BUS105 Managerial Accounting (SAYA-0009) Exam Questions and Answers

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.”

The indirect method starts with net income and adjusts for noncash items and changes in working capital.

As per Saylor Academy BUS105 – Unit 12.2: The Statement of Cash Flows:

“Depreciation and amortization are added back to net income under the indirect method. Increases in current assets (like accounts receivable) are subtracted from net income.”

Thus, applying these rules:

463,000 + 38,500 + 17,950 + 4,000 − 29,900 = 493,550

Answer: B

Comprehensive and Detailed Explanation:

Contribution Margin = Sales − Variable Costs

Variable Costs = Variable COGS + Variable S&A

= $340,000 + $164,000 = $504,000

Contribution Margin = $830,000 − $504,000 = $326,000

Answer: B

—

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

—

The Payback Period method calculates how long it will take to recover the original investment but does not consider the time value of money (i.e., it treats all cash inflows as equally valuable regardless of when they are received).

According to Saylor Academy BUS105:

“The payback method ignores the time value of money and therefore is not as reliable as methods such as NPV or IRR.”

Internal audit reports related to internal controls are typically reviewed by senior management because they involve organization-wide compliance, governance, and financial integrity.

As per Saylor Academy BUS105 – Unit 13: Ethics and Corporate Governance:

“The chief financial officer (CFO) is responsible for financial planning, risk management, and ensuring proper internal controls. The CFO often reviews internal audit reports and communicates results to the board.”

A payroll clerk (A) and plant manager (B) would be responsible for their functional areas but would not be the main recipient of an internal audit committee report.

A managerial accountant (D) may be involved in preparing internal data but does not typically oversee internal control reporting.

Therefore:

Answer: C

—

Comprehensive and Detailed Explanation:

Flexible budgets adjust budgeted revenues and expenses based on actual activity levels. These budgets include all relevant costs, including variable and fixed S&A expenses.

According to Saylor BUS105:

“Flexible budgets are used after the period ends to evaluate performance by comparing actual results to a budget based on actual activity. They include selling and administrative expenses.”

Answer: C

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.

The Statement of Cash Flows shows how cash is generated and used by a business over a period of time. It breaks down cash flows into:

Operating activities

Investing activities

Financing activities

This financial statement explains the change in cash and cash equivalents from the beginning to the end of the period.

As per Saylor Academy BUS105:

“The statement of cash flows helps users understand how a company’s cash position changed during a specific time period. It ties together the beginning and ending cash balances.”

Let’s assess the options:

A. This describes a balance sheet.

B. This describes the income statement.

C. This describes the statement of retained earnings or statement of changes in equity.

D. Correct — this describes the purpose of the statement of cash flows.

Answer: D

Formula for Materials Quantity Variance (MQV):

MQV = (Actual Quantity Used – Standard Quantity Allowed) × Standard Price

Given:

Actual quantity used = 1,580,000 lbs

Actual output = 800,000 boxes

Standard quantity per unit = 2 lbs/box→ Standard quantity allowed = 800,000 × 2 = 1,600,000 lbs

Standard price = $3.00/lb

MQV = (1,580,000 – 1,600,000) × $3.00

= (–20,000) × $3.00 = –$60,000 → Favorable

Favorable because actual usage was less than expected.

Answer: A

—

In a process costing system, when overhead is applied to production (in this case to the Assembly Department), the journal entry is:

Dr. Work in Process (for the specific department)

Cr. Manufacturing Overhead (applied)

This entry reflects the fact that the company is allocating (applying) manufacturing overhead costs from the overhead pool into the Work in Process account for that department.

Let’s evaluate each choice:

A.

Dr. Manufacturing Overhead

Cr. Work in Process – Assembly

⟶Incorrect: This reverses the correct direction of cost flow. Manufacturing overhead is being incorrectly debited rather than credited.

B.

Dr. Work in Process – Assembly

Cr. Manufacturing Overhead

⟶Correct: This entry correctly applies overhead to WIP for the Assembly department.

C.

Dr. Work in Process – Assembly

Cr. Wages Payable

⟶Incorrect: This would be the correct entry for applying direct labor, not overhead.

D.

Dr. Work in Process – Wages Payable

Cr. Work in Process – Assembly

⟶Incorrect: This is not a standard entry and incorrectly references "Work in Process – Wages Payable."

Therefore, the only correct entry for applying $3,180 of manufacturing overhead to the assembly department is:

Answer: B

—

The decision about upgrading an ERP system must be based on operational needs, such as system capabilities, compatibility, and business requirements.

Out of the options, only C is directly related to system functionality and infrastructure—cloud-based storage may be essential in a modern ERP solution.

Other options relate to external events or general trends not directly relevant to an internal ERP evaluation.