Prelims MAS

7/18/2019 Prelims MAS

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ASIA PACIFIC COLLEGE OF ADVANCED STUDIES

PRELIMS EXAM

MGMT ACCTG 2

MANAGEMENT ACCOUNTING 2

NAME:____________________________________________________________ DATE:_________________

MULTIPLE CHOICE. Show your solutions. (2 oints !"#h$1. PTO Company desires an ending inventory of P140,000. It expects sales of P800,000 and has a eginning inventory of

P1!0,000. Cost of sales is "#$ of sales. %&dgeted p&rchases are'. P #!0,000 C. P 810,000%. P ()0,000 *. P1,0(0,000

+. Calypso Co. has proected sales to e P"00,000 in -an&ary, P(#0,000 in er&ary, and P800,000 in /arch. Calypso

ants to have #0$ of next months sales needs on hand at the end of a month. If Calypso has an average gross profit

of 40$, hat are the er&ary +8 p&rchases2

'. P4"#,000 C. P((#,000%. P!10,000 *. P4+8,000

!. %l&e Company &dgeted p&rchases of P100,000. Cost of sales as P1+0,000 and the desired ending inventory asP4+,000. The eginning inventory as'. P+0,000 C. P4+,000%. P!+,000 *. P"+,000

4. The payment sched&le of p&rchases made on acco&nt is3 "0$ in the time period of p&rchase, !0$ in the folloing

time period, and 10$ in the s&se&ent time period. Total credit p&rchases ere P+00,000 in /ay, and P100,000 in

-&ne. Total payments on credit p&rchases ere P140,000 in -&ne. 5hat ere the credit p&rchases in the month of

'pril2'. P+00,000 C. P14#,000

%. P100,000 *. P+1#,000

#. 6orie Company plans to sell 400,000 &nits of finished prod&ct in -&ly an anticipates a groth rate in sales of #$ per

month. The desired monthly ending inventory in &nits of finished prod&ct is 80$ of the next months estimated sales.

There are !00,000 finished &nits in the inventory on -&ne !0. 7ach &nit of finished prod&ct re&ires fo&r po&nds of

direct materials at a cost of P+.#0 per po&nd. There are 800,000 po&nds of direct materials in the inventory on -&ne

!0. o many &nits sho&ld e prod&ced for the three9month period ending :eptemer !02

'. 1,+"0,000 C. 1,!!1,440

%. 1,!+8,000 *. 1,4+4,0#0

". If the re&ired direct materials p&rchases are 8,000 po&nds and the direct materials re&ired for prod&ction is three

times the direct materials p&rchases, and the eginning direct materials are three and a half times the direct

materials p&rchases, hat are the desired ending direct material in po&nds2

'. +0,000 C. 1+,000

%. 4,000 *. !+,000

(. If there ere !0,000 po&nds of ra material on hand on -an&ary 1, "0,000 po&nds are desired for inventory at

*ecemer !1, and 180,000 po&nds are re&ired for ann&al prod&ction, ho many po&nds of ra material sho&ld e

p&rchased d&ring the year2

'. 1#0,000 po&nds C. 1+0,000 po&nds%. +40,000 po&nds *. +10,000 po&nds

8. :ilver %ol Company man&fact&res a single prod&ct. It ;eeps its inventory of finished goods at (#$ the comingmonths &dgeted sales. It also ;eeps its inventory of ra materials at #0$ of the coming months &dgeted prod&ction.7ach &nit of prod&ct re&ires to po&nds of materials. The prod&ction &dget is, in &nits3 /ay, 1,000< -&ne, 1,+00<-&ly, 1,!00< a&g&st, 1,"00. =a material p&rchases in -&ly o&ld e'. 1,#+# po&nds C. +,##0 po&nds



%. +,)00 po&nds *. !,0#0 po&nds

). >enero&s Company egan its operations on -an&ary 1 of the c&rrent year. %&dgeted sales for the first &arter are

P+40,000, P!00,000, and P4+0,000, respectively, for -an&ary, er&ary and /arch. >enero&s Company expects

