MAS with Answers.pdf

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MANAGEMENT ADVISORY SERVICES

1. A strategy map in the balanced scorecard framework is

a. A statement of what the strategy must achieve and what is critical to its success.

b. Key action programs required to achieve strategic objectives.

c. Diagrams of the cause-and-effect relationships between strategic objectives.

d. The level of performance or rate of improvement needed in the performance measure.

2. Which of the following is a limitation of activity-based costing?

a. More cost pools

b. Less control over overhead costs

c. Poorer management decisions

d. Some arbitrary allocations continue

3. Which of the following factors would suggest a switch to activity-based costing?

a. Product lines similar in volume and manufacturing complexity.

b. Overhead costs constitute a significant portion of total costs.

c. The manufacturing process has been stable.

d. Production managers use data provided by the existing system.

4. An analyst covering Guilderland Mining Company common stock estimates the following information for the

next year.

Expected return on the market portfolio 12%

Expected return on Treasury securities 5%

Expected beta of Guilderland 2.2

Using the CAPM, the analyst’s estimate of next year’s risk premium for Guilderland’s stock is closed to

a. 7.0% c. 15.4%

b. 10.4% d. 21.4%

5. Gild Company has been offered credit terms of 3/10, net 30. Using a 365-day-year, what is the nominal cost

of not taking advantage of the discount if the firm pays on the 35th

day after the purchase?

a. 14.2% c. 37.6%

b. 32.2% d. 45.2%

6. A bank wants to motivate its financial services agents. The current salary of the agents is P80,000. To meet its

objectives, the bank is offering the following salaries:

If revenues are < 90% of last year’s level P 65,000

If revenues are between 90% and 110% of last year’s level P 80,000

If revenues are > 110% of last year’s level P 100,000

Assuming that these 3 outcomes are equally probable, what is the expected salary for a financial services

agent?

a. P65,000 c. P81,667

b. P80,000 d. P83,333

7. A company obtaining short-term financing with trade credit will pay a higher percentage financing cost,

everything else being equal, when

a. The discount percentage is lower.

b. The items purchased have a higher price.

c. The items purchased have a lower price.

d. The supplier offers a longer discount period.

8. The degree of operating leverage for Balloon Company is 7 and the degree of operating leverage for Dirigible

Company is 4. The two companies have identical sales levels and net incomes. Which of the following

statements is incorrect ?

a. The break-even quantity for Balloon will be more than that for Dirigible.

b. The margin of safety for Balloon will be less than that for Dirigible.

c. The contribution margin for Balloon will be more than that for Dirigible.

d. A 10% reduction is sales will cause net income for Dirigible to be lower than that for Balloon.



9. Panktual Company uses just-in-time inventory methods to manage its inventories. Which of the following

statements is incorrect concerning this company?

a. Inventory costs will fluctuate greatly from month to month because of variability in sales.

b. The net income from the absorption costing method will be approximately equal to the net income from

the variable costing method.

c. There will typically be very low levels of inventories period to period.

d. The cost of a unit of product will be different between the variable and absorption costing methods.

10. Giga-Stuff, Inc. has a number of divisions. One division, Khreishan, makes a component, component X, that is

used in the manufacture of DVD players. Another division, Marshan, makes DVD players that use component

X and needs 60,000 units of component X per year. Khreishan incurs the following costs for one unit of

component X:

Direct materials P0.30

Direct labor 0.15

Variable overhead 0.70

Fixed overhead 1.00

Total P2.15

Khreishan has capacity to make 400,000 units of component X per year, but due to a soft market, only plans

to produce and sell 320,000 units next year. Marshan currently buys component X from an outside supplier

for P2.50 each (the same price that Khreshan receives).

Assume that Khreishan and Marshan have agreed on a transfer price of P2.20. What is the total benefit for

Giga-Stuff, Inc.?a. P18,000 c. P69,000

b. P63,000 d. P81,000

11. A data model developed specifically for use in designing accounting information databases is

a. REA data model

b. Data definition language

c. Entity-relationship model

d. Networked model

12. Which of the following is correct concerning the Internet?

a. All communications are processed using URL – Uniform Resource Language.

b.

