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MANAGEMENT ·ADVISORY SERVICES

FIRST PRE~BQARO:EXAMINATI_ON SE2\A ocroeeR 201~. $ATCH
. AUGUST 6, 2018; 11 :30-2; 30PM

INSTRUCTIONS! . Se~ct the co~ect.answer for 0 ~ ea~~

f~llowih{f questions, Mark only one answer t~e
for each it~m by V!'1t1QQ _a Sij~!)l~G _qorreap~i_\di~:lo the le~er ofye>urc_ ho~.on the ilnswer sheet
·to
ltems.1 5 are b~sed on the following Information: _- .· · . .
The building of Sula$iln-:Corpora·t,on was gutted by fire .fhe'reby destroying its iriv~ntories.-ana its financial
and accounting :re·ccirg"s-. 1a retent :prior years; howev:et; BUiacan tr_ ::is maintained the following
relationships amor:g the data or, its ~nancialstat!r.n'erits: · :· · ·· · ·
~Gfusa.Marglrf9fl:ne($ales . . ., . . -~ 40%
.Profit~a-rgin.~asedon net sal~s . ·· · .10%·:
Accounts.iecer.iabte turnover 8.times per year
. lnv~QlQ!Y·turiiov~ · ,,. . 6:tm1es per year
,Acid test ratio .··..... _ ,. / >-... · 2to·:1 .
,~'fl!~
t ..1sro1n1ar,g,~~~~.;, . ..•· .·. ·•·.·. ·. iJi~rper
· .·Ratio'..ofA.bcumulated depreciati~n·t(fCoif~f#xe-d a~s·e& .·Hc:r2· -..·
y..,

Bula.can na~ ~t f~com~ i P·120iitto~ tha

Y:ear1iti<bt~~tiiJ~as~ts composltlon:i~ estimated to be 8%
Cash; 32%.Mafketable.-$e.curities,carici60%:Accountsieci!ivable:'i:ndirig acroui:rt balances are

;~~•~m;f~f[j!~~~41~~~'tl/•:!•·:::~; · .·
.-~ . - :--·.·- ---:- ·.- ...-: _.. . .. : .. :·::, . .. ,. : .. ' ..

2. . What is the:~lafice of Bulacafi'S: iriventory accdunt at cl"ecember' 31 ; 20t8? .

-·- a/ ·P 1scf-09.:0 ·>, · · <· .._
·-. ·> -.,: :i> -:cl :P-foo_:ooo
b. P 12s:ooo . .d. ·p .120.000 ··

3. What is the··~1tiet'.corrent ass~·aceotmt balanee?·· '. ;;

i.C: Pio.0.00°· . -· · · . --_.;, ·. c. ~o ...
b:-.P 5;000' :.:.:.:. .· · · ·- - ·d, None .~f the above

. . . . .

5.
:.~;~:~:'t:"·? /.:\>,, ·-:'. . :....
Wnat is the J,aiance·:ot-lrnflritanglble asset 8!,COUnt?
·: .c: P20,QOO
. d. P30;Qoo·.

6. The iryai'ginaf:c&ti~g co·11v~ti0n·1f pfofit is ,rrior'.e.fele\i~:nfl(i d&bi!1lon ma1d~9 than'the ab$orption

costing~_
riy~,:ttl~'.~ cau~: .<:.·_::- : ·· _·' :: ,, ,_ . · · ·. : _ -. · .
. ·a.· :_$0:f~~•,~_ft~7_k:~~!a :~.re,~:s)r~.:~9,fgl_~al-c~~~Jn~;4ive~.a:more e~ijery~tl~~Jmpression of
~P.!.3/l:~~-~fP.~-~/_\~O~ng, .·: ,:.. : :: :(· :< ·· .·. : . · . <•:·:"<· .
t>,·..·~ry-~?~~t~r}?~~f.-~~-e.faJ~(-:th~-J)J~fi(~l1c_ l(fs~.'~Y::_ryiargi_
~al_:g.~~jng;is;l~ ln(~enced by
: .:~ollt1r.o_m .te pr-,vioui peri9(l than·ls:·,ne ciee w!th,.a~0.rpli0n cqstli'Jg .>· . ·
~/ ~a,(~fiaJ:x~)l_~Q,pry>~ld~.a;y~iO,lt;C)f_.pJoflf~t" telites.-dnti·:f~ ih~~e i:9st~ the.level of
. ---~i~~~,)ti,~~a-~•Jh:e;~,ajt,_~:~~~d:~qi_g~:.~~otl:\._ v_.;)·.•:::.· ._>.···. ,> .
d. _M,rcinal ·cost~:1>t~~1~,s a v.aluatTQll ¢ ·~tock.:t1,;it:~~foryna:with cul'l'8_
nt accc:>_untlng
,: -~: stSndar,.ds-fftle\iJ_
. .
ri_t tcrtbe·pr:epal'atlcm bf~u~llshectaccounts
. . -.. . .
· ' . ~ .
CRC-ACE/MAS: FIRST PRE-BOARD EXA~ (OCT 2018 BATCH)
PAGE2

