MAS(Management Advisory Services) 1st preboard PDF

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NATION’S FOREMOST CPA REVIEW INC.(formerly NORTHERN CPA REVIEW)412 Pelizloy Centrum, Lower Session Road, Baguio City Globe:09057473119; Smart: 09294891758 : ncpar@yahoo : northern@facebook RHAD VIC ESTOQUE,CPA,MBA,CMA SET A MANAGEMENT ADVIROSY SERVICES First Pre-board Which of the following is not c...

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Nation’s Foremost CPA Review Inc.: Management Services First Preboard

NATION’S FOREMOST CPA REVIEW INC. (formerly NORTHERN CPA REVIEW)

412 Pelizloy Centrum, Lower Session Road, Baguio City Globe: 09057473119; Smart: 09294891758 : [email protected] : [email protected] RHAD VIC ESTOQUE,CPA,MBA,CMA

SET A MANAGEMENT ADVIROSY SERVICES First Pre-board 1.

Which of the following is not classifiable as a management advisory service by CPA’s c. Make or buy analysis a. Production design b. Project feasibility d. Assistance in budgeting

2.

It consists of the sum total of the methods and the procedures employed in the accumulation and in the organization of its financial data for an enterprise. It is designed by the accountant to fit the peculiar needs of the particular business unit a. Accounting process c. Accounting system b. Accounting cycle d. Auditing

3.

Which of the following is not a controllership function, as distinguished from a “treasury function”? a. Reporting and interpreting c. Protection of assets b. Credit and collection d. Government reporting

4.

In comparing financial and management accounting, which of the following more accurately describes management accounting information? a. Historical, precise, useful b. Required, estimated, internal c. Budgeted, informative, adaptable d. Comparable, verifiable, monetary

5.

Which of the following statements about management or financial accounting is false? a. Financial accounting must follow GAAP b. Management accounting is not subject to regulatory reporting standards c. Both management and financial accounting are subject to mandatory record keeping requirements d. Management accounting should be flexible

6.

The primary purpose of MAS is a. To conduct special studies, preparation of recommendation, development of plans and programs, and provision of advice and assistance on their implementation. b. To provide service or to fulfill some social need c. To improve the client’s use of its capabilities and resources in order to achieve the objectives of the organization d. To earn the beast rate of return on resources entrusted to its care with safety of investment being taken into account and consistent with the firm’s social and legal responsibilities.

7.

In the installation of an accounting system, the following are all essential components, except a. Accounting policies and procedures on handling transactions and book of entries b. Business forms, book of accounts, and chart of accounts. c. Policies and procedures for purchase, handling of inventories and control of manufacturing costs. d. Procedures and strategies in marketing the products.

8.

A long-term plan that fulfills the goals and objectives of an organization is known as a (n)

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MAS – 13th Batch – 1st PB

Nation’s Foremost CPA Review Inc.: Management Services First Preboard

a. Management style c. Mission statement b. Strategy d. Operational mission 9. A systematic gathering and analysis of data concerning a proposed projectand the formulation of conclusions there from for the purpose of determining whether or not it is viable and if so, its degree of profitability. a. Return on investment study b. Long range planning c. Information flow analysis d. Feasibility study 10. Which of the following major aspects of the project feasibility study isusually the most important? a. Marketing, engineering or technical and financial b. Financial, management and economic benefits c. Financial, marketing and management d. Financial, marketing and economic benefits 11. A a. b. c. d.

management information system should satisfy External demands for information External and internal demands of information Internal demands for information The Accounting Department’s demands for information