It is composed of an international collection of networks of independently owned computers.c. It requires the use of viruses, which invariably escape their proper primary use and infect user

computers.

d. The operating center of the Internet is headquartered in the New York World Wide Web Center.

13. A common input device is a(n)

a. Compiler c. Expert system

b. Printer d. Point-of-sale recorder

14. Which of the following is not a widely used disaster recovery approach?

a. Hot site c. Regular backups

b. Firewall d. Cold site

15. The network most frequently used for private operations designed to link computers within a building in a

research park is referred to as a(n)

a. Bulletin board service c. Wide area network

b. Local area network d. Zero base network

16. A Utah hospital decided to streamline its surgical suite operation. In order to speed things up, the nurses in

charge studied what time patients actually spent in various activities. They found that on average, a patient

scheduled for an operation spent about 1 hours waiting, and 1.5 hours in moving from lab to x-ray to the

operating room. The average operation takes 90 minutes. What is the MCE?

a. 100% c. 50%

b. 60% d. 37.5%



17. If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent, the

divisional ROI

a. would increase by 56 percent.

b. would decrease by 60 percent.

c. would increase by 20 percent.

d. cannot be determined.

18. During the year, Hawkins produced 10,000 units, used 20,000 direct labor hours, and incurred variable

overhead of P90,000. Budgeted variable overhead for the year was P88,000. The hours allowed per unit are

2.1. The standard variable overhead rate is P4.00 per direct labor hour. The variable overhead spending

variance is:

a. P2,000 F. c. P10,000 U.

b. P6,000 U. d. P2,000 U.

19. Assume that Sunshine Products Inc. has an agreement with Shady Finance Company to factor its receivables.

Shady charges a flat commission of 2 percent of the receivables factored, plus 6 percent a year interest on the

outstanding balance. It also deducts a reserve of 10 percent for returned and damaged materials. Interest and

commission are paid in advance. No interest is charged on the reserve or the commission. If the average level

of outstanding receivables is P700,000, and if they are turned over 4 times a year (hence the commission is

paid 4 times a year), then what is the effective quarterly interest rate charged by Shady for this arrangement?

a. 6.05% c. 7.52%

b. 3.83% d. 9.31%

20. Grogi Corporation uses a standard costing system. Information for the month of May is as follows:

Actual manufacturing overhead costs (P26,000 is fixed)

P80,000

Direct labor:

Actual hours worked 12,000 hrs.

Standard hours allowed for actual production 10,000 hrs.

Average actual labor cost per hour P18

The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at

12,000 direct labor hours were as follows:

Variable factory overhead P48,000Fixed factory overhead 24,000

Total factory overhead P72,000

What is the fixed overhead spending variance for Grogi?

a. P2,000 (U) c. P4,000 (U)

b. P8,000 (U) d. P20,000 (U)

21. If actual fixed manufacturing overhead was P54,000 and there was a P1,300 unfavorable spending variance

and a P1,000 unfavorable volume variance, budgeted fixed manufacturing overhead must have been

a. P56,300. c. P53,000.

b. P50,300. d. P52,700.

22. Perfect Builders makes all sorts of moldings. Its standard quantity of material allowed is 1 foot of wood per 1

foot of molding at a standard price of P2.00 per foot. During August, it purchased 500,000 feet of wood at a

cost of P1.90 per foot, which produced only 499,000 feet of molding. Calculate the materials price variance

and the materials usage variance, respectively.

a. P50,000 F and P2,000 U

b. P49,900 U and P2,000 F

c. P50,000 F and P1,900 U

d. P49,900 F and P1,900 U

23. Wilmer Company produces two products: Oldies and Newbies. Budgeted sales for four months are as follows:



Oldies Newbies

May 10,000 40,000

June 20,000 70,000

July 15,000 80,000

August 30,000 90,000

Wilmer's ending inventory policy is that Oldies should have 10% of next month's sales in ending inventory and

Newbies should have 20% of next month's sales in ending inventory. On May 1, there were 1,000 units of

Oldies and 9,000 units of Newbies.

