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The following statements characterize MAS practice, except:

a. The risks associated to multifarious ongoing changes in business environment and conditions greatly
contribute in making MAS Practice visibly important.
b. CPA advisors must always maintain independence and integrity despite the so many situations that may
negate their practical applicability.
c. The practice of advisory services is too broad to include those outside the traditional professional services of
CPAs and allow him to deviate from the general code of professional ethics governing the practice of
2. What is one primary benefit of an enterprise resource planning (ERP) system?
a. it reduces inventory levels.
b. it permits companies to be more streamlined in production
c. it replaces research and development in a company
d. it requires an increased emphasis on product quality
3. Which one of the following is classified as direct labor?
a. flour in a bakery
c. bottlers of cola in a bottling company
b. wages of factory janitors
d. copy machine costs at a copy shop
4. What is value chain management best defined as?
a. A large chain that keeps the machines from falling on the production floor
b. Management decisions that affect how quickly the production run occurs
c. The incremental value of costs associated with hiring a new production floor leader
d. All activities associated with providing a product of service
5. For what reason is production cost primarily tracked?
a. To keep up with current cost trends to bring products to market
b. To effectively allocate the cost of products to measure profitability
c. To determine what amounts are necessary for allocation overhead
d. To keep managements bonuses increasing every year.
6. The following activity and cost data were provided by Hammer Corp., which would like help in estimating its future
maintenance costs:
Maintenance cost
Using the least squares regression method to estimate the cost formula the expected total cost for an activity level of 10 units
would be closest to:
a. P612.50
b. P581.82
c. P595.84
d. P601.50
7. Selected information about Buehler Corporations operations at high and at low levels of activity follow:
Level of Activity
Number of units produced
Total manufacturing costs
Direct material cost per unit
Direct labor cost per unit
Using the high-low method, what is the cost formula for manufacturing overhead?
a. P50,000 per period plus P10 per unit
c. P50,000 per period plus P22 per unit
b. P50,000 per period plus P21 per unit
d. P347,000 per period plus P0.10 per unit
8. Expected sales for next year for the Jona Division are 120,000 units. Nestor Carey, the manager of the Jona Division, is under
pressure to improve the performance of the division. As he plans for next year, he has to decide whether to produce 120,000
units or 140,000 units. The Jona Division will have higher profit. If Nestor Carey decides to
a. produce 140,000 units if income is measured under absorption costing
b. produce 140,000 units if income is measured under variable costing
c. produce 120,000 units if income is measured under absorption costing
d. produce 120,000 units if income is measured under variable costing.
9. Which is not true concerning sales mix?
a. Sales mix is the relative percentage in which each product is sold when a company sells more than one product.
b. Sales mix is important to managers because different products often save substantiDurian different contribution
c. Sales mix does not affect breakeven analysis
d. The computation of weighted average unit contribution margin is useful in sales mix analysis
10. During the last year, Ruth Company had profit under absorption costing that was P5,500 lower than its income under
variable costing. The company sold 9,000 units during the year, and its variable costs were P10 per unit, of which P6 was
variable selling expense. If fixed production cost is P5 per unit under absorption costing every year, then how many units did the
company produce during the year?
a. 7,625 units
b. 8,450 units
c. 10,100 units
d. 7,900 units
11. Last year, Francis Company had 20,000 units in its ending inventory. During the year, Francis variable production costs were
P12 per unit. The fixed manufacturing overhead cost was P8 per unit in the beginning inventory. The companys profit for the
year was P9,600 higher under variable costing than it was under absorption costing. Given these facts, the number of units of
product in the beginning inventory last year must have been:
a. 21,200
b. 19,200
c. 18,800
d. 19,250
Questions 12 through 13 are based on the following information:
Jason Companys variable costing income statement for August appears below:
Jason Company
Income statement
For the month ended August 31
Sales (P15 per unit)
Less variable costs:
Variable cost of goods sold:
Beginning inventory