7. ln a period when finlahed atock ievela lncreaae, the profit and closing atock valuation• ahown unde r
marginal costing and absorptlo~ coating would be
Profit Closing 1toek valuations
a.· Marginal higher than a~aorptlon coating Marginal lower than ablorption coating .
b. Marginal lower than ati9orpllon coating Marginal higher than absorption costing
c. Marginal higher than absorption coating Marginal higher than absorption costing
d. Marginal lower than absorption coating Marginal lower than absorption costing

8. The following details have been extracted from the budget papers of LK pie for June 2017:
Selling price per unit P 124
Variable productioR costs per unit 54
Fixed production costs per unit 36
,Other variable costs per unit 12
Sales Volume 12,500 units
Production volume 13,250 units
Opening stock of finished items 980 units
I{ budgeted profit statements were prepared by using absorption costing and then by using
marginal costing.
a. Marginal costing profits would be higher by P 27,000.
b. Absorption costing profits would be higher P 27,000.
c. Absorption costing ptoflts would be higher P 35,000.
d. Absorption costing profits would be higher P 62,000.

9. The use of predeterm_ined overhead absorpti~n rates is generally favored by management

accountants be~ause:
a. It allows product costs to be determined before the end of a given accounting period
b. · It avoids the over or under absorption of overheads :
C. It provides a more con~ervative version of product costs
d. It relates more to the activities that give rise to 'overhead costs than do more traditional
. . I

methods of overhead absorption · · ·

10. Benchmarking allows managers to:

a. Determine who In the industry perfonns sfmilar processes most effectively
b. D.etermine the processes that have high value-to-cost relationship
c. Compare certain inteml:3I processes, services and activities to those of other companies in
order to identify strengths and weaknesses
. d. Reproduce another company's product design and manufacturirig processes to eliminate
competitive advantage

11 . The benefits of a just-in-time system for raw materials usually include

a. Elimination of non-value added operations
b. Increase in the number ohuppliers, thereby ensuring competitive bidding
c. Maximization of the standard delivery quantity thereby lessening the paperwork for each
delivery
d. Decrease In the number of deliveries required to maintain production

12. · Hotdog Distribution Company operates four hundred hotdog stands in the,Greate, Manila Area.
· Depreciation expense for the foyr hundred carts amounts to P 160,000 a tear or P 400 per card.
Depreciation with regard to the rlumber ·ot hotdog stands should be considered as;
a. Ftxed Cost c. Mixed Cost ,
b. Variable Cost d. Discret~onary C'ost
1
13. Vera Cruz Company.has projected coat of goods sold of P2 million includlhg fixed costs of P 400,000
and variable costs are expected to be 75 percent of net sales. What will be the projected net sales?
a. p 2,133,333 . C. P 2,666,667
b. P 2,400,000 d. P 2,00Q,000

SET A
?,
I 3'

14. The early liquidatl~ of. a long-term note wlih cnh affects the
a: C~~rifrallo to .a greater degre,nhan ttie quiciuatlo
b. Qoi~-_ratio to a greater degree that the·current ratio
c. - Curr.e'iit and quid( ratio to the eame degree
d. Current ratio but not. the quick ratio -

15. Lockhart Prod~s~pr:oduces a single product. During 2017 the company incurred the following costs
- - Variable .P.roduct Costa . P 8.00 per unit .
: . \tinabh! Petiod-Costs P 2.00 .perunit
. 'total·Fixed Product Costs - P 21 ,000
. '· .T otai Fixed'Period Costs P 10.000.

