charge is Market Price. if the Company is operating at full capacity – then the Minimum and Maximum price they will charge is the Market Price. Coming to the question , here the Company is operating at excess capacity, therefore we cannot charge Market Price. Break down of Variable cost is as follows,

    Product cost is $ 300 of this $ 90 is Fixed Manufacturing cost, therefore, Variable Manufacturing cost is $ 210. If the company take additional orders they will incur a Variable cost of $ 40 Per unit . Total Manufacturing Variable Cost $ 250 ( $ 210 + $ 40 ). The Company charges 20% Markup on Total Manufacturing Cost

    250 + ( 250*20%) = 250 + 50 = 300

    Mcq 2
    Debt Ratio = Total Debt / Total Asset

    Current Asset + Noncurrent Asset = Liabilities + Stockholder Equity
    11,000,000 + 14,000,000 = x + 10,000,000
    X = 15,000,000

    Debt Ratio = Total Debt / Total Asset = 15,000,000/25,000,000 = 60 %

    MCQ 3

    BEP = Fixed Cost + Profit Margin/ Sales – Variable Cost

    48,000+24,000/ 16-10
    72,000/6 = 12,000

    Fk
    May 21, 2019 at 12:57 pm #2416770
    nat
    Participant

    thank you so much @Fk

    Nat
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