MAS 1st PB Exam-5May 2021 PRTCaaaaaaaaaaaaa PDF

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Manila * Cavite * Laguna * Cebu * Cagayan De Oro * DavaoMANAGEMENT ADVISORY SERVICES TRINIDADFIRST PRE-BOARD EXAMINATION FEBRUARY 21, 2021Multiple Choice. Select the letter that corresponds to the best answer. This examination consists of 70 items and the exam is good for three (3) hours. Good luck!...

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Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao Since 1977

MANAGEMENT ADVISORY SERVICES FIRST PRE-BOARD EXAMINATION

TRINIDAD FEBRUARY 21, 2021

Multiple Choice. Select the letter that corresponds to the best answer. This examination consists of 70 items and the exam is good for three (3) hours. Good luck! 1. Which consideration influences the frequency of an internal report? a. The wishes of the managers receiving the report. b. The frequencies with which decisions are made that require the information in the report. c. The cost of preparing the report. d. All of the above. 2.

For internal uses, managers are more concerned with receiving information that is: a. completely objective and verifiable. b. completely accurate and precise. c. relevant, flexible, and immediately available. d. relevant, completely accurate, and precise.

3.

Which of the following would be considered a line function? a. Production c. Administrative services b. Maintenance d. Treasurer.

4.

Which of the following statements most accurately explains the behavior of costs? a. There is no norm; rather, costs can be fixed, variable, or a combination of both. b. The majority of costs are variable per unit of production. c. The majority of costs are fixed per unit of production. d. Costs can be fixed or variable but usually not a combination of both.

5.

6.

7.

Operating leverage is high in firms with a. a small proportion of fixed costs, a high proportion of variable costs, and the resulting high contribution margin per unit. b. a small proportion of fixed costs, a high proportion of variable costs, and the resulting low contribution margin per unit. c. a high proportion of fixed costs, a small proportion of variable costs, and the resulting low contribution margin per unit. d. a high proportion of fixed costs, a small proportion of variable costs, and the resulting high contribution margin per unit. Which of the following would decrease contribution margin per unit the most? a. A 15% decrease in selling price b. A 15% increase in variable expenses c. A 15% increase in selling price d. A 15% decrease in variable expenses Leverage Company changed its cost structure by decreasing fixed costs and increasing its per-unit variable costs. The change a. Increases risk and increases potential profit

b. Increases risk and decreases potential profit c. Decreases risk and decreases potential profit d. Decreases risk and increases potential profit 8.

The most useful information derived from a breakeven chart is the a. Amount of sales revenue needed to cover enterprise variable costs. b. Amount of sales revenue needed to cover enterprise fixed costs. c. Relationship among revenues, variable costs, and fixed costs at various levels of activity. d. Volume or output level at which the enterprise breaks even.

9.

A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency if a. the mix of workers used in the production process was more experienced than the normal mix b. the mix of workers used in the production process was less experienced than the normal mix c. workers from another part of the plant were used due to an extra heavy production schedule d. the purchasing agent acquired a very high quality of material that resulted in less spoilage

10. A favorable efficiency variance for direct materials might indicate: a. that lower-quality materials were purchased b. an overskilled workforce c. poor design of products or processes d. a lower-priced supplier was used 11. Which of the following statements about the selection of standards is true? a. Ideal standards tend to extract higher performance levels since they give employees something to live up to. b. Currently attainable standards may encourage operating inefficiencies. c. Currently attainable standards discourage employees from achieving their full performance potential. d. Ideal standards demand maximum efficiency which may leave workers frustrated, thus causing a decline in performance. e. None of the above statements is true 12. The sales price variance is created by a difference between a. actual and standard contribution margin. b. actual and expected sales price. c. expected and standard net income. d. actual and expected sales volume. 13. When a firm prepares financial reports using absorption costing a. profits will always increase with increase in sales b. profits will always decrease with decreases in sales c. profits may decrease with increased sales even if there is no change in selling prices and costs

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EXCEL PROFESSIONAL SERVICES, INC. d. decreased output and constant sales result in increased profits 14. Which of the following statements is correct? a. When production is higher than sales, absorption costing net income is lower than variable costing net income b. If all products manufactured during the period are sold in that period, variable costing net income is equal to absorption costing net income. c. When production is lower than sales, variable costing net income is lower than absorption costing net income d. When production and sales level are equal, variable costing net income is lower than absorption costing net income. 15. If 600 units are produced and only 400 units are sold, __________ results in the greatest amount of expense reported on the income statement. a. throughput costing c. absorption costing b. variable costing d. undeterminable 16. When is the flexible budget prepared? a. before the budget period begins. b. after the budget period begins, but before it ends. c. about halfway through the budget period begins. d. after the budget period ends. 17. The following items are the same for the flexible budget and the master budget except a. the same variable cost per unit. b. the same total fixed costs. c. the same units sold. d. the same sales price per unit. 18. The capital intensity ratio is the: a. ratio of total assets to total equity. b. amount of fixed assets required to generate P1 in sales. c. amount of total assets required to generate P1 in sales. d. the amount of sales generated from every P1 in total assets. 19. Consider the following three statements: I. A profit center has control over both cost and revenue. II. An investment center has control over invested funds, but not over costs and revenue. III. A cost center has no control over sales Which statement(s) is/are correct? a. Only I c. Only I and III b. Only II d. Only I and II 20. The application of the balanced scorecard includes four categories of measures. Production downtime would fall into one of those four categories. The specific category would be: a. customer. c. internal business process. b. financial. d. learning, growth, and innovation. 21. Employee skill sets and the concept of balanced scorecard have received considerable managerial attention in recent years. Under the balanced scorecard methodology, employee skill sets are most likely to be addressed and measured under which category? a. Customer c. Internal business processes b. Financial d. Learning and growth