Newbies requires 4 units of component A. (Oldies does not use component A.) There were 2,100 units of

component A in inventory on May 1. Wilmer wants to have 30 percent of the following month's production

needs in inventory for Component A.

What is the budgeted amount of component A to be purchased in May?

a. 288,000 c. 264,300

b. 180,000 d. 64,500

24. Cohlmia Company makes all its sales on account. Cohlmia's accounts receivable payment experience is as

follows:

Percent paid in the month of sale 20%

Percent paid in the month after the sale 75%

Percent paid in the second month after the sale

2%

Cohlmia provided information on sales as follows:September P100,000

October P120,000

November P200,000

December (expected) P250,000

What are the expected cash receipts for the month of November?

a. P200,000 c. P190,000

b. P 40,000 d. P132,000

25. Capitan Company produces a line of salsas. Capitan's estimated production of jars of salsa for the third

quarter of the year is as follows:

July 80,000August 90,000

September 70,000

Each jar requires 1/4 pound of peppers. Capitan prefers to buy the freshest peppers, so it has a policy to

have just 5% of the following month's production needs in ending inventory. On July 1, the company had

1,200 pounds of peppers in inventory. Capitan pays P0.40 per pound of peppers. It buys all peppers on

account and typically pays 50% of a month's purchases in that month, and the remaining 50% the following

month.

How many pounds of peppers will be purchased during the month of August?

a. 23,375 c. 19,925

b. 22,250 d. 21,950

26. Shape Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master

budget. Data for the July master budget are given below:

The June 30th balance sheet follows:

Cash P 25,000 Accounts

payable

P 45,000

Accounts

receivable

110,000 Capital

stock

300,000

Inventory 54,000 Retained

earnings

94,000

Building and

equipment (net) 250,000



Actual sales for June and budgeted sales for July, August, and September are given below:

June P137,500

July 360,000

August 400,000

September 320,000

Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following

the sale. There are no bad debts.

The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the

following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are

purchased on account and paid in full the following month.

The monthly cash operating expenses are P43,000, and the monthly depreciation expenses are P7,000.

What is the balance of the accounts receivable at the end of July?

a. P110,000 c. P360,000

b. P288,000 d. P398,000

27. Which of the following is a characteristic of environmental scorecards?

a. They are comparable.

b. They are efficient.

c. They promote good corporate citizenship.

d. They are required for firms with high environmental risks.

28.

Activity-based costing (ABC) classifies costs in a hierarchy with 4 levels. Costs related to engineering changesshould be classified as which of the following?

a. Batch-level costs

b. Product-sustaining level costs

c. Unit-level costs

d. Facility-sustaining level costs

29. Which category of costs of environmental work would include using non-toxic alternatives for chemicals used

in a manufacturing process?

a. Appraisal costs c. Internal failure costs

b. External failure costs d. Prevention costs

30.

Which of the following represents the flow of services and information from the initiating moment to the finalcustomer?

a. Customer chain c. Supply chain

b. Demand chain d. Value chain

31. The best model for choosing the best of several competing projects is

a. net present value. c. payback period.

b. internal rate of return. d.accounting rate of return.

32. All of the following relate to the balanced scorecard's learning and growth perspective EXCEPT:

a. How do we achieve greater employee satisfaction?

b. What new products do we create?

c.

How do we provide information systems with updated technology?

d. How will we motivate and empower our employees?

33. A component of the average payment period is

a. the time from the purchase of raw materials until the firm places the payment in the mail.

b. the time it takes after the firm places its payment in the mail until the supplier has withdrawn funds from

the firm’s account.

c. both a and b

d. either a or b



34. Elegance Bath Products, Inc. (EBP) makes a variety of ceramic sinks and tubs. EBP has just developed a line of

sinks and tubs made from a mixture of glass and ceramic. The sinks sell for P150 each and have variable costs

of P80. The tubs sell for P600 and have variable cost of P450. The glass and ceramic sinks and tubs require the

use of specialized molding equipment. The specialized molding equipment has 4,050 hours of capacity per

year. A sink uses an average of 2 hours of specialized molding equipment time; a tub uses an average of 5

hours of specialized molding equipment time.