12. Who of the following are external users of data gathered by a managementinformation system? Creditors Competitors Suppliers a. yes no yes b. no no no c. no yes yes d. yes yes yes 13. The automatic copying or transcription from one business record to one or more other records frequently with simultaneous reproduction at the time the one original records is prepared is a. Integrated Data Processing b. Programming c. Accounting system d. Output device 14. It transfers data out of the electronic data equipment in the form of completed readable printed materials c. Arithmetic unit a. Output device b. Source document d. Memory unit 15. What do you call a chart that shows the step-by-step elements of an activity including time notations and distances traveled? It is also used to determine how operations and steps might be eliminated, simplified or subdivided for greater efficiency. c. Work distribution chart a. Process flowchart b. Layout flowchart d. Procedure flowchart 16. Who is primarily responsible in the detection and correction of error in the processing of data? The a. Independent public accountant b. Independent internal control group c. Machine operator d. Data processing manager 17. The initial debugging of a computer program should be normally done by the c. Machine operator a. Programmer b. Internal auditor d. Control group 18. An orderly arrangement of procedures, personnel, written records, equipment and device utilized for the systematic collection, processing

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MAS – 13th Batch – 1st PB

Nation’s Foremost CPA Review Inc.: Management Services First Preboard

and reporting of financial and other information essential to the efficient conduct and evaluation of the activities of an enterprise. a. Accounting system c. Accounting process b. Accounting cycle d. Management Information System 19. A technique used to code items and collect them into group prior to processing is called a. On-line c. Tape sorting b. Batching d. Coding 20. Two basic methods of processing business data are a. Machine and manual bookkeeping b. Computer and punched card processing c. Daily and weekly processing d. Batch and on-line processing 21. Dexter Co. has a debt ratio of 0.50, a total assets turnover of 0.25, and a profit margin of 10%. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio, along with the 14% profit margin, is required to double the return on equity? d. 0.55 a. 0.75 b. 0.70 c. 0.65 22. Jones Inc. has a total asset turnover of 0.30 and a profit margin of 10%. The president is unhappy with the current return on assets; and he thinks it could be doubled. This could be accomplished by (1) increasing the profit margin to 15% and (2) increasing the total assets turnover. What new asset turnover ratio, along with the 15% profit margin, is required to double the return on assets? a. 35% b. 45% c. 40% d. 50% 23. Buttercup Co. sells on terms 3/10 net 30 days. Gross sales for the year are P2,400,000 and the collections department estimates that 30% of the customers pay on the tenth day and take discounts; 40% pay on the thirtieth day; and the remaining 30% pay, on the average, 40 days after the purchase. Assuming 360 days per year, what is the average collection period? a. 40 days b. 15 days c. 20 days d. 27 days 24. Veronica Co., whose gross sales amounted to P1,200,000 sold on terms of 3/10, net 30. The collections manager estimated that 30 percent of the customers pay on the tenth day and take discounts; 40 percent on the thirtieth day; and the remaining 30 percent pay, on the average, 40 days after the purchase. If management would toughen on its collection policy and require that all non-discount customers pay on the thirtieth day, how much would be the receivables balance? a. P60,000 b. P80,000 c. P70,000 d. zero 25. Selected information for the PRINCE COMPANY is as follows: Cost of goods P 5,400,000 Average inventory 1,800,000 Net sales 7,200,000 Average receivables 9 60,000 Net income 720,000 Assuming a business year consisting of 360 days, what was the average number of days in the operating cycle for 2005? a. 72 b. 84 c. 144 d. 168 26. KING COMPANY had net income of P5,300,000 and earnings per share on common stock of P2.50. Included the net income was P500,000 of bond interest expense related to its long-term debt. The income tax rate was 50%. Dividends from preferred stock was P300,000. The dividend-payout ratio on common stock was 40%. What were the dividends on the common stock?

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Nation’s Foremost CPA Review Inc.: Management Services First Preboard

a. P1,800,000 c. P2,000,000 b. P1,900,000 d. P2,120,000 27. Judith Co. has an inventory conversion period of 60 days, a receivable conversion period of 35 days, and a payment cycle of 26 days. If its sales for the period just ended amounted to P972,000, what is investment in accounts receivable? (Assume 360 days in year) a. P85,200 b. P72,450 c. P94,500 d. P79,600 28. The corporation exercise control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation? a. Result in an increase current ratio b. Result in increased earnings per share c. Increase several turn-over ratios d. Decrease book value per share 29. Roswell Co. generated the following results for the period just ended: Sales P1.0 million Net income 0.1 million Capital investment 0.5 million To arrive at the return on investment, the following should be used. a. ROI=(5/10) X (10/1) c. ROI=(5/10) X (1/10) b. ROI=(10/5) X (10/1) d. ROI=(10/5) X (1/10) 30. Brain Co. has stockholders’ equity equal to 60% of total liabilities and stockholders’ equity of P120 million. If the return on total assets invested registers 9%, what is the return on stockholders’ equity? d. 12% a. 10% b. 6% c. 15%

