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Management Advisory Services Seta Management Advisoy Services aA INSTRUCTIONS: Select the best ans wer for each of the eck Total following questions. Mark: only one answer for Crewneck — V-n 7 each item on the | 2.75 93.25 Erosures wl render your exoebath,areSURES ALLOWED. | Unt vale cos eae i mination answer sheet INVAI in ratio 0.545455 0.461 Use PENCIL NO. 2 only, GOODLUCKIS HD, Seon a 1,000,000 1,000,000 875,000 d cost -" 3h the context of making a decision, which of the following ‘one statements regarding relevant costs is correct? Based on the above data, which of the following statements a. An opportunity cost is not a relevant cost. concerning the effect of changing the sales mix is correct? b. A traceable fixed. cost cannot be a relevant cost. a. The company cannot make a higher total profit than what A variable cost cannot be a sunk cost. itis currently making. X A sunk cost is not a relevant cost, (6. Ancreasing the number of units sold of 1 style while b (° Gecreasing the number of units sold of the other style by ‘ozen Sweets Company produces two lines of froze : al amount will change the total profit. J erasslane and Vanilla. Analysis of the annual ssles ang ‘profit cc. Changing the mix so that the company sells 100 less of Performance for 2013 reveals the following: " Venecks while maintaining sales of crewnecks will provice ¢, The sales price variance for both products was unfavorable. a higher profit than selling rp less of crewnecks while . 'e market volume variance for both jing sales of V- ks. Favorable. | a Ita not ‘possible to determine which style is more * The market share variance for each product is 0. profitable for the company. Based on the above information, which of the following statements is incorrect? ~ a. The actual price of each product was less than the corresponding budgeted price. b. The actual market sales for each product were greater than the budgeted market sales quantity for that product.“ 4, The following is a fragment of the lyric to the song “Inner City Blues,” written by Marvin Gaye: way “Rockets, moon shots. Spend it, on the have-nots, fn wich he suggests that the money for the space program be spent ‘on helping the poor, Which is the most appropriate co: | concept embodied by the lyric? ¢, The actual share of the market for each product was equal | a. Opportunity cost X Prime cost to the expected share of the market. B. Sunk cost (adponvesion cost 2) The actual quantity of sales for each product was less than the anticipated volume of sales. | The total of all credit entries to’ the finished goods inventory 5 MSount of Jesse Company was P2,320,000, The credit entry 3. TS Company produces two styles of t-shirts and is selling an | to. the manufacturing overhead control account was ees ata Meieal Ghee oe le ee 985,000. The company’s income statement after all the [lire meats Co a a ld adjustments shows that the cost of goods sold was io, 2,300,000. The company uses a normal costing system and | ‘doses the balance in the manufacturing overhead control Tage Tor a enor = HAE Open TaPRORTE re Page Forza wanna. HAS Open BGSTE Management Advisory Services SETA account to the cost of goods sold. Whi pecoun goods sold. Which of the following is mpany’s manufacturing overhead acco 1b, osing Would have a debit balance of P20, 00." Per fe . The normal costing system over Tee The. poral tasting 4 applied manufacturing (© The normal costing system under appl The coral eos 3 applied manufacturing d. The company’s manufacturing overhead control account will show a debit balance of P20,000 at havelbenn made 4 ifter closing entries digitized music tuner has been a staple it 7 line for several years. Annual fix. Production and administration related to this preduct hy the past have been P643,500. Variable costs of production and sales have been Pi7 per unit. The selling price in the past has been P28 per unit. For the year just ended, the company sold 100,000 units. In the coming year, based on the appearance of competing products on the market, the company expects a decrease of 10 percent in unit sales. Assuming that the company wants a profit before tax of 405,000, what is the required selling price if it expects to i! 90,000 units? 