Assume that EBP can sell as many as 1,000 sinks and 500 tubs per year. How many tubs should EBP produce?

a. 1,000 c. 410

b. 500 d. 675

35. Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte)

into two chemical, dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons ofdac and 3,000 gallons of tyl at a total joint processing cost of P12,000. At the split off point, dac can be sold

for P3 per gallon and tyl can be sold for P4 per gallon. Autry has just learned of a new process to convert dac

into prodac. The new process costs P4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac.

Prodac sells for P5 per gallon.

Should Autry process dac further?

a. No, income will be P1,500 lower

b. No, income will be P5,000 lower

c. Yes, income will be P1,500 higher

d. Yes, income will be P5,000 higher

36.

Aerotoy Company makes toy airplanes. One plane is an excellent replica of a 737; it sells for P5. VacationAirlines wants to purchase 12,000 planes at P1.75 each to give to children flying unaccompanied. Costs per

plane are as follows:


Direct labor 0.50


Fixed overhead 0.90

No variable marketing costs would be incurred. The company is operating significantly below the maximum

productive capacity. No fixed costs are avoidable. However, Vacation Airlines wants its own logo and colors

on the planes. The cost of the decals is P0.01 per plane and a special machine costing P1,500 would be

required to affix the decals. After the order is complete, the machine would be scrapped. Should the specialorder be accepted?

a. Yes, income will increase by P300

b. No, income will decrease by P180

c. No, income will decrease by P1,500

d. Yes, income will increase by P180

37. Foster Industries manufactures 20,000 components per year. The manufacturing cost of the components was

determined as follows:

Direct materials P150,000

Direct labor 240,000

Inspecting products 60,000

Providing power 30,000

Providing supervision 40,000

Setting up equipment 60,000

Moving materials 20,000

Total P600,000

If the component is not produced by Foster, inspection of products and provision of power costs will only be

10% of the production costs; moving materials costs and setting up equipment costs will only be 50% of the

production costs; and supervision costs will amount to only 40% of the production amount. An outside

supplier has offered to sell the component for P25.50.



What is the effect on income if Foster Industries purchases the component from the outside supplier?

a. P25,000 increase c. P90,000 decrease

b. P45,000 increase d. P90,000 increase

38. The operations of Smits Corporation are divided into the Childs Division and the Jackson Division. Projections

for the next year are as follows:

Childs Jackson

Division Division Total

Sales P250,000 P180,000 P430,000

Variable costs 90,000 100,000 190,000

Contribution margin P160,000 P 80,000 P240,000

Direct fixed costs 75,000 62,500 137,500Segment margin P 85,000 P 17,500 P102,500

Allocated common costs

35,000 27,500 62,500

Operating income (loss) P 50,000 P(10,000) P 40,000

Operating income for Smits Corporation as a whole if the Jackson Division were dropped would be

a. P22,500. c. P50,000.

b. P40,000. d. P60,000.

39. Moore Company's net income last year was P56,000 and cash dividends declared and paid to the company

stockholders was P31,000. Changes in selected balance sheet accounts for the year appear below:

Increases(Decreases)

Debit balances:

Accounts receivable P (8,000)

Inventory (6,000)

Prepaid expenses 12,000

Credit balances:

Accumulated Depreciation 23,000

Accounts payable (10,000)

Accrued liabilities 7,000

Taxes payable 5,000

Bonds payable 40,000

Based solely on this information, the net cash flows from operating activities under the indirect method on

the statement of cash flows would be:

a. P79,000. c. P29,000.

b. P102,000. d. P83,000.

40. Presented below are selected data from the financial statements of Bruce Corp. for 2011 and 2010.

2011 2010

Net income P110,000 P123,000

Cash dividends paid on

common stock

P 42,000 P 38,000

Market price per share of

common stock at the end of

the year

P16.00 P13.00

Earnings per share P 0.84 P 0.74

Shares of common stock

outstanding

140,000 100,000

The dividend payout ratio for 2011 is

a. 38.2% c. 2.8%

b. 5.0% d. 50.0%



41. If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term

debt and collection of accounts receivable have on the ratio?