The estimated operating income of Blue Co. for the production of plastic bags for the year ended December 31 is arrived as follows: Sales Cost of Sales Direct Materials

P 11,250.00 P 1,685.00

Direct Labor

1,575.00

Variable factory overhead

1,125.00

Fixed factory overhead Gross income from sales Selling and administrative expenses Variable expenses Fixed expenses Net operating income

562.00

4,947.00 6,303.00

P 2,365.00 1,538.00 P

3,903.00 2,400.00

31. How much sales would be necessary in order to break-even? a. P3,500 b. P6,750 c. P4,500 d. P5,250

Presented below are the results of operations of the Acute Co.: Sales (150,000) units) Cost of goods sold: Fixed Variable

P 600,000.00 P 150,000.00 300,000.00

450,000.00

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Nation’s Foremost CPA Review Inc.: Management Services First Preboard

Gross profit 150,000.00 Selling and administrative: Fixed P 39,000.00 Variable 84,000.00 45,000.00 Income before taxes P 66,000.00 The company is concerned about the expected increase in fixed manufacturing cost by 50% if it will buy new equipment with a higher production capacity. However, further study shows that with the expected increase in production, sales volume will be expected to increase by 40% while variablemanufacturing costs will decrease from P2 to P1.50 per unit. The total fixed selling and administrative expenses and the variable selling and administrative expenses will remain the same. The company has been operating at full capacity. If the company will buy the new equipment, 32. What would be the break-even point in terms of units? b. 66,000 c. 176,000 d. 105,600 a. 120,000 Dave Co. is expecting an increase of fixed costs by P78,750 upon moving their place of business to the downtown area. Likewise, it is anticipating that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to break-even is P750,000 but with the expected increase in fixed costs, the sales volume necessary to breakeven would go up to P975,000. Based on this projection 33. What is the profit volume ratio of Dave Co.? c. 45% d. 65% a. 35% b. 40% The following information pertains to Zoe Co.’s cost-volume-profit relationships: Breakeven point in units sold 1,000 Variable cost per unit P500 Total fixed costs P150,000 34. How much will be contributed to profit by the 1,001 unit sold? d. P300 a. P650 b. P500 c. P150 Saber Co. produces two products, Cole and Cane that account for 40% and 60% of the total sales peso of Saber, respectively. Variable costs as a percentage of sales pesos are 75% for Cole and 60% for Cane. Total fixed costs are P300,000. There are no other costs. 35. The break-even point in sales pesos for the company is a. P882,352.94 c. P529,411.76 b. P362,941.17 d. P300,000.00 Step-by-Step explanation The correct answer is a. P882,352.94 The Break-even point is the point where a business's total income equals the total expenses. At this point, the business has no total loss or gain. The Break-even point is computed by dividing the fixed costs by the contribution margin. The contribution margin is the representation of the part of sales that was not consumed by the variable cost and is used to cover the fixed costs. Solution; Break-even point=total fixed costs/contribution margin Contribution margin=total sales of cole (in %) ×(100-percentage variable cost)+total sales of cane (in %)×(100-percentage variable cost)

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MAS – 13th Batch – 1st PB

Nation’s Foremost CPA Review Inc.: Management Services First Preboard

Contribution margin=40%(100-75)+60%(100-60) 0.4×25+0.6×40 =10+24=34% contribution margin=34% fixed costs=P300,000 Break-even point=P300,000/34% P300,000/0.34=P882,352.9411 rounded to the nearest 2 DP=P882,352.94 Break-even point=P882,352.94 36. The current break-even sales of Dream Co. is P700,000 per year. It is computed that if fixed expenses will increase by P80,000, the sales revenue required to break-even will also increase to P900,000 without any change on the variable expenses and selling price per unit. Before the increase of P80,000, the total fixed expenses of Dream Co. is a. P160,000 b. P220,000 c. P280,000 d. P360,000 The following information pertains to the two types of products manufactured by Key Co.

