BUS105 Exam Dumps - Managerial Accounting (SAYA-0009) Exam

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.

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The Inventory Turnover Ratio measures how many times a company's inventory is sold and replaced over a period, and it is calculated using the following formula:

Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory

Step 1: Identify the values:

Cost of Goods Sold (COGS) = $1,525,000

Beginning Inventory (Year 1 ending) = $300,000

Ending Inventory (Year 2) = $350,000

Step 2: Compute Average Inventory:

Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2

= ($300,000 + $350,000) ÷ 2 = $650,000 ÷ 2 = $325,000

Step 3: Compute Inventory Turnover Ratio:

Inventory Turnover = COGS ÷ Average Inventory

= $1,525,000 ÷ $325,000 ≈ 4.692 → Rounded to one decimal = 4.7

Therefore:

Answer: C

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This is an ethical dilemma. The correct course of action is to refer to the company’s ethical policy or code of conduct for handling such situations. According to the IMA (Institute of Management Accountants) Statement of Ethical Professional Practice, the first step when facing an ethical conflict is:

“Follow the organization’s established policies on the resolution of such conflict. If these policies do not resolve the ethical conflict, consider discussing the issue with an immediate supervisor.”

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Step 2: Calculate Differential Profit

However, notice that the result is negative $550, which matches answer A, not B. Let's verify the available choices:

A. A differential profit of ($550) — This means a loss of $550, which matches our calculation.

B. A differential profit of ($700) — This would mean a loss of $700.

C & D refer to differential contribution margin (which excludes fixed costs).

Since the differential profit is negative $550,the correct answer is A.

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