L~hal1 hactn~;llrtitS·fn .beginningJnvantory; During 2017, 6,000 units were produced and 5.000
units:"we-(!! ~old.. -' '. ' - - .- - - · : -• - - .
' a: ~-t ➔~onifwill ti¢·~-M00:hlgher._usii)g_~orption_costing than us~g variable costing
p'; Neflbc0f.'!1e~wili.~ '. ~ isc)'o•fower.us1rjg_ abso'rpti09-costiryg than using variable costing
- t . ~~ '!1Gome.wl~~'f4,200h\~~®~soi'ptlon·CO:stingtnan using variable costing
:d, N'¥_JA:COIT18 'h'.ill}>~ ~-~;'20(ffow1wusing:'absorption costing than using variable costing

16. The·CaterpillarCompany is _ expecting.an in~~e in.fixed costs by P.78.750 upon moving their p!ace
of ou~n·e:ssJo ~e-·downt-own ~rea:·_Ukewis~ itls ~nticip~tlng thaf the .selling price ~r unit and th e
:va~bf&; exp~~ei wilt ~i°.cl"tarig~.:At" pre~eot( ihe.·· sa-fe~ volume:'
n'ecessary' to break-even is p
750,000 tiut=t11i1t.icpe.cted'iocreasej n fixed costs,'. the saies-votume necessai'y to. break-even will go
up top 975.~:;~ased·· or t·h_ese projecti~ns. what would, be th~~;required peso sales to earn p

10{"~(t~;Y••H / •.·. ·..··,-: t.:•} :j ~i~r

1? - Blake_Man~ritig has the fbllowiog prg.ciu~;frrt'oimati<m:ava11ab1e: _--. · _
·-:; .: -_\;:~;t1Jf~c : -.- ~--.::~::~·t::-_: ~ ·
~:··_·Beforetaxprofit ·. .
.. - ::. , · .... :;·· ·:? ·--·: · .: . _:. .. ,, - · ,
P. 180,000
. .... .
-

lf-~~h~Clllated t~tit need~ to seilW;OQO units in order to earn artafter tax profit of p
126,-000;wKat'~i'e.B!Bke~s'-~l(ed-COSts? :· _-- . •. . : . .· -~-- . :.
~-i- P54,-000·: '·. <:,- . -
C. p 820,000 _
· .
it- it-ieMoo; ::.-~
. . . . . :· . ·J •. .• . . ~.,.· _: -.
d. P·s14.ooo -

Items 18-and' ffarebastd\on::tM ~~lng information: .

Korn Corporatiari~:twol~e'olprodµcts: -. .
< -- .•,-' .- - Sales Price Variable Costs

.t:::;;,: ~: - , ; ._- _=-: :;1~r~~~\ .~: --:r~~O': _

F-ixect costS:totatP.-"300';000-·an~ually.-li,e expeci_
z. . ed mixih
·, . units is 60% for product
. Y. and 40% for product
18. How ~~js·Kom'& break--e¥en sales in ~nits?
- r( :as1'.·'"< : . .. . ' ·' ·-. .c, 2:000
_. t 1,11~-~· ·;.· · it _'2,459 "

19. How muctrls~rri's bre~~veri sales in pesos?

- ~-·- P3Q'o;o6a -_, . .- -. _.- . C: P 475,000',
-.b. p·4·20,ifdo·· · . - . . d. P 54~.0QO'
.. ::· :·"·.."' .,- ~ ·. • 4 J .. , -

20. cpr}trbira6i~ -cda~;ifre·-fy(5e ot·co~ .: < . _: · :· ·:· :· ... ·-· · ·: .: . -_ _ -_

