Maniia PREWEEK MANAGEMENT ADVISORY SERVICES pias PROBLEMS CG oh G2 Para Co. is reviewing the following deta relating to an enesgy seving F ivestment proposal: Cost P50,000 «74° Residual value at the end of 5 years 16,060 Present value of an annuity of 1 at 12% for S years «3.60. Present value of 1 due in 5 years at 12% 057 What would be the annual savings needed to make the investment realize 2 12% yield? a. P8189 mie © P12,306 texan ert tf b. P1111 ‘ P be ati} ee @ rss Pole Co. is investi Machine with 2 three-year fe. The machine is expected to reduce annual cash operating costs by P30,000 in each of the first two years and by 20,000 In year three. Present values of an annuity of Pi at 14% are Yet ier ia = dese 1 Jom # tus < wbered t hes wos 3 BOW KOT tee 3 ania Using @ 14% cost of capital, whet is the present value of these future savings? a. P59,600 c P62.990 b. P60,800 @. P6S,SO0 ITEMS 3 TO 5 ARE BASED ON THE FOLLOWING INFORMATION: Super D, a computer disk storage and back up company, uses accrual accounting. The company’s Statement of Financial Position as of November 30 is as follows: ‘Super D ‘Statement of Financia! Position November 30 Assets Liabittes & Stockholders’ Equity Cash P 52,000 Accounts payabie P 175,000 Accounts receivable, net 150,000 Common stock 900,000 Inventory 315,000 _ Retained earnings ~- A200 Property, plant & eqpmnt. 1,000,000 Total Eablities Total assets Pi.312.009 and stockholders’ equity 1,517,000 Additional information regarding Super D's operations include the following: prdsen * Sales are budgeted at P520,000 for December and P500,000 for January of the next Sen ver 3 year. * Collections are expected to be 60% in the month of sale and 40% in the month following the sale. * Eighty percent of the disk drive components are purchased in the month prior to the month of sale, and 20% are purchased in the month of sale. Purchased components are 40% of the cost cf goods sold. + Payment for the components is made in the month fotlowing the purchase. © Cost of goods soid is 30% of sales.A. 3. Super b's budgeted enitections for the month nf Heroes ale «ass Soles $20ynv 462,000 Ge PRAUO00 nk eet Kk P402,000 d, P208,000 oa Fan ee fev 1D) 4. Super O’s projected balance In accounts payable on December 31 Is eon | a, 201,600 c. P166,400 ! b, 416,000 ® P161,280 C. 5. Super D’s projected gross profit for the month ending December 31 Is L a. PO 104,000 yur vz, 200K 287 b, PS36,000 P416,000 t ® 6. An individual receives an Income of P3,000 per month, and spends P2,500, An Increase in Income of P500 per month occurs, and the individual spends 2,800. The individual's marginal propensity'to save Is M? ta concent, DO beretene 20.20 = dias §—, AMGUMI, 0.60 A HY | Ir «3 A 0.40 Aiwrmone BING, 0.80 Ty Gem | ago ITEMS 7 TO 10 ARE BASED ON THE FOLLOWING INFORMATION: 1 ay ae hele ge ‘An organization has four Investment proposals with the following costs and expetted cash inflows: Expected Cash Inflows Project Cost End of End of End of year 1 year 2 year3 A Unknown 10,000 »—P10,000—P10,000 8 20,000 5,000 10,000 15,000 Cc 25,000 15,000 10,000 5,000 D -30,000 20,000 Unknown 20,000 000 NOTE: round present value factors to four (4) decimal places. en vel CO) VB, 7. If Project A has an internal rate of return (IRR) of 15%, then It has a cost Of 2.2432 civ Irey a. P8696 % ¢, P24,869 " b. P22,832 HED een @. 27,232 a 1} 8. Ifthe discount rate is 10%, the net present value (NPV) of Project Bis | a. 4,079 hi et P9869 Samy 0-404) HO, DB. P6789 sae, 68s 4 d. P39,204 jee A VB2GH S GRU Pypan gen + HO ISuw x 4695) C9. The payback period of Project C is Eh 18 = ah He OVeais . 2years. 200 b. Lyear. 4. 3 years, Ta + () 10. If the discount rate Is 5% and the discounted payback pcriad of Project D Is exactly two? years, then the year two cash Inflow for Project Dis cg m1 Wee Mme a. P 5,890 ray te , ©. P12,075 0,00 eo B P10,000 pratye Sats qanermuay P4302 aor a. 16,500 Bia * 133599 c, 12,500 ; -be 13,750 d, 11,250 B 42. Assume that an ABC analysis of the effects of the redesign of the produgt mentioned in the fact pattern unexpectedly revealed an Increase In the batch-level cost per driver to 2,400 and in the quantity of the product-level driver to 2,600. According fo ABC analysis, how many units must be sold to generate operating Income of P30,000 If fixed costs are unchanged? Yates 9uey ray Aor 16,500 Yrdat 2200 * 1Col c. 13,750 b. 15,917 phan Te d, 13,167 Seat t2y-> 15a TTEMS 43 to 44 ARE BASED ON THE FOLLOWING INFORMATION: The Dashi, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2014 Is presented below: : Dashi, Inc, | Income Statement For the Quarter Ended March 31; 2014 Sales : trl. PBO0,000 207 Cost of goods sold 4,1560,000 Gross margin P240,000 Less Operating Expenses: Sales P105,000 Administrative 105,000 210,000 Net income 230,000 On average, 2 book sells P40, Variable selling expenses are #3 per book, the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remalnder Is fixed. i In [i we 1) 43. The contribution margin of Dashi, Inc. for the first quarter of 2014 igh ast -a, P660,000. ot oor ha eye & P180,000. iA BST) p. 700,000. yy i Bd P140,000.