+0$ of its sales cash and the remainder on acco&nt. Of the sales on acco&nt, (0$ are expected to e collected in

the month of sale, +#$ in the month folloing the sale, and the remainder in the folloing month. o m&ch sho&ld>enero&s receive from sales in /arch2

'. P!04,800 C. P!88,800

%. +)4,000 *. P+)#,+00

10. /endre? Company has a collection sched&le of "0$ d&ring the month of sales, 1#$ the folloing month, and 1#$

s&se&ently. The total credit sales in the c&rrent month of :eptemer ere P80,000 and total collections in

:eptemer ere P#(,000. 5hat ere the credit sales in -&ly2

'. P)0,000 C. P4#,000

%. P!0,000 *. P!+,000

11. Oligacion Company has P+)),000 in acco&nts receivale on -an&ary 1, +00". %&dgeted sales for -an&ary areP8"0,000. Oligacion expects to sell +0$ of its merchandise for cash. Of the remaining sales, (#$ are expected to

e collected in the month of sale and the remainder the folloing month.

The -an&ary cash collections from sales are3'. P81#,000 C. P4(1,000%. P")1,000 *. P)8(,000

1+. 'del Company has the folloing sales forecasts for the selected three9month period in +00(3

/onth :ales

'pril P1+,000/ay (,000

-&ne 8,000:eventy percent of sales are collected in the month of the sale, and the remainder is collected in the folloing month.

'cco&nts receivale alance @'pril 1, +00(A P10,000Cash alance @'pril 1, +00(A #,000

/inim&m cash alance is P#,000. Cash can e orroed in P1,000 increments from the local an; @ass&me nointerest chargesA.o m&ch cash o&ld e collected in -&ne from sales2'. P (,(00 C. P 8,000%. P 8,#00 *. P10,000

1!. 's of -an&ary 1, +00(, the 6ieral :ales Company had an acco&nt receivale of P#00,000. The sales for -an&ary,

er&ary, and /arch ere as follos3 P1,+00,000, P1,400,000 and P1,#00,000, respectively. Of each months

sales, 80$ is on acco&nt. "0$ of acco&nt sales is collected in the month of sale, ith remaining 40$ collected inthe folloing month. 5hat is the acco&nts receivale alance as of /arch !1, +00(2

'. P(+0,000 C. P#8(,+00

%. P480,000 *. P"00,000

14. 'latross Company started its commercial operations on :eptemer !0 of the c&rrent year. Proected man&fact&ring

costs for the first three months of operations are P1,#"8,000, P1,)#+,000, and P+,1(",000, respectively.

*epreciation, ins&rance, and property taxes represent P+88,000 of the estimated man&fact&ring costs. Ins&rance

as paid on :eptemer !0, and property taxes ill e paid in -&ly next year. :eventy9five percent of the remainder

of the man&fact&ring costs are expected to e paid in the month in hich they are inc&rred, ith the alance to e

paid in the folloing month. The cash payments for man&fact&ring costs in the month of Bovemer are3

'. P1,#"8,000 C. P1,""4,000

%. P1,)#+,000 *. P1,8#",000

1#. 5hat term identifies an acco&nting system in hich the operations of the &siness are ro;en don into reportale

segments and the control f&nctions of a foreperson, sales managers, or s&pervisor is emphasi?ed2

'. =esponsiility acco&nting C. Operations9research acco&nting

%. Control acco&nting *. %&dgetary acco&nting



1". ' responsiility center

'. is an organi?ation &nit here management control exists over inc&rring costs or generating reven&e

%. is responsile for all other departments

C. has a responsile manager in charge of it

*. all of the aove

1(. The se&ence that reflects increasing readth of responsiility is

'. cost center, investment center, profit center

%. cost center, profit center, investment center

C. profit center, cost center, investment center

*. investment center, cost center, profit center

18. ' profit center is

'. a responsiility center that alays reports a profit.

%. a responsiility center that inc&rs costs and generates reven&es.