Short-term Collection of

Borrowing Receivable

a. Increase No effect

b. Increase Increase

c. Decrease No effect

d. Decrease Decrease

42. A firm expects to pay dividends at the end of each of the next four years of P2.00, P1.50, P2.50, and P3.50. If

growth is then expected to level off at 8 percent, and if you require a 14 percent rate of return, how much

should you be willing to pay for this stock?

a. P67.81 c. P31.00b. P58.15 d. P43.97

43. Helton Company has the following information for the current year:

Beginning fixed manufacturing overhead

in inventory P95,000

Fixed manufacturing overhead in production

375,000

Ending fixed manufacturing overhead in

inventory 25,000

Beginning variable manufacturing overhead

in inventory P10,000Variable manufacturing overhead in

production 50,000

Ending variable manufacturing overhead

in inventory 15,000

What is the difference between operating incomes under absorption costing and variable costing?

a. P70,000 c. P40,000

b. P50,000 d. P5,000

44. Grant's Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one-time-only special

order for a product similar to one offered to regular customers. The following per unit data apply for sales to

regular customers:

Direct materials P 455

Direct labor 300

Variable manufacturing support 45

Fixed manufacturing support 100

Total manufacturing costs 900

Markup (60%) 540

Targeted selling price P1440

Grant's Kitchens has excess capacity. Ms. Wang wants the cabinets in cherry rather than oak, so direct

material costs will increase by P30 per unit.

For Grant's Kitchens, what is the minimum acceptable price of this one-time-only special order?

a. P830 c. P 785

b. P930 d. 1,440

45. Cochran Corporation has a plant capacity of 100,000 units per month. Unit costs at capacity are:


Direct labor 6.00


Fixed overhead 1.00

Marketingfixed 7.00

Marketing/distribution, variable 3.60



Current monthly sales are 95,000 units at P30.00 each. Suzie, Inc., has contacted Cochran Corporation about

purchasing 2,000 units at P24.00 each. Current sales would not be affected by the one-time-only special

order. What is Cochran's change in operating profits if the one-time-only special order is accepted?

a. P14,800 increase c. P22,000 increase

b. P17,200 increase d. P33,200 increase

Question number 46 and 48 are based on the following:

Konrade's Engine Company manufactures part TE456 used in several of its engine models. Monthly production

costs for 1,000 units are as follows:

Direct materials P 40,000

Direct labor 10,000

Variable overhead costs 30,000Fixed overhead costs 20,000

Total costs P100,000

It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company

purchases TE456 from the outside supplier. Konrade's Engine Company has the option of purchasing the part from

an outside supplier at P85 per unit.

46. If Konrade's Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs

that will no longer be incurred) total:

a. P 82,000 c. P50,000

b. P98,000 d. P100,000

47. If Konrade's Engine Company purchases 1,000 TE456 parts from the outside supplier per month, then its

monthly operating income will:

a. increase by P2,000 c. decrease by P3,000

b. increase by P80,000 d. decrease by P85,000

48. The maximum price that Konrade's Engine Company should be willing to pay the outside supplier is:

a. P80 per TE456 part

b. P82 per TE456 part

c. P98 per TE456 part

d. P100 per TE456 part

49.

Denly Company has three products, A, B, and C. The following information is available:Product A Product B Product C

Sales P60,000 P90,000 P24,000

Variable costs 36,000 48,000 15,000

Contribution

margin 24,000 42,000 9,000

Fixed costs:

Avoidable 9,000 18,000 6,000

Unavoidable 6,000 9,000 5,400

Operating income

P 9,000 P15,000 P (2,400)

Assuming Product C is discontinued and the space formerly used to produce Product C is rented for P12,000

per year, operating income will:

a. increase by P6,600 c. increase by P12,000

b. increase by P9,000 d. increase by P14,400

50. Shimon Corporation manufactures industrial-sized water coolers and uses budgeted machine-hours to

allocate variable manufacturing overhead. The following information pertains to the company's

manufacturing overhead data:



Budgeted output units 15,000 units

Budgeted machine-hours 5,000 hours

Budgeted variable manufacturing

overhead costs for 5,000 units P161,250

Actual output units produced 22,000 units

Actual machine-hours used 7,200 hours

Actual variable manufacturing

overhead costs P242,000

What is the flexible-budget variance for variable manufacturing overhead?

a. P5,500 favorable c. P4,300 favorable

b. P5,500 unfavorable d. P4,300 unfavorable

51.