Product Y Product Z

Selling Price P120 500

Variable Cost P70 200

37. Fixed costs total P300,000 annually. The expected mix in units is 60% for Product Y and 40% for product Z. How much is Key’s breakeven sales in pesos? a. P522,000 b. P420,000 c. P475,000 d. P544,000 Step-by-Step explanation Computation of breakeven point Breakeven point = TFE / (WS - WV) TFE = Total Fixed Expenses WS = Weighted average selling price = (Sale price of product A × Sales percentage of product A) + (Sale price of product B × Sale percentage of product B) + .. WV = Weighted average variable cost per unit = (Variable expenses of product A* Sales percentage of product A) + (Variable expenses of product B *Variable expenses of product B) +... Breakeven point = $300000/ ($272-$122) = $300000/ $150 = 2000 units WS = $120*60% + $500*40% = $72+$200 = $272 WV = $70*60% + $200*40% = $42+$80 = $122 Computation of breakeven point in Dollars The company will have to sell 2,000 units to break-even. Now compute the number of units of each product to be sold: Product y = 2000*60% = 1,200 Product z = 2000*40% = 800 As the number of units of each individual product to be sold has been computed, now compute the breakeven point in dollars as follows Product y = 1200*$120 = $144000 Product z = 800*$500 = $400000 Breakeven point in dollars = $544,000

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MAS – 13th Batch – 1st PB

Nation’s Foremost CPA Review Inc.: Management Services First Preboard

38. Helen Co. sells Product E 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 Helen is to realize a profit of 10% of sales? c. P472,500 d. P420,000 a. P700,000 b. P525,000 39. The Cole Co. is planning to produce two products, Alt and Tude. Cole is planning to sell 100,000 units of Alt at P4 a unit and 200,000 units of Tude at P3 per unit. Variable costs are 70% of sales for Alt and 80% of sales for Tude. In order to realize a total profit of P160,000. Total fixed costs must be? a. P100,000 b. P120,000 c. P80,000 d. P90,000 40. Doe Co. has fixed costs of P100,000 and breakeven sales of P800,000. What is the projected profit at P1,200,000 sales? b. P150,000 c. P200,000 d. P400,000 a.

With a production of 200,000 units of Product A during the month of June, Mort Co. has incurred costs as follows: Direct materials used P 200,000.00 Direct labor used 135,000.00 Manufacturing overhead Variable 75,000.00 Fixed 90,000.00 Selling and administrative Variable 30,000.00 Fixed 85,000.00 Total P 615,000.00

41. Under absorption costing, the unit cost of Product A was a. P2.20 b. P2.50 c. P3.15 d. P2.05

The following operating data are available from the records of Bone Co. for the month of January Sales (P70 per unit) P 210,000.00 Direct materials 59,200.00 Direct labor 48,000.00 Manufacturing overhead Fixed 36,080.00 Variable 24,000.00 Selling and administrative Fixed 21,000.00 Variable-5% of sales Production in units 3,280 units Beginning inventory none 42. The net income for the month under variable costing method would be a. P19,420 b. P25,500 c. P23,320 d. P22,420 The books of Marie Co. showed the following figures relating to Product X: Beginning and Ending WIP and Fin. Goods None No. of units produced 40,000 units No. of units sold at P15.00 32,500 units Direct materials cost P 177,500.00 Direct labor cost 85,000.00 Fixed overhead 110,000.00 Variable overhead 61,500.00 Fixed administrative 30,000.00 Ending WIP None

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MAS – 13th Batch – 1st PB...