: ,::· -"i#~:~e;rfk6(yfo~~nd't{thlamo~rit ~(attention ~e~otedto theM'. by ir specified
. ~~~!!:~ :.:.;:::.::_. ;-::· :.-.. .: - :. .~·:· :... .:, -~: >
- b, ~a{are 99\',etried'rrjai~ :by pesfdecisjqoS:thilf.eilabllshed the presei'I\ levels of.operating
'. ~ ::;: _. :. :-: _c_-•; >·.. :_· .·
~cfofg~l~(eapacity arld··tfiat:bnly'chiirigj{tiowiy_in-re.~ponsa1o an,all changes In
~P~O!tf ;/:_:•i··:; f .- ", -:.-. ;, : _> - : .: . . :· .
 PAGE 4
. CRC·ACE/MAS: FIRST. PRE-BOARD EXAMS (OCT 2018 BATCH)

c. That W111 be ·unaffected by current managerial decisions

d. That nuctuate In total In response to small change In the rate of utilization of capac 11 Y

th8
21 . A review of Parry Corporation's accounting records found that at a volume of 90,000 units ,
variable and fixed costs per unit amounted to PB and P4, respectively. On the basis of lhis
Information, that amount of total cost would Parry anticipate at a volume of 86,000 unite?
a. P 1,020,000 c. P 1,060,000
b. P 1,040,000 d. P 1,080,000

22. A retail company determines its selling price by marldng up variable coeta 60%. In addition, th e
company uses frequent aelllng price markdowns to stimulate sales. If the mar1<downs average 10%,
what is the company's contribution margin ratio?
a. 27.5% C. 37.5%
b. 30.6% d. 41 .7%

23. A company manufactures a single product. Estimated cost data regarding this product and 0th8 r
information for the prqduct and the company are as follows:
Sales price per unit ,. P40
Total variable production cost per unit P22
Sales commission (on sales) 5%
Fixed costs and expenses,
Manufacturing overhead P5,598,720
General and administrative P3,732,480
Effective income t8'< rate 40%
The number of units the company must sell in th~ coming year in order to reach its breakeven point
is:
a. 388,8.00 units c. 583,200 units ·
b. 518,400 units d. 972,000 units

24. Ass~me ·that the same cost behavior patterns can~ extended linearly over the range of 3,000 to
35,000 units and that the cost driver for each cost is the number of units produced. The company is
concerned about its current operating performance that Is summarized as follows:
· Sales (P12.50 per unit, P300,000
Variable costs 180,000
Net operating loss (40.000)
How mariy additional units should have been sold in order for the company to break even?
a. 32,000 . C. 12,800
b. 16,000 d. 8,000 ,
Items 25 to TT are based on the followtng lnfonnatlon:
Delphi has developed a new project that will be marketed for the first time In the next flacal year. Although
the Marketing Department estimates that 35,000 units could be sold at P3~ per unit, Delphi's management
has only allocated enough manufacturing capacity to manufacture 25,000 unite of the new product
annually. The fixed costs that are associated with the new product are budgeted at P450,000 for the year,
which inch,1des P60,000 of depreciation on new manufacturing equipment. Data for each unit of product is
below and Delphi Is subject to a 40% tax rate.
Variable Coats
Direct material P 7.00
Direct labor 3.50
Manufacturing ovel'hei,d · 4.00
Total variable manufaqturlng cost 14.50
Selling expenna 1.50
Total variable costs i P16.00
25. The number of µnits of the new product that Delphi must sell in order to 1break even during the next
· fiscal year Is:
a. 20,930. C. 22,600
b. 1ij,140 d. 25,500

SET A .1
,S CRC·ACE/MAS: FIRST PRE-BOARD EXAr.1S (OCT 2018 BATCH) PAC,t 5
26. The maximum after-tax profit that can be earned by Delphi Company from sales of the new product
during the riext flsc;al year is
8 . P30,000 c. P11D.OOO
b. P50-,000 d P66.000

27 Delphi Company's management has stipulated that It will not approve the continued manufacture of
the new product ·after the next fiscal year unless the after-tax profit Is at least P75,000 the first year
The .unit selling price to achieve this target profit must be at least.
a. P37 .00 c. P34.60
b. P36.60 d. P39.00

28. A company has :iale.s of PSOQ,000, variable costs of,PJ00,000, and pre-taJ< profit of P150,000. If the
company increased the sales price per unit by 10%, reduced fixed costs by 20% , and left variable
cost per unit unchangeq. what would be the new breakeven point in saJes dollars?
a. P 88,000 c. P110,000
b. Pl00,000 d. P125,000