6 P28.65 c. P25.60 7.95 d. P30.80 “Ong Film Studios has. completed its first film for a total production cost of P34,714,285, including the allocation of all studio overhead costs for 9,000,000. Tt considering producing a DVD documenting the CD of the music contained in the film. The studio allocates overhead at a rate of P0.35 per peso of prime production cost. The projected profitability for the DVD and CD has been calculated as follows: ‘HAS. pan TstPB05i4 Management Advisory Services * SETA pvp co Sales (units) 165,000 60,000 Price per unit P 21.99 14,99 Revenues P 3,628,350 P.899,400 Licensing and 3,700,000 700,000 production cost Allocated overhead 1,295,000 245,000 Net income (1,366,650) _P (45,600) ‘What should Ong Film Studios do? a. Produce both the DVD and the CD b. Produce the DVD but not the CD GS Produce the CD but not the DVD f. Not produce either the DVD or the CD 8, Loquacious Company's break-even point is P150,500 and its unit contribution margin (UCM) 15 P2.30. Operating results for 2013 show a net income of P27,000. Assuming that the unit price was P5.50, what was the sales revenue for 2013 rounded to the nearest hundreds of pesos? ax P150,500 a 346,200 (bi) P215,100 d. P359,9 u& 9, Three Rivers Company uses a standard, cost system. "Overhead is applied on the basis of direct labor hours. Analysis of the actual financial results against budget shows: the following: * Unfavorable labor rate and efficiency variances + Zero volume variance Based on the above, which of the following conclusions about bor and overhead variances is correct? Geren aate owed cen variance Unfavorable fixed overhead budget variance .. Zero labor efficiency variance Me MM. esnent Avner Deine "ee SETA Management Adviory Services SETA 10. Ropé Company makes 2 products, both of whi resource — direct labor-hours, Both produc have aut contribution margin of P20. However, the direct labor cost per. Unit of Product.¥ is higher than that for Product X. The ua price of Product X is higher than the unit. Price of a Product Y. Rope is interested in maximizing its profits. Which of the following statements is correct? hat can be concluded from VHO's variances? Production was below budgeted volume. ‘There was efficient use of raw materials. % : . The company paid a wage rate higher than the standard d. Variable overhead usage was inefficient. 133822 Products has the following information available for the a. Rope should produce both products, but more ¥ than ge Rone mould only produce V. ill 7, gmonth of Mercia Rope should produce both products, but more X than Y. ‘4. Rope should only produce x. i Vamabe'cons 30,000 11. The degree of operating leverage for Balloon Company is 7 Net ince P15,000 and the degree of operating leverage for Dirigible Company 4. The two companies have identical sales levels and net ‘The company's manager is considering several options to incomes. Which of the following statements is incorrect? increase net income. By what amount do sales pesos need to a. The break-even quantity for Balloon be more than increase in order for net income to increase to'P20,000? that for Dirigible. 2. P50,000 g_P17,500 b. The margin of safety for Balloon willbe less than that for b. P25,000 d.)P12,500 irigible. __ (©) The contribution margin for Balloon will be more than that 14. Michelangelo Company makes a single product. Cost for Dirigible. information for the product is as follows: d. A 10% reduction is sales will cause net income for Dirigible to be lower than that for Balloon. Direct materials Paz — 2 Direct labor 8 ae ne VHO Corporation, which uses a standard costing system, Variable overhead 6 reported the following cost variances for the most recent Variable selling expenses 5 month: Fixed overhead 1 Raw materials price variance U Raw materials quantity variance U Direct labor rate variance F Direct labor efficiency variance U Variable overhead spending variance U Variable overhead efficiency variance U Fixed overhead spending variance U Fixed overhead volume (denominator) variance U The fixed overhead cost per unit is based on a normal volume of 20,000 units. Fixed selling and administrative expenses are 40,000 regardless of the number of units produced and sold. Michelangelo has an opportunity to buy this product at a cost of P28 per unit. Michelangelo is expecting to sell 18,000 unit: in the upcoming year. AS Open tTatPBOSTs HAS Open iP OST Pepe 61 ‘voweore.comoh z "MAS. Open istPB0544 ! Page Fora ‘wonecricccom.oh od HAS Ope ‘Management Advisory Services, arr, A What are the unavoidable costs for Michelangelo? P 20,000 ¢. P-90,000 & 60,000 d. P150,000 A5-Plucky Company recently entered into a contra: i Plucky charges a price of actual cost plus 20%. iF the’ price charged based on this formula is less than the target price of 4,500,000, Plucky is entitled to also receive 50% of the difference between the actual cost and the cost that would lead to the formula price equaling the target price. Plucky incurred an actual cost of P3,600,000. How much will Plucky make from the contract? 