C. eval&ated y the rate of ret&rn earned on the investment allocated to the center.

*. referred to as a loss center hen operations do not meet the companys oectives.

*. it is a responsiility center hich only generates reven&es.

1). In hich type of responsiility center is the manager held acco&ntale for its profits2

'. Cost center C. Investment center

%. Profit center *. Profit centers or Investment centers

+0. The *ela /erced Companys o&sehold Prod&cts *ivision reported in +00( sales of P1#,000,000, an asset t&rnover

ratio of !.0, and a rate of ret&rn on average assets of 18 percent. The percentage of net income to sales is'. " percent. C. ! percent%. 1+ percent. *. # percent.

+1. /arsh Company that had c&rrent operating assets of one million and net income of P+00,000 had an opport&nity toinvest in a proect that re&ires an additional investment of P+#0,000 and increased net income y P40,000. 'fter theinvestment, the companys =OI ill e'. 1".0$ C. 1).+$%. 18.0$ *. +0.+$

++. /atipid *ivision of 7xpendit&res Company expects the folloing res&lts for +00(3Dnit sales (0,000

Dnit selling price P 10Dnit variale cost P 4Total fixed costs P!00,000Total investment P#00,000Consider the folloing3Investment centers after9tax operating profit P #0,000Investment centers total assets 800,000Investment centers c&rrent liailities 80,0005eighted9average cost of capital ".#$5hat is the economic val&e added @7E'A2'. P"0,000 C. P ",000%. P !,+00 *. P#0,000

+!. If the investment t&rnover increased y !0$ and =O: decreased y +0$, the =OI o&ld'. increase y !0$ C. increase y "$%. increase y 4$ *. none of these

+4. 'n appropriate transfer price eteen to divisions of the =eno Corporation can e determined from the folloingdata3arication *ivision



/ar;et price of s&assemly P#0 Eariale cost of s&assemly P+0 7xcess capacity @in &nitsA 1,000'ssemling *ivision B&mer of &nits needed )005hat is the nat&ral argaining range for the to divisions2

'. %eteen P+0 and P#0 C. %eteen P#0 and P(0%. 'ny amo&nt less than P#0 *. P#0 is the only acceptale price

+#. Company F is highly decentrali?ed. *ivision G, hich is operating at capacity, prod&ces a component that it c&rrentlysells in a perfectly competitive mar;et for P1! per &nit. 't the c&rrent level of prod&ction, the fixed cost of prod&cingthis component is P4 per &nit and the variale cost is P( per &nit. *ivision H o&ld li;e to p&rchase this componentfrom *ivision G. 5hat o&ld e the price that *ivision G sho&ld charge *ivision H2'. P ( C. P 11%. P 1! *. P )

+". The Ealve *ivision of Ind&strial Company prod&ces a small valve that is &sed y vario&s companies as a component

part in their prod&cts. Ind&strial Company operates its divisions as a&tonomo&s &nits, giving its divisional manager

great discretion in pricing and other decisions. 7ach division is expected to generate a rate of ret&rn of at least 14

percent on its operating assets. The Ealve *ivision has average operating assets of P(00,000. The valves are sold

for P# each. Eariale costs are P! per valve, and fixed costs total P4"+,000 per year. The *ivision has a capacity of

!00,000 &nits.

o many valves m&st the Ealve *ivision sell each year to generate the desired rate of ret&rn on its assets2

'. +80,000 C. !##,!8#

%. !#0,000 *. +"#,000

+(. The c&rrent income for a s&&nit is P!",000. Its c&rrent invested capital is P+00,000. The s&&nit is considering

p&rchasing for P+0,000 e&ipment that ill increase ann&al income y an estimated P+,800. The firms cost of

capital is 1+$. If the e&ipment is p&rchased, the resid&al income of the s&&nit ill

'. increase y P+,800 C. increase y P400

%. increase y P1",000 *. increase y 4$

+8. The minim&m re&ired =OI is 1# percent, and divisions are eval&ated on resid&al income. ' foreign c&stomer has

approached /atipids manager ith an offer to &y 10,000 &nits at P( each. If /atipid accepts the order, it o&ld not

lose any of the (0,000 &nits at the reg&lar price. 'ccepting the order o&ld increase fixed costs y P10,000 and

investment y P40,000.

