2019 Cpa Bec Answers

2019 CPA BEC – Answers
For questions visit : http://cpa.suryapadhi.com
2019 - CPA - BEC - Question 1

Explanation
Equivalent Units Units % to Completed Units

complete
Unit completed 92000 100% 92000
Less - Beginning WIP ( 20%) -16000 20% -3200
End WIP 24000 40% 9600
Equivalent completed units 98400
during May
Beginning WIP $ 35,560.00

Direct labor $ 20,320.00
Factory overhead $ 15,240.00
Add - incurred during the year $ 574,040.00
Direct labor $ 182,880.00
Factory overhead $ 391,160.00
Total Conversion Cost (A) A $ 609,600.00
Completed units 98400
Beginning WIP (16000 X.20%) 3200
Total Unit ( B) $ 101,600.00
Unit conversion cost A/B 6
Answer is A
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Page 1 of 14
Explanation
The marginal propensity to consume is calculated by dividing the change in consumption by
the change in disposable income.
Change in spending
Marginal Propensity to Consume
Change in income
Therefore, the marginal propensity to consume would be 0.75 [($44,000 − $38,000) /
($48,000 − $40,000)].
Answer is D

Page 2 of 14

Explanation
Assets = Debt + Equity, whereas assets is 275 mill and debt to equity is 1.75
275 = 1.75 Equity + Equity
275 = 2.75 Equity, Equity = 100 mill and Debt 175 mill.
Type of Capital Before Change After change

change
Debt (A) $175,000,000 $20,000,000 $195,000,000
Equity (B) $100,000,000 $20,000,000 $120,000,000
Debt to Equity 1.75 1.625
Answer is B

Page 3 of 14
Explanation
Step 1: Calculate last year's contribution margin per unit (CM/unit)

CM/unit = Sales price per unit - Variable cost per unit = $7.50 - $2.25 = $5.25
Step 2: Determine last year's fixed costs using the breakeven formula
Breakeven units = Fixed costs / Contribution margin per unit
20,000 = Fixed costs / $5.25
Fixed costs = 20,000 x $5.25 = $105,000
Step 3: Calculate last year's before-tax profit
Before-tax profit = After-tax profit / (1 - tax rate)
Before-tax profit = $5,040 / 60% = $8,400
Step 4: Calculate units sold last year
Units sold to achieve profit = (Fixed costs + Profit) / Contribution margin per unit
Units sold last year = ($105,000 + $8,400) / $5.25 = 21,600
Answer is A

Page 4 of 14
Explanation
1 2 3 4
SR X SH SR X AH AR X SH AR X AH
Direct Overhead efficiency variance = 1 - 2

Direct Labor Price Variance = 2 – 4
1 2 3 4
SR X SH SR X AH AR X SH AR X AH
Given 9 X 88,000 9 X 94,000 940,000
792,000 846,000 940,000
Direct Overhead efficiency variance = 1 – 2 = 792,000 – 846,000 = 54,000 Un-favorable

Direct Labor Price Variance = 2 – 4 = 846,000 – 940,000 = 94,000 Un-favorable
Answer is C

Page 5 of 14
Explanation
Cash collections for the second quarter are comprised of second quarter cash sales and
collections of first quarter credit sales.
Second quarter cash sales (15,000 units x $2.00 x 60%) $ 18,000
Collections of first quarter credit sales (10,000 units x $2.00 x 40%)8,000
Second quarter cash collections $ 26,000
Answer is D

Page 6 of 14
Choice "a" is correct. $5,000 favorable.

 The fixed overhead rate is $5 per machine hour [$1,200,000 / 240,000 = $5].
 The amount of FIXED manufacturing overhead planned for November is $100,000.
 Therefore, the standard production for FIXED overhead is 20,000 machine hours
[$100,000/$5 = 20,000.]
The fixed overhead volume variance SR (SHrs AHrs)

=5(22,000 -21,000)
=5,000 Fav.
Add The fixed overhead budget (spending) variance AHrs ( SR-AR)
= Total Fixed Overhead Variance
Choices "c", "d", and "b" are incorrect, based on the above explanation.
Answer is A

Page 7 of 14
April cash receipts is computed as follows
April cash sales $625,000 x 20% = $ 125,000
Credit sales collected - April - $625,000 x 80% x 30% = 150,000
March - $700,000 x 80% x 40% = 224,000
February - $650,000 x 25% = 130,000
Total $ 629,000
Answer is C