4,320,000 ¢. P4,410,000 b.) 4,395,000 d._ P4,500,000 16, Fricksy Corporation plans to introduce a new product with the following price and costs: Price per unit 80.00 Variable cost per unit 47.20 Fixed cost 984,000.00 Income tax rate 40% What is the sales level, in units, at which Tricksy’s operating profit after tax would be P393,600? a. 25,000 c. 50,000 b. 30,000 d. $5,000 12. Haywood Inc. has the following information available for one ~~~ of its products: Sales price per unit PLS Contribution margin ratio 60% Total fixed costs 5,000 Units produced and sold 1,000 Management Advisory Services sera Tf ‘Haywood Sells one more unit, net income will: a. increase by P4, () increase by P9. b. increase by P6. ‘. increase by P15. USE THE FOLLOWING INFORMATION FOR QUESTION NO. 18 & 19. PrufRite Company applies manufacturing overhead on the basis of direct labor-hours. On December 31, the company’s manufacturing overhead account showed a 20,000 credit balance. The company estimated that it would incur 200,000 direct labor-hours during the year. The actual number of direct labor hours was_220,000., Completed job cost sheets show that 330,000 in manufacturing overhead was transferred to the finished goods account. There were no jobs in process at the beginning of the year and 1 job was partially completed at the ‘end of the year, with P110,000 in applied overhead. 18. What amount of manufacturing overhead cost would the company have estimated at the beginning of the year? a. P300,000 ‘c. 440,000 b. 400,000 d. P484,000 ‘What is the amount of actual overhead cost incurred for the year? a. P320,000 <. P460,000 be P420,000 d. P504,000 20. 3n~planning its operations for next year based on a sales “forecast of P6,000,000, PERA, Inc. prepared the following estimated costs and expenses: Variable Fixed Direct materials 1,600,000 Direct labor 1,400,000 Factory overhead ‘600,000 P 900,000 Selling expenses 240,000 360,000 Administrative expenses __60,000 __140,000 23.200,000 P1.400,000 = ‘Open sae 5a we nTccomah a ‘HAS. OpentstPB0! : f ad Page Oot 24 ‘Woaprecom.nh cad FAST rent Ad\ Sic Manager visory Services seta oa be the amount of sales pesos at the breakeven a. P2,250,000 ‘c.’ P4,000,000 b. P3,500,000 . P5,300,000 “Which of the following statements about ee Gi relevant costs is a. Fixed costs of production are costs that do not vai iternatives. x —_e ¢. Relevant costs will never include sunk costs. d. Opportunity costs are not relevant costs. amon Inc. seils Slim Sardines for PS per unit. The fixed costs are P210,000 and the variable costs are 45% of the selling price. What would be the amount of sales if Salmon were to realize a profit of 15% of sales? a. P700,00 c P525,000 b. P472,500 d. P420,000 AF oink Company uses the standard costing method. The company's main product is a fine-quality audio speaker that normally takes 0.25 hour to produce. Normal annual capacity is 3,000 direct labor hours, and budgeted fixed overhead costs for the year were! P675,000. During the year, the company produced and“ sold 8,000 units. Actual fixed overhead costs were P480,000. What is the fixed overhead volume variance? a. 300,000 (F) g. P195,000 (U) b. P300,000 (U) S 225,000 (U) Use the following information to answer number 24 and 25. You are applying for a job at a major door and window retailer. The manager would like to evaluate your skills in the area of inventory management and he provides you with the following information: Tapa Management Advisory Services, * Annual demand is 450 windows (an aver ies (an average of 9 every * Average cost of each window is P250. = Purchase order lead time is 21 days. ‘= Relevant handling costs are 5,000 per year. * Relevant ordering costs are P150 per order. * Shareholders’ expected return is 8%, © Shipments are FOB destination. 24, What is the economic order quantity (E0Q)? a 45 7G 6 a4 a. 72 25. What are the total relevant costs, assuming the EOQ is 75 units and the relevant carrying costs are P50? a. P1,500 WAS. OpantsiPOOsia ‘Management Advisory Services ad ‘SETA phe iGrink producer acquiring @ bottle manufacturer is an / a. Horizontal merger. " Vertical merger. = Congeneric merger, d. Conglomerate merger. 36. In microeconomics, the distinguishing characteris long run on the supply side is that! ee Be @. Only supply factors determine price and output. Only demand factors determine price and output. ‘MS are not allowed to enter or exit the industry. All inputs are variable. 37. Systematic evaluation of the trade-offs between product functionality and product cost while still satisfying customer Needs is the definition of a, Activity-based management. =) Theory of constraints. Total quality management. 