Kellar Corporation manufactured 1,500 chairs during June. The following variable overhead data pertain toJune:

Budgeted variable overhead cost per unit P 12.00

Actual variable manufacturing

overhead cost P16,800

Flexible-budget amount for variable

manufacturing overhead P18,000

Variable manufacturing overhead efficiency

variance unfavorable P360

What is the variable overhead spending variance?

a. P840 unfavorable c. P1,200 unfavorable

b.

P1,200 favorable d. P1,560 favorable

52. Jenny's Corporation manufactured 25,000 grooming kits for horses during March. The fixed-overhead cost-

allocation rate is P20.00 per machine-hour. The following fixed overhead data pertain to March:

Production 25,000 units 24,000 units

Machine-hours 6,100 hours 6,000 hours

Fixed overhead

costs for March P123,000 P120,000

What is the fixed overhead production-volume variance?

a. P1,000 unfavorable c. P3,000 unfavorable

b. P2,000 favorable d. P5,000 favorable

53. Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value

of P8,000,000 and an interest rate of 8%, and equity capital with a market value of P12,000,000 and a cost of

equity of 12%. Springfield has two operating divisions, the Blue division and the Gold division, with the

following financial measures for the current year:

Total Assets

Current

Liabilities

Operating

Income

Blue Div. P9,500,000 P2,800,000 P1,055,000

Gold Div. P11,000,000 P2,200,000 P1,200,000

What is Economic Value Added (EVA) for the Blue Division?

a. -P233,400 c. P188,600

b.

P21,960 d. P433,960

54. Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and

Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple

evaluation measures. The following information is provided for 20X5:

ASSETS INCOME

Book value

Current

value Book value

Current

value

Bleach P225,000 P300,000 P150,000 P155,000

Cleanser P450,000 P250,000 P100,000 P105,000



The company is currently using a 15% required rate of return.

What are Bleach's and Cleanser's residual incomes based on book values, respectively?

a. P116,250; P32,500 c. P67,500; P110,000

b. P110,000; P67,500 d. P37,500; P116,250

55. Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing

machine is operable for three more years and will have a zero disposal price. If the machine is disposed now,

it may be sold for P60,000. The new machine will cost P200,000 and an additional cash investment in working

capital of P60,000 will be required. The new machine will reduce the average amount of time required to

wash clothing and will decrease labor costs. The investment is expected to net P50,000 in additional cash

inflows during the year of acquisition and P150,000 each additional year of use. The new machine has athree-year life, and zero disposal value. These cash flows will generally occur throughout the year and are

recognized at the end of each year. Income taxes are not considered in this problem. The working capital

investment will not be recovered at the end of the asset's life.

What is the net present value of the investment, assuming the required rate of return is 10%? Would the

company want to purchase the new machine?

a. P82,000; yes c. P(50,000); yes

b. P50,000; no d. P(82,000); no

56. The Zeron Corporation recently purchased a new machine for its factory operations at a cost of P921,250. The

investment is expected to generate P250,000 in annual cash flows for a period of six years. The required rate

of return is 14%. The old machine has a remaining life of six years. The new machine is expected to have zerovalue at the end of the six-year period. The disposal value of the old machine at the time of replacement is

zero. What is the internal rate of return?

a. 15% c. 17%

b. 16% d. 18%

57. Lobster Liquidators will make P500,000 if the fishing season weather is good, P200,000 if the weather is fair,

and would actually lose P50,000 if the weather is poor during the season. If the weather service gives a 40%

probability of good weather, a 25% probability of fair weather, and a 35% probability of poor weather, what is

the expected monetary value for Lobster Liquidators?

a. P500,000 c. P267,500

b. P232,500 d. P200,000

58. In national income terms, aggregate demand is the

a. Demand for money by the community in a period of full employment.

b. Total expenditure on capital goods by entrepreneurs during a period of full employment

c. Demand that is needed if a country’s economy is to operate at optimum level and the level of investment

is to be raised.

d. Total expenditure on consumer goods and investment, including government and foreign expenditure,

during a given period.