22. Which of the following would NOT be considered in a make-or-buy decision? a. fixed costs that will no longer be incurred b. variable costs of production c. potential rental income from space occupied by the production area d. unchanged supervisory costs 23. Discontinuing unprofitable products will increase profitability: a. if the resources no longer required by the discontinued product can be eliminated b. if capacity constraints are adjusted c. automatically d. when a large portion of the fixed costs are unavoidable 24. Which one of the following costs would be relevant in short-term decision making? a. Incremental fixed costs. b. All costs of inventory. c. Total variable costs that are the same in the considered alternatives. d. Costs of fixed assets to be used in the alternatives. 25. A useful tool in financial statement analysis is the “common-size” financial statement. What does this tool enable the financial analyst to do? a. Evaluate financial statements of companies within a given industry of approximately the same value. b. Determine which companies in the same industry are at approximately the same stage of development. c. Ascertain the relative potential of companies of similar size in different industries. d. Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over time or between companies within a given industry without respect to relative size. 26. At the optimal order quantity size, the: a. total cost of holding inventory is fully offset by the restocking costs. b. the carrying costs equal the restocking costs. c. restocking costs are equal to zero. d. the total costs equal the carrying costs. 27. The market risk premium is a reflection of the investment community's level of risk aversion. It is calculated by: a. subtracting the return on the market from the risk-free rate. b. multiplying the beta of a stock by the result of subtracting the risk-free rate from the return on the market. c. subtracting the risk-free rate from the return on the market d. multiplying beta of a stock by the expected return on the market. 28. Which of the following capital budgeting techniques may potentially ignore part of a project's relevant cash flows? a. net present value b. internal rate of return c. payback period d. profitability index 29. Of the following, which is the best reason for using activity-based costing? a. to keep better track of overhead costs

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EXCEL PROFESSIONAL SERVICES, INC. b. to more accurately assign overhead costs to cost pools so that these costs are better controlled c. to better assign overhead costs to products d. to assign indirect service overhead costs to direct overhead cost pools 30. Put the following ABC implementation steps in order: A Compute the allocation rates. B Compute the total cost of the products. C Identify the products that are the cost objects. D Select the cost allocation bases. a. DACB c. BADC b. DBCA d. CDAB 31. The following data have been collected for four different cost items. Cost Item W X Y Z

Cost at 100 units P8,000 P5,000 P6,500 P6,700

Cost at 140 units P10,560 P5,000 P9,100 P8,580

Which of the following classifications of these cost items by cost behavior is correct?

a. b. c. d.

Cost W variable mixed variable mixed

Cost X fixed fixed fixed fixed

Cost Y mixed variable variable mixed

Cost Z variable mixed variable mixed

32. Galaxy Company is preparing a flexible budget for the coming year and the following maximum capacity estimates for Department 05 are available: Direct labor hours Variable factory overhead Fixed factory overhead

60,000 P150,000 P240,000

Assume that Galaxy’s normal capacity is 80% of maximum capacity. What would be the total factory overhead rate, based on direct labors, in a flexible budget at normal capacity? a. P6.00 c. P7.50 b. P6.50 d. P8.13 33. Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost for four recent periods appear below.

Activity Cost

Period 1 24 261

Period 2 20 243

Period 3 21 244

Period 4 25 265

Using the least-squares regression method, what is the cost formula for this cost? a. Y = P138.64 + P 5.09X b. Y = P153.41 + P 2.10X c. Y = P146.71 + P 4.74X d. Y = P 0.00 + P11.26X 34. Regal, Inc. sells product Rainbow for P5 per unit. The fixed costs are P210,000 and the variable costs are 60% of the selling price. What would be the amount of sales if Regal is to realize a profit of 10% of sales?

a. P700,000 b. P525,000

c. P472,500 d. P420,000

35. Bauan Company had a 25 percent margin of safety. Its after-tax return on sales is 3.6 percent, and tax rate of 40 percent. What is Bauan’s contribution margin ratio? a. 9 percent c. 24 percent b. 14.4 percent d. 62.5 percent 36. Kator Co. is a manufacturer of industrial components. One of their products that is used as a subcomponent in auto manufacturing is KB-96. This product has the following financial structure per unit. Selling Price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Shipping and handling Fixed selling and administrative Total costs