4. Value-engineering. a Be Wiich of the benchmarking? a. A technique that examines product and process attributes _~ to identify areas for improvements. Cy The comparison of existing activities with the best levels c following definitions best characterizes of performance in other, similar organizations. The development of the most effective methods of completing tasks in a particular industry. d. The complete redesign of a process within an organization. ~ 39.In “a large firm, custody of an entity's data is most appropriately maintained by which of the following personnel? a. Data librarian. c. Computer operator. (y:) Systems analyst. d. Computer programmer. \ 2 a Page 14 of 24 Wawediecon.ah < ‘OpenistPB0s3: enero (IN, eeennelihtiiittiilctisianteiiais Management Advisory Services age 15 ara SETA ich of the following procedures would an entity most likely include in its disaster recovery plan? ‘. Convert all data from EDI format to an internal company format. b. Maintain a Trojan horse program to prevent illicit activity. €. Develop an auxiliary power supply to provide uninterrupted electricity. (4. Store duplicate copies of files in a location away from the \C) computer center, 41. What is the primary objective of data security controls? a. To establish a framework~for—comtrating [he design, and use of computer programs throughout an organization. b. To ensure that storage media are subject to authorization prior to access, change, or destruction. ¢. To formalize standards, rules, and procedures to ensure LA, that organization's controls are property executed. (To monitor the use of system software to prevent \_)' unauthorized access to system software and computer programs. 42. Which of the following is a batch control totai that represents the minimum level of control for input completeness? a. peso totals b. document/record counts cc. hash totals 43. Which of the following systems is one where the master and open files are posted, or updated, immediately? a, “Microcomputer system ) Mainframe computer system Batch system d. Real-time system 7 aaa Sama Management Advisory Services tess hassle he a ‘SSA Management Advisory Services SETA 5 is the advantage of having a “hot site” “I te! - control? as a back-up Management is unhappy with the results and plans to make a. Power and space are available at the site some changes for next year. If management implements a Processing equipment on short notice (ege act, new marketing program, fixed costs are expected to increase disaster) (e.g., after a by P19,200 and variable costs to increase by P1 per unit. b. The site is located i Unit sales are expected to increase by 15 percent. What is neighboring —— another branch of the company in a the effect on income if the foregoing changes are cirThe syst 5 : plemented? Toney ae cS configured in a manner similar to the 2.) decrease of P21,200 c. increase of P 1,800 emma day-to-day processing and is available for increase of 13,800 4, increase of 14,800 4. All of the above are advantages of having a hot site. 49.In~~comparing management accounting with _ financial accounting, which of the following statements is true? 45. Theoretical capacity reduced by norm: historical costs as their primary unit ae ae YY normal and anticipated work a> (BORE User Historica . costs primary, La a. practical capacity. ©. ideal capacity. b. Both depend on the double-entry system of accounting. b. normal capacity. d.. excess capacity. fs. Both require adherence to GAAP. ‘>> Financial accounting reports are more objective, whereas 6. The treasurer function incudes : Se er a iene taiveae a. tax administration b. evaluating and consulting 50. The Fire Company hes a standard absorption and flexible a ‘Solar Co.'s year-end income statement is as follows: 51. Using regression analysis, Fairfield Co. graphed the foll Sales (20,000 units) 360,000 relationship of its most expensive product line's sales with its Variable costs 220,000 customers’ income level Contribution margin P140,000 If there is a strong stat relationship between the sales Fixed costs 105,000 and customers’ income levels, which of the following best Net income 235.000 represents the correlation coefficient for this relationship? | Fae 177 won como = Was opent PaO sr setae FO — wanes 8 i Management Advisory Services sera c. 40.93 d. +1.02 _52-far the year ended December 31. 2013, Norhan Co. Girect costs of P500,000 based on a’ particular course of action during the year. Had a different course of action had been taken, direct costs would have been P400,000. in addition, Norhan's 2013 fixed costs were P90,000. ‘The incremental cost was ae a. P 10,000 \G, P100,000 b. P90,000 @. P190,000 _ saree Co. plans to discontinue a division with a P20,000 contribution margin. Overhead allocated to the division is P50,000, of which P5,000 cannot be eliminated: The effect of this discontinuance on Ferdie's pretax income would be an increase of Roe's 2013 unfavorable variable overhead efficiency variance was 2x PO . 2,000 incurred (b. 'P1,500 4. 