5hat is the minim&m price that /atipid co&ld accept for the order and still maintain its expected resid&al income2

'. P#.00 C. P#."0%. P4.(# *. P).00

+). :egment ' generated sales reven&es of P400,000 and variale operating expenses of P180,000. Its controllale

fixed expenses ere P40,000. It as assigned +0$ of P+00,000 of fixed costs controlled y others. The common

fixed costs ere P+#,000. 5hat as :egment 's controllale segment profit margin2

'. P++0,000 C. P140,000

%. P180,000 *. P1"0,000

!0. If the investment t&rnover decreased y 10$ and =O: decreased y !0$, the =OI o&ld

'. increase y !0$ C. decrease y 10$

%. decrease y !($ *. none of the aove

!1. amily 7nterprises has to divisions3 *avy and -ohnny. *avy *ivision has a capacity to prod&ce +,000 &nits and is

expecting to sell 1,#00 &nits. -ohnny *ivision ants to p&rchase 100 &nits of a prod&ct *avy prod&ces. *avy sells the

prod&ct at a selling price of P100 per &nit, the variale cost per &nit is P+# and the fixed costs total P!0,000. The

minim&m transfer price that *avy ill accept is2

'. P100 C. P4!.(#



%. P4# *. P+#

The folloing information has een gathered y the %&dget *irector of the areton Company, another o&tfit managed y the/as&gid Company. The firm man&fact&res and sells only one prod&ct.

S!llin% ri#! !r unit & P'. E)!#t!* unit s"l!s + ,'- units

Dir!#t l"or #ost is P/. !r hour 01 "n hour o3 DL 4 0 unit o3 ro*u#t

E)!#t!* 56- !%innin% & 2- units E)!#t!* 56- !n*in% & '- units

7"ri"l! 3"#tory !)!ns!s + P//-2 5i)!* o8!rh!"* + P99-

E)!#t!* ;"w <"t!ri"ls- !%innin% + '- %"llons E)!#t!* ;"w <"t!ri"ls- !n*in% & =- %"llons

0 unit 4 0 > %"llons o3 r"w <"t!ri"l ;"w M"t!ri"ls #ost 4 P.0= !r %"llon *urin%

7"ri"l! "*<inistr"ti8! "n* s!llin% !)!ns!s + P0. !r unit

5"#tory o8!rh!"* is "li!* to wor?+in+ro#!ss on th! "sis o3 *ir!#t l"or hours.

In assisting the company to form&late the &dget, yo& determined the folloing &dget parameters.!+. %&dgeted cost of ra materials to e &sed in prod&ction is

'. P1+4,#00 %. P14,)40 C. P8,)10 *. P++,410

!!. %&dgeted ra materials p&rchases cost is

'. P++,)#0 %. P++,410 C. P+!,("0 *. P1+4,#00

!4. %&dgeted direct laor is

'. P+0,(#0 %. P8!,000 C. P"+,+#0 *. P!!,+00

!#. Eariale overhead cost per direct laor ho&r is

'. P1."0 %. P4.80 C. P1.80 *. P".40

!". ixed overhead cost per direct laor ho&r is

'. P1."0 %. P4.80 C. P1.80 *. P".40

!(. %&dgeted contri&tion margin is

'. P#.00 %. P1.80 C. P!.40 *. P+.#8

!8. %&dgeted cost of goods sold @f&ll costA is

'. P(",#00 %. P)",#00 C. P1)",#00 *. P!04,000

!). Bet profit efore tax is

'. P1(8,#00 %. P10!,#00 C. P#!,000 *. P+4),#00

40. Pera Inc. prepared the folloing sales &dget

/onth Cash :ales Credit :ales

er&ary P 80,000 P !40,000

/arch 100,000 400,000

'pril )0,000 !(0,000

/ay 1+0,000 4"0,000

-&ne 110,000 !80,000

Collections are 40$ in the month of sale, 4#$ in the month folloing the sale, and 10$ to months folloing the sale. The

remaining #$ is expected to e &ncollectile. The companys total &dgeted collection from 'pril to -&ne amo&nts to

