Miss Jana Lim, a graduate of Cebu University, is going to Manila to review for the CPA Board Examination. She is considering to stay in a dormitory that is just a stone’s throw away from the review school during her 5-month stay in Manila. Her aunt, however, is offering her a room in her house which is about three (3) kilometers away from the school. She told her aunt that she would first conduct differential analysis before making her decision on where to stay. She listed the following costs and cost estimates: If she will stay in Her Aunt’s House A Dormitory Plane ticket: Cebu-Manila-Cebu ₱8,000 ₱8,000 Tuition Fee (1) 1,000 1,000 Boarding and lodging fee - 25,000 Share in food and household expenses 10,000 - Transportation (Aunt’s house-school-Aunt’s house) 1,700 - Snacks, etc., while in school 4,000 4,000 Books used in college to be used during the review 10,000 10,000 New review books to be purchased 2,000 2,000 Clothes to be brought to Manila 6,000 6,000 Personal supplies while in Manila (2) 400 2,000 Other expenses (for contingencies, gimmicks, etc.) 3,000 5,000 (1) Being an honor graduate, Jana has to pay the miscellaneous fee of only ₱1,000 for the whole review term. (2) Her Aunt will shoulder some of her personal supplies if she will stay in her (Aunt’s) house. Jana is currently working as an accounting clerk in a Cebu-based firm earning ₱8,000 per month. She could have stayed in Cebu and continue working, but she wants to review in Manila and fulfil her dream of becoming a CPA. She informed her boss of her decision to review in Manila. She filed a five-month study leave (without pay) which her boss approved. If the alternatives are whether to stay in her Aunt’s house or in a dormitory, the relevant costs if she will stay in her aunt's house amount to

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Miss Jana Lim, a graduate of Cebu University, is going to Manila to review for the CPA Board Examination. She is considering to stay in a dormitory that is just a stone’s throw away from the review school during her 5-month stay in Manila. Her aunt, however, is offering her a room in her house which is about three (3) kilometers away from the school. She told her aunt that she would first conduct differential analysis before making her decision on where to stay. She listed the following costs and cost estimates: If she will stay in Her Aunt’s House A Dormitory Plane ticket: Cebu-Manila-Cebu ₱8,000 ₱8,000 Tuition Fee (1) 1,000 1,000 Boarding and lodging fee - 25,000 Share in food and household expenses 10,000 - Transportation (Aunt’s house-school-Aunt’s house) 1,700 - Snacks, etc., while in school 4,000 4,000 Books used in college to be used during the review 10,000 10,000 New review books to be purchased 2,000 2,000 Clothes to be brought to Manila 6,000 6,000 Personal supplies while in Manila (2) 400 2,000 Other expenses (for contingencies, gimmicks, etc.) 3,000 5,000 (1) Being an honor graduate, Jana has to pay the miscellaneous fee of only ₱1,000 for the whole review term. (2) Her Aunt will shoulder some of her personal supplies if she will stay in her (Aunt’s) house. Jana is currently working as an accounting clerk in a Cebu-based firm earning ₱8,000 per month. She could have stayed in Cebu and continue working, but she wants to review in Manila and fulfil her dream of becoming a CPA. She informed her boss of her decision to review in Manila. She filed a five-month study leave (without pay) which her boss approved. If the alternatives are whether to stay in her Aunt’s house or in a dormitory, the relevant costs if she will stay in her aunt's house amount to: Answer: Question 2 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text If the alternatives are whether to stay in her Aunt’s house or in a dormitory, the relevant costs if she will stay in dormitory amount to: Answer: Question 3 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text What is the opportunity cost of reviewing in Manila? Answer: Question 4 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text Jana will incur some future costs during her stay in Manila. Such items, although future costs, are considered irrelevant because they do not differ under the alternatives. The total amount of such irrelevant future costs is Answer: Question 5 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text Included in Jana’s list are some costs which are considered irrelevant because they have already been incurred in the past. These costs are called past costs, sunk costs, or historical costs, and amount to Answer:

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