3,500 56. The standard direct labor cost to produce one pound of output for a company is presented below. Related data reyarding the planned and actual production activities for the current month for the company are also given below. Direct Labor Standard: 0.4 DLH @ P12.00 per DLH @= P4.80 Planned production, 15,000 Actual production, 15,500 ‘Actual direct labor costs (6,250 DLH, 75.250 ‘The company's direct labor efficiency variance for the current month would be ‘ a. P5,000 . 'P25,000 2. 600 unfavorable. @ )P2,400 unfavorable. b. P20,000 4. P30,000 b. P602 unfavorable. 3,000 unfavorable. 2 Fommel Co. signed a government construction contract 57. Lockhart Products produces a single product. During 2013 the | i | providing for a formula price of actual cost plus 10%. In | __--~ company incurred the following costs: addition, Briar was to receive one-half of any savings resulting from the formula price being less than the target price of P2,200,000. Romme''s actual costs incurred were 1,920,000. How much should Rommel receive from the contract? < a. P2.060,000 c./P2,156,000 b. P2,112.000 - 2,200,000 ~ Vanable product costs P8.00 per unit Variable period costs 2.00 per unit Total fixed product costs P21,000 Total fixed period costs P10,000 Lockhart had no units in beginning inventory. During 2013, 6,000 units were produced and 5,000 units were sold. 55, Jhe“Tollowing information pertains to Roe Co.'s 2013 ‘manufacturing operations: Standard direct manufacturing labor hours per unit, 2 Actual direct manufacturing labor hours, 10.500 Number of units produced, 5,000 Standard variable overhead per standard direct ‘manufacturing labor hour, P3 ‘Actual variable overhead, P28,000 fC, Which of the following statements is true when comparing net ~ AXgome using absorption versus variable costing? a.) Net income will be P3,500 higher using absorption costing than using variable costing. ¥v b. Net income will be P3,500 lower using “absorption costing than using variable costing. Pave ee HAS Open istPBOSIA Page 1 of 4 wowewnprtcom.eh | Management Advisory Services a c. Net income will be P4,200 higher using ab: ic a ‘than using variable costing. "ia Ensoretion costing . Net income be P4,200 lower using absorpti than using variable costing. 7 Ray 58. Which of the following standard costi ing variances least controllable by a production supervisor? Houde a. Overhead volume. (c._Labor efficiency. b. Overhead efficiency. d. Material usage. 59. Dahl Co. uses a standard costing system in connection with the manufacture of a "one size fits all" article of clothing. Each unit of finished product contains two yards of direct material. However. a 20% direct material spoilage calculated ‘on input quantities occurs during the manufacturing process. The cost of the direct material is P3 per yard. The standard direct material cost per unit of finished product is a. P4.80 ¢. P7.20 (bv P6.00 4. P7.50 7 Items 60 and 61 are based on the following information: company for planning and controlling its business act Data regarding the ‘Company's monthly sales for the last 6 months of the year and its tion patterns are shown below. The cost of merchandise averages 40% of its selling price. The company’s policy is to maintain an inventory equal to 25% of the next month's forecasted sales. The inventory balance at cost is, 80,000 as of June 30. Forecasted Sales July 775,000 ‘August “750,000 September 825,000 ‘October 800,000 November 850,000 December 900,000 Ss es WAS Open THPBOSTA Page oF 74 % cnr Management Aavsoy Serons sera ‘Types of Sales Cash sales 20% Credit sales 80% Collection Pattern for Credit Sales Month of sale 40% First month following the sales 57% Uncollectible 3% 60. The Budgeted cost of the company’s purchases for the month of August would be a. P302,500 <307.500 b. P305.000, d. P3) 8,750 om _ ad 61, The company's total cash receipts from sales and collections fon account that would be budgeted for, the month of September would be a. P757,500 s c. 793,800 /b.\P771,000 d, P856,500 t 62. Miéh Co. is budgeting sales of 53,000 units of product Nous for October 2013. The manufacture of one unit of Nous requires four kilos of chemical Loire. During October 2013, Mien plans to reduce the inventory of Loire by 50,000 kilos land increase the finished goods inventory of Nous by 6,00C units, There is no Nous work in process inventory. How many kilos of Loire is Mien budgeting ta. purchase in October 20 13? a. 138,000 Cc.) 186,000 b. 162,000 238,000 ss a ae 63.A°Single-product company prepares income statements usinc <7) both absorption and variable costing methods. Manufacturing overhead cost applied per unit produced in 2013 " was the same as in 2012, The 2013 variable costing stetemen’ reported a profit’ whereas the 2013 absorption costinc statement reported a loss. The difference in reported income ‘could be explained by units produced in 2013 being H

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