Add variable CGM

Goods available for sale
Less ending inventory
Variable cost of goods sold
Variable selling expense
Total variable costs
Contribution margin
Fixed costs:
Fixed manufacturing
Fixed selling and administrative
Total fixed costs
The company produces 35,000 units each month. Variable production costs per unit and total fixed costs have remained
constant over the past several months
12. The peso value of the companys inventory on August 31 under the absorption costing method would be:
a. P27,000
b. P42,000
c. P36,000
d. P47,000
13. Under absorption costing, for the month ended August 31, the company would report a:
a. P20,000 profit
b. P5,000 loss
c. P35,000 profit
d. P5,000 profit
14. ABC had P400,000 budgeted fixed overhead costs and based its standard on normal activity of 40,000 units. Actual fixed
overhead costs were P430,000 actual production was 36,000 units, and sales were 30,000 units. The volume variance was
a. P30,000
b. P40,000
c. P70,000
d. P77,777
15. Myla Inc. makes a single product that sells for P50. The standard variable manufacturing cost is P32.50 and the standard
fixed manufacturing cost is P7.50, based on producing 20,000 units. During the year Myla produced 22,000 units and sold
21,000 units. Actual fixed manufacturing costs were P157,000; actual variable manufacturing costs were P735,000. Selling and
administrative expenses, all fixed, were P75,000. There were no beginning inventories;
Which costing model, absorption or variable, has a higher profit and how much?
a. Absorption, P7,500
b. Variable, P7,500
c. Absorption, P25,000
d. Variable, P15,000
16. Which one of the following is true about the graph of a mixed cost?
a. The portion of the cost that is fixed cannot be determined from the graph.
b. There are three lines on the graph for this cost-total variable costs total fixed costs and revenue
c. The fixed cost portion of the graph is the same amount at all levels of activity.
d. The variable cost portion of the graph is rectangular in shape.
17. Company A and Company B sell their products for exactly the same sales prices. Both have the same annual fixed costs.
Company As variable and fixed costs at breakeven total P60,000 and P30,000 respectively. Company Bs variable and fixed
costs at breakeven total P30,000 and P60,000 respectively. Both companies have the same profit. If both companies experience
an increase in sales, which company will have the higher profit?
a. company A
c. Both companies will report the same profits since total costs are the same
b. company B
d. More information is needed to determine the answer
18. Jonathan Corporation sells its product for P40. The variable costs are P18 per unit. Fixed costs are P16,000. The company
is considering the purchase of an automated machine what will result in a P2 reduction in unit variable costs and an increase of
P5,000 in fixed costs. Which of the following is true about the breakeven point in units?
a. It will remain unchanged
c. it will increase
b. it will decrease
d. it cannot be determined from the information provided
19. Which of the following statements is not true?
a. Operating leverage refers to the extent to which a companys profit reacts to a given change in sales
b. Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c. When a companys sales revenue is increasing, high operating leverage is a good thing because it means that profits
will increase rapidly.
d. When a companys sales revenue is decreasing, high operating leverage is good thing because it means that profits
will decrease at a slower pace than revenues.
20. Pinoy buhay-buhay is a nonprofit organization that captures stray deer from residential communities. Fixed costs are
P10,000. The variable costs of capturing each deer is P10.00 each. Pinoy buhay-buhay is funded by a local philanthropy in the
amount of P32,000 for 2010. How many deer can Pinoy buhay-buhay capture during 2012?
a. 2,200
b. 3,200
c. 4,200
d. 2,000
21. Ruth Companys degree of operating leverage is 2.0. Myla corporations degree of operating leverage is 6.0. if the companies
are expected to increase by 10%. The increase (decrease) in the profit before interest and tax of Ruth as compared to Myla
would be:
a. 30% higher
b. 2 times higher
c. 3 times higher
d. 33% lower
Questions 22 and 23 are based on the following information:
Below are income statements that apply to ABC Companys three product line:
Product A
Product B
Product C
Variable costs
Contribution margin
Fixed costs
Profit before taxes
22. Within the relevant range, if sales go up by P1 for each firm, which product line will experience the greatest increase in profit
a. Company A
c. Company C
b. Company B
d. cant be determined from the information given
23. At sales of P100, what is the difference in the margin of safety rate between the two product lines having the highest
profitability performance?
a. 85.71%
b. 75%
c. 66.67%
d. 10.71%
25. Which one of the following is a critical factor in budgeting for a service company?
a. Coordinating professional staff needs with anticipated services
b. Determining how to allocate the disproportionate costs
c. Budgeting expenditures before anticipated receipts
d. Determining client needs.

