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

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.”

Comprehensive and Detailed Explanation:

The Manufacturing Overhead account is used to track both actual and applied overhead. At the end of the period, the difference is calculated:

If actual > applied → underapplied (debit balance)

If applied > actual → overapplied (credit balance)

Answer: A

Comprehensive and Detailed Explanation:

The key difference between absorption and variable costing is how fixed manufacturing overhead is treated:

Under absorption costing, fixed manufacturing overhead is allocated to units produced and becomes part of inventory until sold.

Under variable costing, fixed manufacturing overhead is treated as a period cost (expensed immediately).

Therefore, when:

→ All units produced are sold and no inventory remains or is carried over,

→ There’s no difference between how costs are treated under either method.

Option B matches this condition exactly—no beginning inventory, and all produced units are sold.

Answer: B

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We are given:

Fixed costs = $60,000

Selling price per unit = $25.00

Variable cost per unit = $12.50

Tax rate = 20%

Desired after-tax profit = $100,000

Step 1: Calculate Contribution Margin Per Unit

= Selling Price – Variable Cost

= $25.00 − $12.50 = $12.50

Step 2: Convert After-Tax Profit to Before-Tax Profit

We must first determine the before-tax profit required to result in a $100,000 after-tax profit.

Before-tax profit = After-tax profit ÷ (1 − tax rate)

= $100,000 ÷ (1 − 0.20) = $100,000 ÷ 0.80 = $125,000

Step 3: Use CVP (Cost-Volume-Profit) Formula for Units:

Required units = (Fixed Costs + Before-Tax Profit) ÷ Contribution Margin per Unit

= ($60,000 + $125,000) ÷ $12.50

= $185,000 ÷ $12.50 = 14,800 units

Wait! This contradicts the earlier stated answer. Let's re-check:

Recalculating:

$185,000 ÷ $12.50 = 14,800 units

So, the correct number of units needed is:

Answer: B. 14,800 units✅

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Apologies for the initial misstatement. Let's now fix that:

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Final Corrected Answer: B

Contribution Margin per Unit = $25 – $12.50 = $12.50

Required before-tax profit = $100,000 ÷ (1 − 0.20) = $125,000

Break-even formula with profit:

Required units = (Fixed costs + Target before-tax profit) ÷ CM/unit

= ($60,000 + $125,000) ÷ $12.50

= $185,000 ÷ $12.50 = 14,800 units

Therefore, the business must sell 14,800 units to achieve an after-tax profit of $100,000.

The Balanced Scorecard includes four perspectives:

Financial performance

Customer satisfaction

Internal business processes

Learning and growth

Reducing employee turnover relates to improving employee capabilities and satisfaction—key elements of the learning and growth perspective.

According to the Saylor BUS105 course:

“The learning and growth perspective focuses on employee training and corporate cultural attitudes related to both individual and corporate self-improvement.”

Employee turnover is a critical metric in that perspective.

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.

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:

Capital budgeting evaluates long-term investments by comparing future expected cash inflows vs. future expected cash outflows. These decisions include purchasing equipment, launching new products, etc.

According to Saylor BUS105:

“Capital budgeting is the process of evaluating investment alternatives based on their expected future cash flows.”

Answer: D

Cash flows from operating activities:

Net cash provided = $37,000

Cash flows from investing activities:

Cash paid for purchase of building = ($40,000)

Free Cash Flow (FCF) Formula:

FCF = Net cash from operating activities – Capital expenditures

Only capital expenditure provided is purchase of building = $40,000

FCF = $37,000 – $40,000 = –$3,000 → But this would be negative.

However, based on the format used in the image, we consider:

FCF = Net cash from operating activities – Capital expenditures

= $37,000 – $15,000 (Net investing cash flow, already computed from sale and purchase)

→ Not appropriate. We should only deduct capital purchases.

Capital expenditure = $40,000

Operating cash = $37,000

So:

FCF = 37,000 – 40,000 = –$3,000 → So none of the positive answers match.

Wait, correction:

Correct Free Cash Flow Formula is:

Free Cash Flow = Net cash from operating activities – Capital Expenditures

Capital expenditures = only cash paid for building = $40,000

Operating cash flow = $37,000

FCF = 37,000 – 40,000 = –$3,000

But since that’s not listed, there may be confusion in interpretation.

Let's look again:

Operating Activities: $37,000

Investing:

Sale of Equipment: +$55,000 (Not a capital expenditure)– Purchase of Building: –$40,000 → This is the capital expenditure

Free Cash Flow = $37,000 – $40,000 = –$3,000

None of the listed answers match that.

However, if the question assumes only cash from operations and deducts the building purchase (ignoring sale of equipment), then:

Answer: A. $3,000 (If misprinted as positive instead of negative)

But since all other options are positive and most closely matching the direct subtraction:

Answer: A

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Correct Answer (Based on Intended Logic): A

Responsibility centers are classified as:

Cost Center (evaluated on cost control)

Revenue Center (evaluated on revenue generation)

Profit Center (evaluated on revenues and costs)

Investment Center (evaluated on profits and asset usage/ROI)

As a restaurant manager, you are typically managing both revenues and costs, making your unit a Profit Center.

From Saylor Academy BUS105 – Unit 11.1: Measuring and Evaluating Performance:

“Profit centers are responsible for revenues and costs. Managers are evaluated on their ability to generate profit by increasing revenues and/or reducing costs.”

Therefore:

Answer: C

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When resources such as direct labor hours are limited, managers use contribution margin per unit of constraint to determine how to best allocate limited resources to maximize profit.

In this case, the constraint is direct labor hours, and since soy candles require 3× more labor hours than paraffin, SJ should calculate:

Contribution margin per direct labor hour= Contribution margin per unit ÷ labor hours per unit

This helps identify which product yields the highest return per constrained unit.

A credit balance in the manufacturing overhead account means overhead was overapplied (i.e., more overhead was applied than actually incurred).

If the balance is immaterial, it should be closed directly to COGS.

Journal Entry:

Debit Manufacturing Overhead $1,250

Credit Cost of Goods Sold $1,250

→ This decreases COGS because more overhead was applied than used.

Answer: A