P150 P20 15 12 30 3 10 P90

During the next year, KB-96 sales are expected to be 10,000 units. All of the costs will remain the same except for fixed manufacturing overhead, which will increase by 20 percent and material, which will increase by 10 percent. The selling price per unit for next year will be P160. Based on these data, the contribution margin from KB-96 for next year will be: a. P620,000 c. P750,000 b. P1,080,000 d. P1,100,000 37. An organization's sales revenue is expected to be P72,600, a 10% increase over last year. For the same period, total fixed costs of P22,000 are expected to be the same as last year. If the number of units sold is expected to increase by 1,100, the marginal revenue per unit will be a. P4 c. P6 b. P20 d. P46

38. A company sells two products, X and Y. The sales mix consists of a composite unit of two units of X for every five units of Y (2:5). Fixed costs are P49,500. The unit contribution margins for X and Y are P2.50 and P1.20, respectively. If the company had a profit of P22,000, the unit sales must have been

Product X Product Y

a. 5,000 12,500

b. 13,000 32,500

c. 23,800 59,500

d. 32,500 13,000

39. The following direct manufacturing labor information pertains to the manufacture of Product B. Time required to make one unit Number of direct workers Number of productive hours per week, per worker Weekly wages, per worker Workers’ benefits treated as direct manufacturing labor costs

2 direct labor hours 50 40 P500 20% of wages

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EXCEL PROFESSIONAL SERVICES, INC. What is the standard direct manufacturing labor cost per unit of Product B? a. P30 c. P24 b. P15 d. P12 40. Eastern Co. has total budgeted fixed costs of P150,000. Actual production of 39,000 units resulted in a P6,000 favorable volume variance. What normal capacity was used to determine the fixed overhead rate? a. 33,000 b. 37,500 c. 40,560 d. 40,625 e. Cannot be determined without further information. 41. Information on Overhead Company’s overhead costs is as follows: Standard applied overhead Budgeted O/H based on standard DLH allowed Budgeted O/H based on actual DLH Actual overhead

P80,000 84,000 83,000 86,000

What is the total overhead variance? a. P2,000 U c. P4,000 F b. P3,000 F d. P6,000 U 42. Hansen Company is a chemical manufacturer that supplies various products to industrial users. The company plans to introduce a new chemical solution called Bysap, for which it needs to develop a standard product cost. The following labor information is available on the production of Bysap. • The product, which is bottled in 10-liter containers, is primarily a mixture of Byclyn, Salex, and Protex. • The finished product is highly unstable, and one 10-liter batch out of six is rejected at final inspection. Rejected batches have no commercial value and are thrown out. • It takes a worker 42 minutes to process one 10liter batch of Bysap. Employees work eight hours a day, including one hour per day for rest breaks and cleanups. What is the standard labor time to produce one 10liter batch of Bysap? a. 0.7 hour c. 0.84 hour b. 0.8 hour d. 0.96 hour 43. TYD, Inc. reported the following data for the year: Actual hours Denominator hours Standard hours allowed for output Fixed predetermined overhead rate Variable predetermined overhead rate

120,000 150,000 140,000 P6 per hour P4 per hour

TYD’s non-controllable variance was a. b. c. d.

P60,000 which is neither favorable nor underapplied. P60,000 favorable. No volume variance. P60,000 under-applied.

44. Compute the sales volume variance based on the following data:

Unit sales Unit sales price Unit variable cost a. b. c. d.

P30,000 P12,000 P30,000 P12,000

Budget 20,000 P30 P18

Actual 21,000 P32 P21

Favorable Favorable Unfavorable Unfavorable

45. The following operating data are available from the records of BONAN CO. for the month of January. Sales @ P70 per unit Production Beginning inventory Costs Direct materials Direct labor Manufacturing overhead Marketing and General Expenses

Variable Cost 59,200 48,000 24,000 5% of sales

P210,000 3,280 units None Fixed Cost

36,080 21,000

The net income for the month under variable costing method would be a. P32,920 c. P23,320 b. P25,500 d. P22,420 46. This year, Roberts Company's income under absorption costing was P2,000 lower than its income under variable costing. The company sold 8,000 units during the year, and its variable costs were P8 per unit, of which P2 was variable selling expense. If production cost was P10 per unit under absorption costing, then how many units did the company produce during the year? a. 7,500 units. c. 9,000 units. b. 7,000 units. d. 8,500 units. 47. In the ABC Company, sales are P800,000, cost of goods under absorption costing is P600,000, and total operating expenses are P120,000. If cost of goods sold is 70% variable and total operating expenses are 60% fixed, what is the contribution margin under variable costing? a. P332,000. c. P260,000. b. P308,000. d. P380,000. Use the following information for the next two questions. Reusser Company produces wood statues. Management has provided the following information: Actual sales Budgeted production Selling price Direct material costs Variable manufacturing costs Variable administrative costs Fixed manufacturing overhead

80,000 statues 100,000 statues P20.00 per statue P5.00 per statue P1.50 per statue P2.50 per statue P2.00 per statue

48. What is the cost per statue if throughput costing is used? a. P11.00 c. P7.50 b. P9.50 d. P5.00...