29. The Smith Cof!lpany produces two products; 158-0 .and 074-J. 158-0 accounts for 35% of Sm,tt,·s
lotal sales r_
evenue, while 07 4-J. accounts for the remainder. The variable cost for 158-D is 45% of its
selling price, while 074cJ's variable cost Is 55% of its selling price. If Smith's fixed costs are
P250,000, what Is ihe company's total breakeven revenue? ·
. a. P485,437 . . .· c. PSOS,051
b. P515;464 d. P495,050

30. KJCarter's Use.d Cars wou.1.d like to hire a new l!alesper~on. There are 2 candidates who each have
different expectationsregardfng their compensation. Onecand.idate would llke to have a fixed salary
of P45,000 per y~ar. The second cam;lldate ..wpuld Ilk~ tQ be paid by a commission of 5% of sales .
KJCc!rter belie1i'es that ttie individual. sales person has very little Impact on the level of sales. At what
level of expecied sales fro~ this position would 11 not matter to Carter which salesperson is hired
a. P800,000 . c. P1 ,000,000
b. P900,000 d. Pl, 100,000
Items n to 33 are .based on the followlng Information: .
Moorehead Manufa9turing Company produces .twQ products. Fixed manufacturing cost is applied at a rate
of P1 .00 per machine hour.
Per Unit ·· X.Y-7 . BD--4
Selfing price P4.00 P3.00
Variable manufacturing cpst 2.00 150
Fixed manufacturing cost 0.75 0.20
Variable selling cost 1.00 1.00 .
The sales ma~ger has had a P160,000 increase In the budget for advertising . The products are not
substitutes for ope. another in the eyes of the company's customers.
31 Suppose the sales manager chooses to d_ evote the enlire P16-0,000 to lncreaseq advertising for XY-
in
7. The minimum increase sales units of X..Y·7 required is:
a. 640,000 units . .. . c. 128,000 u.Ms.
b. 160,000 units d. 80,000 units

ooses to devote the entire PH~0,000 to increased advertising for BD-

32 . Suppose the· sale_s manager ch_
4. The minimum incr-,ase_In sales dollars of BD-4 required to offset the increased advertising would
be:
a. P160,000 c. P960,000
b. P320,000 d. P1 ,600,000

33. Suppose Moorehead has only 100,000 machine hours that can be made available to produce
additional uorts of X.Y •.7 an,d B0-4. 1.f the potent!al increase in sales units for either product resulting
from adver:tlsl~g.lsfar In ex~n or thla production capadty, which pro(luct should be advertised and
what is th.a estim,aled .in!lrease In contribution margh:, ea med?
a. Product XY-7 should be produced, yielding ii contribution margin of P75,000.
SET A
 PAGE 6
CRC-ACE/MAS: FIRST PRE-BOARD EXAMS (OCT 2018 BATCH)
01
b. Product XY-7 should be:produced, yielding a contrt_but~on marg'.n .
c. Product BD-4 should be,produced, yielding a contnbution margin ,of p
p~!;·!~~-
' ·
d. Product BD-4 shou.ld be produced, yielding a contribution margln ·of P250,000.

· f the CMA Code of Professional

34. A sufficient reason for a management accountant to depart rom
Ethics is
a. Direction by a superior that the course pf action 11 acceptable
b. The judgment that the Code of Professional Ethics does not deal adequately with the
circumstances of the situation
c. Advice fron, a colleague
d. No.ne of the above

35. Given that a cost has been Identified as a variable cost, which of the following additional descriptions
of that cost is incompatible with that id.entification? ·
a. The cost, in total, does not change with changes in the volume of the cost driver.
b. The cost can be traced directly to the cost object.
c. The.cost, In total, does change with changes in the volume of the cost driver.
d. The cost carinot be traoed directly to the cost object.

36. Which of the following statements about managerial accounting is correct?

a. Managerial accounting reports are audited annually by Certified Pu_
blic Accountants.
b. Managerial accounting reports help investors make decisions.
c. Managerial accounting reports provide detailed infonnation on parts of a company .
.d. Managerial accounting reports must follow Generally Accepte9Accounting principles
(GAAP).