26. The performance report of Bohol Division of South Inc. showed a difference between the budget and the actual results for
the year. Management determines this difference was controllable by the manager in charge. Should the division manager be
held responsible?
a. No, since budget differences fluctuate over time
b. Yes, because managers are responsible for controllable costs for their departments
c. Only if the difference is favorable
d. Yes, managers are responsible for all costs in their division
27. Which of the following includes people who make up the budget committee?
a. Sales manager, company president, company treasurer
c. Sales manager, controller, investors
b. Company treasurer, creditors, controller
d. External auditors, controller, treasurer
28. How does a sales forecast differ from a sales budget?
a. A sales forecast includes the company, while a sales budget includes the industry.
b. A sales forecast includes the company and the industry, while a sales budget includes only the industry
c. A sales forecast includes the company and the industry, while a sales budget includes only the company.
d. They are both the same
29. Burnham Park Company makes and sells umbrellas. The company is in the process of preparing its Selling and
Administrative Expense Budget for the last half of the year. The following budget data are available based on 20,000 units:
Variable Cost per Unit Sold
Monthly Fixed Cost
Sales commissions
Depreciation on office equipment
Other operating expenses
Expenses are paid in the month incurred. If the company has budget to spend P90,900 for the expenses, how many units does
the company expect to sell in the last half of the year?
a. 20,000
b. 22,000
c. 37,102
d. 20,367
30. The production budget shows expected unit sales are 1,800. The required production units are 1,700. Which of the following
represents possible inventory balances?
Beginning Units
Ending Units
a. 200
b. 100
c. 200
d. 0
31. Bayantel Company showed the following on its direct materials budget for June:
Units to be produced
Total pounds needed for production
Total pounds of materials to be purchased
Increase in materials inventory
The materials costs P2 per pound. How much is the cost or direct materials per unit?
a. P0.16
b. P25
c. P20
d. P0.20
32. Bajada Company reported the following information for 2012:
Budgeted sales
Budgeted purchases
Cost of goods sold in 35% of sales
Bajada purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month
Accounts payable is used only for inventory acquisitions
How much is the budgeted balance for accounts payable at October 31, 2012?
a. P48,000
b. P72,000
c. P102,000
d. P51,200
33. All-purpose Equipment Inc. is planning to sell 200 buckets and produce 190 buckets during March. Each bucket requires 500
grams of plastic and one-half hour of direct labor. Plastic costs P10 per 500 grams and employees of the company are paid
P15.00 per hour. Manufacturing overhead is applied at a rate of 10% of direct labor costs. All-purpose Equipment has 300 kilos
of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted
direct labor for march?
a. P1,500
b. P3,000
c. P1,425
d. P2,850
34. If a company is concerned with the potential negative effects of establishing standards they should
a. set loose standards that are easy to fulfill
c. not employ any standards
b. offer wage incentives to those meeting standards
d. set tight standards in order to motivate people
35. Which of the following statements is false:
a. The overhead volume variance indicates whether plant facilities were used efficiently during the period
b. The costs that cause the overhead volume variance are usudurian controllable costs
c. The overhead volume variance relates solely to fixed costs.
d. The overhead volume variance is favorable if standard hours allowed for output is greater than the standard hours at
normal capacity.
36. An unfavorable labor quantity variance may be caused by
a. paying workers higher wages than expected
c. worker fatigue or carelessness
b. paying workers a bonus at year end
d. higher pay rates mandated by union contracts
37. The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the
actual number of direct labor hours worked was 8,400. If the direct labor price variance was P8,400 unfavorable, and the
standard rate of pay was P18 per direct labor hour, what was the actual rate of day or direct labor?
a. P17.00 per direct labor hour
c. P19.00 per direct labor hour
b. P15.00 per direct labor hour
d. P18.00 per direct labor hour
Questions 38 and 39 are based on the following information. The controller for oriental gravity is reviewing the production cost
report for July. An analysis of direct materials costs reflects an unfavorable flexible budget variance of P25.00 the plant manager
believes this is an excellent performance on a flexible budget for 5,000 units of direct materials. However, the production
supervisor is not pleased with this result because he claims to have saved P1,200 in materials cost on actual production using
4,900 units of direct materials. The standard materials cost is P12.00 per unit. Actual materials used for the month amounted to

38. The actual average cost per unit of materials was

a. P12.00
b. P12.01
c. P12.24
d. P12.25
39. If the direct materials variance is investigated further, it will reflect a price variance of
a. Zero
b. P1,176 favorable
c. P1,225 unfavorable
d. P1,250 unfavorable
40. The Dongyi Companys has a standard cost system. In July the company purchased and used 22,500 pounds of direct
material at an actual cost of P53,000; the materials quantity variance was P1,875 UF; and the standard quantity of materials
allowed for july production was 21,750 pounds. The budgeted materials for the period are 23,000 pounds for purchases and
24,000 for usage
Also during the period, the company incurred 12,540 direct labor hours and paid 5,300,00 for plant payroll. The
materials price variance for july was
a. P2,725 F
b. P2,725 U
c. P3,250 F
d. P3,250 U
41. The Reedy Company uses a standard costing system. The following data are available for November:
Actual direct labor hours worked
5,800 hours
Standard direct labor rate
P9 per hour
Labor rate variance
P1,160 favorable
Standard pounds per hour
Standard variable overhead rate per hour
Normal capacity in hours
The actual direct labor rate for November is:
a. P8.80
b. P8.90
c. P9.00
d. P9.20
42. Borden Enterprises uses standard costing. For the month of April, the company reported the following data:
Standard direct labor rate
P10 per hour
Standard hours allowed for actual production
Actual direct labor rate
P9.50 per hour
Labor efficiency variance
P4,800 F
The labor rate variance for April is
a. P3,760 U
b. P3,760 F
c. P2,850 F
d. P2,850 U
Questions 43 and 44 are based on the following information:
The Lon Company makes and sell a single product called a Grix and employs a standard costing system. The following
standards have been established for one unit of Grix:
Standard Quantity or Hours
Standard Cost per Grix
Direct materials
6 board feet
Direct labor
0.8 hours
There were no inventories of any kind on August during August, the following events occurred:
Purchased 15,000 board feet at the total cost of P24,000
Used 12,000 board feet to produce 2,100 Grix
Used 1,700 hours of direct labor time at a total cost of P20,060
43. The record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance
a. P1,500 credit
b. P1,500 debit
c. P6,000 credit
d. P6,000 debit
44. To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the
Labor Efficiency variance account?
a. P480 credit
b. P240 debit
c. P1,200 debit
d. P1,200 credit