ReSA -7k Rea*n'Sclod

PracticeSet{F}
VARIOUS
TOPICS
rnillAt{AGEtffENT
SERVICES
Souqes:CMA/ClA/RPCPA/AlCPAruarious
TextsandTestBanksrumlee

l. Produqtlift cycle costingdeterminesthe total cost of a productover its life cycle by dividing costsinto
four (4) groups:

A company'sproducthasan exp,ected 4'yet life cycle from research,development,anddesignthroughits

;withdrawalftom the market. Budgetedcostsar:
Upstreamcosts(R & D, design) P 2,000,b00
Manufacturingcosts 3,(X)0,000
Downstrearncosts(marketingdistribution,customerservice) 1,200,000
After-purchasecosts 1,000,000
T'hecompanyplans to produce200,000units and price the productat l25o/oof the whole-life unit cost.
Thus,what is the budgetedunit sellingprice?
a . P 15 c. P 3 6
b. P3 r d. P 45

2. The following year-end,data pertainto AnthonyCorporation:

' Book Yalue Fair Value
'Currentassets P 8OO,OOO
Non-cufrentassets 3,200,000
Currentliabilities 400,000
Non-currcntliabilities.(87ointerestrate) 1,000,000 p 1,000,000
. Stekholders'equity 2,600,(XlO 3,000,000
During the year,thc companyeamedinconp bcforc i*clcsts andtaxesof P 800,0@. lt paysilrcoru ta 11
the rateof 25Yo.lts costof oquitycsp*sl is l2Yn. What is the company'seconomicvalueaddod(SVA}?
a. P 422,M0 c. P 222,000
b. P 240,000 d. P 180,000

3. Giventhe following informationon the Mark Corp. includingcertainforecastedbalancesheetaccounts:

This year'ssale P 15;000,000
Nextyear's sale P 20,000,000
After tax profits 4 percentof sales
Dvidendpay-out 4V/o
This yef,r'sretainedearnings P 4,200,000
Cashes porcentof sales 12%
Receivables as percentof sales t8%
Inventory as prcentof sales 30o/o
Net fixed assetsas percentof sales 40%
Accountspayableasperccrf of saks . 2A% ./
Aecrualsas perqentof sales 5o/o
Next year'scommonstcick P 5,000,000
What is the forecastedamountof retainedearningsnext year?
a. P 4,680,000 c. P 4,860.000
b. P 4,800,000 d. P 4,200,000

4. The averagestockholdorsequity for Yan Cornpanyfor 2013 was P 2,000,000.Includedin this figure is
P200,000par value of YYoprefened stock, which remainedunchangedduring tlie yeaE.The return on
commonshareholders' equitywas 12.5o/oduringthe 20t3. How muchwasthe net incomeof the company
in2013?
a. P 250,000 c. P 225,A0O
b. P 241,000 d. P 266,000

Page1 of2 pages

ReSA 74eRarrzt sclad o{&anataac4 Set F
MS PRACTICE
SET - Batch 26 (page No.Z)

5' The inpomestatementdf UPD company showstotal interestexpfiseof p 245,600.No new bonds
issued
duringtheyearandnonewereretired.Therfollowinginfrrmationis alsoavailable.
Interestpayable,l/l P 9"900
Interestpayxble, l2/3 | 8,200
Unamortizeddiscounton bondspayable,l/l g0,500
_ Unamortized discounton bondspyable,12/31 74,700
How muchwasthe cashpaidfor interest?
a. P23 8 ,100 c. P 249,700
b. P24t.s0a d . P2 5 3 , t 0 0

,6' UD[,S Corporation'sbudgetedsalesand grossprofit rate for the coming month ale p 2EE,000,000
and
37.5Vo,respectively,.Sftort-termintelest rates are expectedto average"6yo.lf
UDLS
inventoryturnoverfrom its current8"0times pr yearto | 0.00times pei year,what "oufa'i**"*
woutd be its expected
costsavingsin the culrentyear?
a. P 1,080,000 c. P 270,000
b. P 8t0;000 d. P 162.000
7' UEE company has a debt ratio of 0.500a total arsetsturnoverof 0.25,and profit
a marginof | 0Zo. The
presidentis unlrappywith the currenl returnon equi$, and he thinks ii
could L ooubled. This could be
accomplished ( t ) b.yincreasingthe pro{it marginto tio/oand (2) by irrcrcasingdebt
utilization. Total assets
turnoverwill not change' Whatnew debt ratio,alongwith the 146/opront rr*irgin,is roquiredto doublethe
rcturnon equity?
a. 0.75 c. 0.55
b. o.70 d. 0.55

E: a maker of customeru.pholsteryfabrics,is conbemedabout preservingthe wealth

tTT.CgTpaly, of its
stockholdersduring a cyctic downturnin the homefuridring business.
The-companyhas maintainodr
constantdividendpayoutof'P 2.00 tiedto a_targctpqrout rdi6 of 40elo.t"tanagem*nt
is pneparinga sh*c
-**
rc6lrchase-nsco{nifid?itfi$ffi10 p$rcnrto sf? firni'; bourd of direcrois.
fna:Folruwi"i #; rriV"
gatheredfrom the last two years:
z0r2 201'1
Earnings avaihbb for commonstockholden P 1,260,000 P t200,@0
Numberof sheresotn$arrdins 300,000. 300.000
Earningsper share P 4.20 P 4.00
Market price per share P 23.50 20.aa
Price/eamings ratio s.6 5.0
How many sharesshouldthe companyhave outstanding in order to combine
-in the earnings available for
commonstocklrolders.ofp 1,200,ti00 the yedir2013anda dividend p
of 2.00to prodLe tr,.li"iii.o
payoutratio of40o/o?
a. 240,m slreres' c. 360,000shares
. b. 600,000shar,s d. 150,000sharcs
9' The.SPBAcorponario*is about.togo public. lt cuntntly has
after-taxearningsaf p 7.5 million and2.5
million sharesalp orrnsd by tfie prsent.stockholderr Pasba
t-tr* Family). The new public issuewill
represent600'000new sharss. The ncw-shareswill be priced
to the puuii" at i zo pelshare, with a 5o/o
spread
ontheofferingprice'There
will alsobeP2moffi in *t-or-p.'JxJ;G;" "' -
ir,JJ".pr*iil.
Determinewhatrateof returnmustbe earnedon the proceedsto the
corporation so there will not be a
dilutionin ealningsper $hareduringtheyearof goingpublic.
a. l4.95yo c. 16.07%
b. 15.08% d. l6.91a/o
l0' LPM Companyexpectsto generateP l0 million internally,which
could be availablefor financingpart of
its P l2 million capitalbudgetfor this comingyear. LPMis management
believesthata debt-equity ratioof
40%o is bestfor the firm. How much shouii-bepaid in dividenis irtne
targeidebt.equityratio is to be
maintained?
a. . P 8,571,429 c. P 2,800,000
b. P 4,000,000 d. P 1,429,571
(E N D )