59. During the recessionary phase of a business cycle.

a. The purchasing power of money is likely to decline rapidly.

b. The natural rate of unemployment will increase dramatically.

c.

Potential national income will exceed actual national income.

d. Actual national income will exceed potential national income.

60. The most effective fiscal policy program to help reduce demand pull inflation would be to

a. Decrease the rate of growth of the money supply.

b. Increase both taxes and government spending

c. Decrease taxes and increase government spending

d. Increase taxes and decrease government spending

61. Other things remaining constant, an increase in income will normally:

a. increase the demand for money.

b. decrease the demand for money.

c. lead to an decline in the money supply.

d. lead to an increase in the money supply.



62. On an absorption-costing basis, the unfavorable production volume variance for fixed factory overhead was

P13,650, and P52,000 units were produced and sold at an average selling price of P20 per unit. The standard

contribution margin was P5 per unit. Budgeted and actual fixed costs were the same for both manufacturing

(P122,850) and nonmanufacturing (P80,000). The total of price, spending, and efficiency variances was

P36,000, unfavorable. On an absorption-costing basis, fixed factory overhead had been applied on the basis

of the expected volume in the master budget.

The amount of profit under variable costing is:

a. P57,150 c. P14,850

b. P21,150 d. P 7,500

63. Assume that operating income for 2011 was P600,000 under variable costing and P800,000 under absorption

costing. The end-of-year cost of the inventory under standard variable costing was P60,000. The beginning-

of year cost of the inventory under standard absorption costing was P25,000 higher than the cost of thebeginning-of-year inventory under standard variable costing.

What is the end-of-year cost of inventory under standard absorption costing?

a. P165,000 c. P285,000

b. P225,000 d. P310,000

64. JetSky Airways has three divisions, the Western Division, the Eastern Division, and the Northern Division. The

manager of the Western Division had wanted to purchase replacement airplanes for the division. However,

he decided against it because, although revenues would increase and the new planes would be less expensive

to operate, the initial cost of the planes was quite large. The Western Division is most probably accounted for

as a(n)

a. cost center. c. profit center.b. investment center. d. revenue center.

65. Which budget should be used to determine managerial efficiency and effectiveness, respectively?

Effectiveness Efficiency

a. Flexible Static

b. Static Flexible

c. Flexible Flexible

d. Static Static

66. Field trials and quality engineering are examples of ____.

a. prevention costs c. failure costs

b. appraisal costs d. quality costs

Question number 67 through 70 are based on the following:

PRTC Construction Center is a retail hardware store. Information about the store’s operations follow:

November 2011 sales amounted to P400,000.

Sales are budgeted at P440,000 for December 2011 and P400,000 for January 2012.

Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the

sale. Two percent of sales are expected to be uncollectible . Bad debts expense is recognized monthly.

The store’s gross margin is 25 percent of its sales revenue.

A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and

20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the

purchase.

Other monthly expenses paid in cash amount to P45,200.

Annual depreciation is P432,000.

The company’s balance sheet as of November 30, 2011, is as follows:

Assets

Cash P 44,000

Accts receivable (net of

P7,000 allow for uncoll accts) 152,000

Inventory 280,000

Total assets P2,200,000

Liabilities & Equity

Accounts payable P 324,000

Common stock 1,590,000Retained earnings 286,000



Total liab. & equity P2,200,000

67.

How much are expected cash collections for the month of December 2011?

a. P407,200 c. P424,800

b. P416,000 d. P431,200

68. The amount of budgeted income (loss) before income taxes for December 31, 2011 is

a. P20,000 c. P(367,200)

b. P28,800 d. P(376,000)

69. The balance in accounts payable as of December 31, 2011 is

a. P240,000 c. P408,000

b. P306,000 d. P300,000

70. The amount of inventory as of December 31, 2011 is

a. P240,000 c. P320,000

b. P 66,000 d. P300,000

Documents

MAS with Answers.pdf