37. Which of the following is NOT an objective of management accounting?

a.. To provide infonnation to business managers to.assi&t them in planning for their business
b. TQ provide information to business managers to assist them in controlling 1their business
c. To provide information to shareholders to assist them with their investment decisions
d, To assist business managers with respect to providing a return to the owners of the
business

38. Which statemenl is correct? . l

a. Management accounting uses the cash basis and financial accounting uses the accrual
··basis to record transactions.
b. Management accounting uses the cash ,basis to record transactions.
c. ·Financial accounting uses the cash basis to record transactions. ,
d. Both management accounting and financial accounting use the accrual basis to record
transactions ..

39. \Milch of the following are period costs?

a. Current assets on the balance sheet
b. Costs incurred and expensed during the accounting period
c. Costa related to the m•nufacture of products
d. Current liabilities on the balance sheet

40. Which of.the following is NOT a part of manufacturing overhead?

a.- ' Indirect materials c. Factory Insurance
· ·b:· ·indirect labor d. Depreciation on delivery vehicles

41 . Which of th•.following beat defines direct materials?

a. Used to detennlne total lnventorlable product costs
b. Cannot be separately and conveniently traced ttirough the manufacturing proceas to
finished goods
;. c. Are not part o; the finished product
8,ET A
'7 CRC-ACE/MA~: F-IRST PR.E-80A"D EXAMS (OCT2018 8~T~H) PAGE 7
.. ·. . . ' '.

cf U$ed to determine total manufactur'ing overhead

42. Rent' e~ns~ lnCqrred on a .factory. bu tiding Would be tre$ltid as .whllftype(a) of cost?
~- ', Indirect co~l .. .· . C. Product cost
~ - ~~riod cost - d. Both Aand C
Items 43 ~nd 44 .-re based on the followlog Information: .
Rotifnson Cl)mp~'riy has provlded ~he ..following inform,tiitlti'n:
_· • . .Raw materials inventory inct.eased Pt51000:. :
•· -Work in pr~u -lrwentory decreased P29,000.
· • Fll)iSh43d.:goods in~nfory·decreasec:1 P47,000, ·
· •· Sa.les.wer.e P500;b06.> · ·.. ..-· : .- .
• The gross,proiitJatlo-\lias :s2;2°(o. ·. i -> /.
43. Hov., much wasJfobins9n•~ :oost:of goods-manufactured?
a. P2$8;000 . .. .. c. P286,000
b. P192,ooo d. P239,000

44 . Th.a
:~:JI~;·;>: ,,_. . -. ...•, .. ,.._: :' ·:.~::-:11!:b~~-.
manutac;;urlng~osts incur~d bYR~blnson:d~rln1#heperiodwere'.hOW much?

ltern•-45 and ◄ta,.

'~il~cf <>~ followlog info~rn~tJ~n: -· ttt~
Savatd Corpo'.~jpn·t~Po!:fed the following:: . .· _·.·- • · .. .
~ A~-.m~~erial·purcilases totaling P100,000
~ Raw material inventory ·increased P5,000,
•·.--• Pi_r:~~rtapor.-~~sts· jflCUrred:tb(ale'ctP.f59~POO~

\.it11;~1t::·-·.
· • · $ates saia~s-were P.75)000: . : . ·
How 1truefrw~-s~·vard'_
s.costof goods mam.1fjclured?', _.
·

·'·:~:-:::i:~~r. --~_. ·-
45 .
C. P.457 ,000 .
d. P497.,000 ..•·

'46. HQw. iuc:~~~;~:s:96s{of':90~~:,01d'? - . c. P407,000

b. P450'.000 •· •· .d.. P457,9QO

4 7. Raw-mate'r.ials·"are ~~rtsMwiien:: ·
.:~'..:;·t:~t~~~~~t~:~d~ouon pr,~ce~s:· :
c: .: thffir.iished ·i:;fo~ui;;t-comes but ofco.st ~• g~~ man~actured
: . '· ·.:: .: . _ _

d,- ttiidihiatied-pro(iocfis so1di; :· .·- . ·_,<.·.· •:, ;.>;:····, -, -. :. -:·

... :·- :::·: .-.~:.
48. All ~f the fottowing are·ex~;pres of Denchm~rldi,gitan~;rdi 8XC4}P,t
a: the:perlormar:i~ of tl'!e,'unit' du~ng~
tne ~revl<iU$.'yeat. .. ... . .