'. P1,0)0,+#0 %. P1,!+#,#00 C. P1,4"8,#00 *. P1,!)(,#00



41. 'n organi?ations rea;9even point is 4,000 &nits at a sales price of P#0 per &nit, variale cost of P!0 per &nit, and total

fixed costs of P80,000. If the company sells #00 additional &nits, y ho m&ch ill its profit increase2

'. P+#,000 %. P1#,000 C. P10,000 *. P1+,000

4+. Consider the folloing3ixed expenses P(8,000Dnit contri&tion margin 1+Target net profit 4+,000

o many &nit sales are re&ired to earn the target net profit2'. 1#,000 &nits C. 1+,800 &nits%. 10,000 &nits *. +0,000 &nits

4!. Carriean Company prod&ces a prod&ct that sells for P"0. The variale man&fact&ring costs are P!0 per &nit. The fixed

man&fact&ring cost is P10 per &nit ased on the c&rrent level of activity, and fixed selling and administrative costs are

P8 per &nit. ' selling commission of 10$ of the selling price is paid on each &nit sold.

The contri&tion margin per &nit is3'. P+4. C. P!0.%. P!". *. P#4.

44. :eal Fard Ornaments sells lan ornaments for P1# each. :eals contri&tion margin ratio is 40$. ixed costs are

P!+,000. :ho&ld fixed costs increase !0$, ho many additional &nits ill :eal have to prod&ce and sell in order to

generate the same net profit as &nder the c&rrent conditions2

'. 1,"00. C. ",)!!.%. #,!!!. *. 1,0"(.

4#. 't a rea;9even point of #,000 &nits sold, variale expenses ere P10,000 and fixed expenses ere P#0,000. The profitfrom the #,001st &nit o&ld e2'. P10 C. P1#%. P#0 *. P1+

4". >alactica Company has fixed costs of P100,000 and rea;even sales of P800,000. %ased on this relationship, hat isits proected profit at P1,+00,000 sales2'. P #0,000 C. P1#0,000%. P+00,000 *. P400,000

4(. The 'lpine Companys year9end income statement is as follos3:ales @+0,000 &nitsA P!"0,000Eariale costs ++0,000Contri&tion margin P140,000ixed costs 10#,000Bet income P !#,000

'lpines management is &nhappy ith the res&lts and plans to ma;e some changes for next year. If managementimplements a ne mar;eting program, fixed costs are expected to increase y P1),+00 and variale costs to increasey P1 per &nit. Dnit sales are expected to increase y 1# percent.

5hat is the effect on income if the foregoing changes are implemented2'. decrease of P+1,+00 C. increase of P 1,800%. increase of P1!,800 *. increase of P14,800

48. /ercado, Inc. had the folloing economic data for +00(3Bet sales P400,000Contri&tion margin 1"0,000

/argin of safety 40,0005hat is /ercados rea;even point in +00(2'. P!"0,000 C. P!+0,000%. P+88,000 *. P 80,000

4). %elo is the income statement for %lender Co. for +00(3:ales P400,000



Eariale costs @1+#,000AContri&tion margin P+(#,000ixed costs @ +00,000AProfit efore tax P (#,000

5hat is the degree of operating leverage for %lender Company for +00(2'. !."( C. #.!!

%. 1.4# *. 1."(#0. 6evis Company has reven&es of P#00,000, variale costs of P!00,000, and pretax profit of P1#0,000. ad the

company increased the sales price per &nit y 10$, red&ced fixed costs y +0$, and left variale cost per &nit&nchanged, hat o&ld the ne rea;even point in pesos have een2'. P 88,000 C. P100,000%. P 80,000 *. P1+#,000

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Prelims MAS