Page 8 of 14
Explanation
Cash collection for December Year 1 = $462,000 calculated as below

December sales $520,000 x 60% = $ 312,000
November sales (Nov Account receivable) 150,000
Cash collections for December $ 462,000
Note: The November sales were 60% collected in November. The remaining 40% ($150,000 net)
will be collected in December.
Answer is A

Page 9 of 14
Explanation
1= SRSV, 2= SRAV, 3= ARSV SR = 300,000 / 6,000 = 50
4= ARAV AR = 235,000 / 5,000 = 47
Sales Volume Variance ( 1 - SRAV -ARAV
2]
Add Sales Price Variance [ 2- 4] SRAV – ARAV
50 X 5,000 – 47 X 5,000
250,000 - 235,000
=15,000 Unfav.
= Total Sales Variance Price variance + Usage variance.
The answer is B. The sales price variance is $15,000 unfavorable.

Page 10 of 14
Explanation
Variable overhead efficiency variance is
Standard Costing Formulas

1= SRSH, 2= SRAH, 3= ARSH, 4= ARAH
The Variable overhead efficiency variance SRSH - SRAH
= 1 -2 =8 *22,000 * 4 - 94,000
=8 *88,000 – 8*94,000
=704,000 – 752,000
=48,000 Unfav.
Add The variable overhead (OH) spending variance AHrs ( SR-AR)
= Total Overhead Variance Efficiency + Spending Variance
Answer is A. Variable overhead efficiency variance is $48,000 unfavorable

Page 11 of 14
Explanation
1= SRSQ, 2= SRAQ, 3= ARSQ, 4= ARAQ
Material Usage Variance ( 1 - 2 ] SR*SQ – SR*AQ

=1.50*1,650 * 60 -1.50*1,650*58
=148500 – 143,550
=4,950 Favorable
Add Material Price Variance [ 2- 4] A.Qty ( S. Rate - A. Rate)
= Total material variance [ 1- 4] Price variance + Usage variance.
Answer is A. Quantity variance is the difference between the amount of direct materials that
should have been used and the amount of materials actually used times the standard price per
unit.

Page 12 of 14
Explanation
Cost of zipper + opportunity cost of additional investment

1. Cost to purchase 60,000 zippers: 60,000 x .60 = $36, 000
2. Opportunity cost of additional investment on inventory
Principal Ratee Time Interest
33,000 x .08 x 1/2 = $1,320
Answer is C

Page 13 of 14
Explanation
Answer is D.

Page 14 of 14

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2019 CPA BEC – Answers

For questions visit : http://cpa.suryapadhi.com

2019 - CPA - BEC - Question 1

Equivalent Units Units % to Completed Units

Beginning WIP $ 35,560.00

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2019 - CPA - BEC - Question 2

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2019 - CPA - BEC - Question 3

Type of Capital Before Change After change

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2019 - CPA - BEC - Question 4

Step 1: Calculate last year's contribution margin per unit (CM/unit)

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2019 - CPA - BEC - Question 5

Direct Overhead efficiency variance = 1 - 2

Direct Overhead efficiency variance = 1 – 2 = 792,000 – 846,000 = 54,000 Un-favorable

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2019 - CPA - BEC - Question 6

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2019 - CPA - BEC - Question 7

Choice "a" is correct. $5,000 favorable.

The fixed overhead volume variance SR (SHrs AHrs)

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2019 - CPA - BEC - Question 8

April cash receipts is computed as follows

April cash sales $625,000 x 20% = $ 125,000

Credit sales collected - April - $625,000 x 80% x 30% = 150,000

March - $700,000 x 80% x 40% = 224,000

February - $650,000 x 25% = 130,000

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2019 - CPA - BEC - Question 9

Cash collection for December Year 1 = $462,000 calculated as below

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2019 - CPA - BEC - Question 10

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2019 - CPA - BEC - Question 11

Standard Costing Formulas

Answer is A. Variable overhead efficiency variance is $48,000 unfavorable

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2019 - CPA - BEC - Question 12

1= SRSQ, 2= SRAQ, 3= ARSQ, 4= ARAQ

Material Usage Variance ( 1 - 2 ] SR*SQ – SR*AQ

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2019 - CPA - BEC - Question 13

Cost of zipper + opportunity cost of additional investment

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2019 - CPA - BEC - Question 14

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Material Usage Variance ( 1 - 2 ] SRSQ – SRAQ