:;.·.f!=tittn!es!;:·
~:: th~
: :;:;1~:~:~;.::;/s._
~eLpeeforriia~ee.: orii'.6o.mp~~t¥w!tha
.
o~rat,oni .
· iimll~r
. :' .. ..

49. Which,,.oftti_~Nii.pvJJn~'.•J~~r.rieri~!eQa~i~g_:99.IJlmo,n~"tz~)tater.Yte~s.J•,true? ,:· ;: · _•

· . a, : CY~inm~•l~.~ ,ij~e~nta.f()r,:twc;> .corhpanlos; WJU,:i.-~tn sh_ ow!ng:a:1,00o,H'lcresse in profit&,
:~ :thafbotb..'.~piarif~s wociltt:m~k$ .eqvanY,~ttftici1ve:lh~e1~&n1$: • . ·•. -~-·• . ·...-·
. ~' .Hohzoh(!3f'.¢t,i'ri'riion;~e :,tiem~i:tt; Clrl ij m~~,'t9~1)' f~r;com~,n)~;~t~;i~ i,as_t 10 years
•I:l~iii:~• :;n.be=~t'~~;~~oi·.dm"9.~~.
CRC-ACE/MAS: FIRST PRE-BOARD EXAMS (OCT 2018 BATCH) PAGE 8

50. Which of the lollowlng statement la False?

a. CPAs provide management aervlcea to go around the ethical conetralnta aa mandated by
the accountancy act.
b. Businesses hire management coneultanta to help define apeoiflc problem, and develop
solutions.
c. Included In the practice of consulting la the provision of confidential service in which the
Identity of the client la concealed .
d. CPAa performing management service• may be considered to be In the practice of
management consulting .

51 . Which of the following will not Impair the Independence of a CPA In the rendition of Management
Services?
a. The CPA performs decision-making service~ for his client. ·
b. The CPA perform services wherein he Is In effect, acting as an employee of the client.
c. The CPA loses his objectivity and acts In a manner as If he Is advocatlrlg for the Interest of
his client. ·
d. The CPA does not extend his services beyond the presen,atlon of recommendation or
giving of advice. ·

. 52. A ho_spital's records show that th~ cost of carrying out health checks in the last five accounting
periods have been as follows:
Period Number-of Total cost
patients seen (Peso)
· 1 650 17,125
2 940 17,800
3 1260 18,650
~ 990 H,980
5 1150 18,360
Using the high-low method and ignoring Inflation, the estimated cost ot carryin~ out health checks
· on 850 patients in period 6 Is:
a. P17,515 . . c. P17,625
b. P17,570 d. P17,680

53. A company has income after tax of P5.4 million, lriterest expense of P1 million for the year,
depreciation expense of P1 million, and a 40% tax rate. What Is the company's times-interest~arned
ratio?
a. 5.4 C. 7.4
b. 6.4 d. 10.0

54 . Anderson Cable wishes to calculate their return on assets. You know that the return on equity is 12%
and that the debt ratio is 40%. What is the return on assets?
a. 4.8% ' · C. 12.0%'
b. 7.2%" d. 20.0%

55. Schodack lnc.'s common sto~k has a market price of P25, a price/earnings ratio of 7.2, and a
dividend yield of 5%. The earnings yield and dividend payout ratio, respectively, are closest to
Earnings Dividend
Yield: Payout Ratio:
a. 9% . 36°/o
b. 9% 64%
c. ·14% 36%
d. 14% 64%
'

56. · A company has caeh of P100 mllllon, accounts receivable of P600 million, cu,rrent assets of P1.2
1
· billion, accounts payable of P4p0 million, and current llabllltles of PS00:million. What Is its acid-test
(quick) ratio?
a. 0.11 C. 1.75
b. 0.78 d, 2.11

8BA
57 JM Lid. has a single product that hill a gross profit margin ratio of 60% per unit and had total sales
of Pt,200,000 laat year. JM has a degree of total leverage of 2.10 and a degree of operating
leverage of 1.20 for the current year: If the earning& before Interest and tax (EBIT) were to increase
by 15°4 this coming year, what would be the expected percentage change in earnings per share
(rounded to the h&areat percent)?
Q . 18% C. 9%
b. 32% d. 26%

58 Mattick Company has provided the following data:

Inventory and prepaid expenses .... . .. P 36 ,000
Current ratio .. .......... ,... ... . .. .... .... ... ....... .... 2.4
l\cid-te~tratio .... ...... .... .. .. ... .. .. ..... .. .... .. 1.6
Mattick .Company's current liabilities are:
a. P60,000 C. P 45,000
.b. P 30,000 d . P 48,000

59 A company's current ratio is 2. According to the fine print in its bond agreements, the company
cannot aliow its current ratlp to . fall below Ui without defaulting on the debt and going into
bankruptcy ' If current llabinti~i are p 200,000, whati~
the maximum amount of additional new short-
term debt the company can take on without defaulting if the new debt is used to finance new current
assets?
a P 200 ~000 C. P 266,667
b. P 66;667 d. P 150,000

60. A feature of just-if1 time which cuts down set-up cost, the time to change machine settings from
making one product to another, so the company can immediately respond to the needs of the
customer'ls ·called: . . .
a. :~omeuter Aided Design
b. Computer-Integrated Manufacturing
c. Quality Time
d . Flexible Menufact\Jri.ng System

61 . A review of the set of linl<~d. value-creatina activities from procurement of materials to customer
service is called:
a. Value chain Analysis c. Value Added Analysis
b · Acttvity-8ased'-Analysls d. Cqst Analysis ·

62 As part of a benehmarking process, a company's CO$tS of quality for the current month have been
identified·as follows: . . .

Employee \raining P20,000

ProductJecalls MOO
Scrap .. . 4,500 .
Quality·inspectors 48,000
Preventiv~ maintenance 19,500
Suppl!~ education expense 17,500
MateriJ.ls inspection 60,000
expense
Processing product returns 2,500
What amount i5 the company's prevention cost for the current !TIOnth?
a P39;SOO . c. P165 000
b. P57;000 d, P175'.soo

63. The cos\ of acnap, rew_ork, and tooling changes In a prQduct quality coat system are categoriZed as a
~): . . .

a. ExtemjfFallvre Cost c. Prevention C9st

b. Tr~lnir,;iC~!t •/ · ct. Internal Fillure Cost
 PAGE 10
CRC-ACE/MAS: ARST PRE-BOARD EXAMS (OCT 2018 BATCH)
64. Llated below are aele~ed llne itema from the co,t of quality report for Watson Products lalt monfh.
Category 6ln2lID1
Rewor1( P 725
Equipment maintenance P 1, 154
Product Testing . P 788
Product Repair P 895
What is Watson's total prevention and appraisal cost for last month?
a. P 2,865 C. P 78
b: P 1,154 d. P 1,940

65. The adoption of JIT normally requires which one of the following facto" tc Increase:
a. stock levela· c. batch sizes;
b. work-ln-progreai levels; d. quality standards.

66. In a TQM environment, external benchmar1dng Is preferred to standard costing as a performance

measurement technique because:
a.
standard costs qulckly 'become obsolete;
b. TOM emphasizes continuous Improvement and reference to a predetermined mtemal
.

standard gives no incentive to improve; ··

. c. TOM places an en:iphasls on employee empowerment, and the concept of a standard cost
is alien to this;
d. the use of standard costs fs only possible in a traditional mass-production industry.

67. Which of the following is a characteristic of TQM?

a. Education and self-improvement ·
b. Management by objectives
c. Quality by final inspection
d . On-the-job Training by other workers

68. In the cost of quality, costs incurred in detecting lndlvl'dual units of product that do not conform to
specifications are ·
a. Prevention c;osts. c. lntemal failure costs.
b. Appraisal costs: d. External failure: costs.

69. In the theory of constraints, an operation or resource where the .work performed approaches or
exceeds the available is referred to as ·
a. A bottl~neck. e. Customer-reaponse time.
b. A time driver. d. Manufacturing lead time.

70. ·An organization has the following total coats at two activity levels:
Activity Level (Units) 17,000 . 22,000
Total Coat P 140,000 · P 110,000
Vllllable cost per unit Is constant in this range of activity and there is a step up of P5,000 in ~ total
fixed coats when activity exceeds 18,000 units. 'Mlatis the total cost at an activity level of 20 ooo
units? · ' ·
a. P155,000 c. P160,000
b. P158,000 d. P163,000

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