- f 44. The net income using the contribution approach for the first quarter of 2014 is iA ‘a. P30,000. en. Mg c. P140,000. B.P180,000. th Fir yan gpede PO- (45. The cost formula forloperating expgisesvty “¢" equal to the number of books sold is a. y = P105,000 + P3x. mre “ov . y =P110,000 + P5x. b.y = P105,000 + P5x. 9° * Yaw. dk. y= P110,000 + P33x, a 46. If 25,000 books are sold during the second quarter of 2014, the company’s contribution "margin would equal to 10, 3 P875,000. 33 _ ¢. P175,000. b. P300,000. 7 d. P65,000,nw B 48. ‘The market price per share of PE Co, on January 1, 2014 was POO, andl on December 31, 2014 was P72. Net income for 2014 was 48,000. rides to the preference Shareholders for the year totaled 12,000, and dividends of P2.50 pér share were paid on the 6,000 ordinary shares outstanding during the year. The priceearnings ratio for PE Co. me atyearendwas Wl! tyr 2 12 & 10to1 =P nr c itor = 1. fo b. 6 to FM Geter = © EFS a 12 to1 : RPI Co.'s net accounts receivable was 430,000 on December 31, 2013 and P480,000 on December 31, 2014. Cash sales during 2014 were P175,000. The accounts receivable turnover for 2014 was 5, The company’s total sales for 2014 were a. 3,150,000 Aut AV = 1A . P2,275,000 cred sexes BE P2,450,000 »/cunons ais . 2,575,000 i Croll obs 20957 mn Sy 49. ABC Co. has the following data: *“”"" I Budgeted Budgeted Level ! OH Cost Pool OH Cost /» —_for Cost Driver Cost Driver Direct materials P120,000P%0 3,000 kilos Weight of materials Machine setup 9,750 4 325 repetitions Number of repetitions Machine repair time 1,045 a Sunits Unit of time* Inspections 8,100 uo 135 Inspections Number of inspections * One unit equals iSminute intervals ++ 9 Shad Requirements for Job 201: Raw materials 100kilos = Pyr Machine setup 25 repetitions 470 Machine repair time OS hour xyx104 49 Inspections 10 Inspections _wn F540 1p The total overhead cost that should be assigned to Job 201 ist a, P5,350 i c. P4,750 b, P4,000 d. P5,768 p 50. b. P100,000 d.: P75,000 MPEG IBT-DED © GE ITEMS 51 TO 53 ARE BASED ON THE FOLLOWING INFORMATION: Mickey Is a distributor of plcture frames. For 2014, she plans to purthase frames for P30. 4x each and sell them for P45 each. Mickey's fixed costs are.P240,000, are variable costs of P60 per shipments for preparing the invoice an ‘organizing the delivery, and following up for collecting accounts rec is incurred each time Mickey ships an order of picture frames, cegard| frames inthe order. Her only other costs delivery documents, le. The P60 cost -r6 77 less of the number of “* ‘Suppose Mickey sells 40,000 picture frames in 1,000 shipments in 2014, what is Mickey's Si. A rating income for 2014? re.: 300,000 cm (ernie) vert + P240,000 b. P420,000 Fe Fiver d. P450,000 Gripte (anon) C{) 52 Suppose Mickey sells 40,000 pleture fr: in 2014, what is her ‘operating income for 20142 picture frames In 800 shipments ’. P246,000 cm kt ; ve flay & P241,000 b. P325,000 we fan) P312,000 ur © f\ 53, Suppose Mickey anticipates making 500 shipments in 2014, How many picture frames must Mickey sell to break even in 20a? “" “Sr? ‘ -& 18,000 te even c. 14,000 b, 12,000 «get d. 16,000 Yen las. NTH ITEMS 54 TO 58 ARE BASED ON THE FOLLOWING INFORMATION: Meeman Company produces a single product. It sold 25,000 units last year with the following results: Sales JI P628,000 ‘ Variable costs ashy P375,000 i Fixed costs 450,000 nae Income before tax P10, Income tax @id#5000 Net income B.52,000 In an attempt to improve Its product, Meemon Is considering replacing a component part In its product that has a cost of P2.50 With a new and better part cogting P4.50 per unit In the coming year. A new machine would also be needed to ir plant capacity. The machine could cost P18,000 with a useful life of 6 years and m salvage value. The company uses straight line depreciation on all plant assets, “/* © "P/yy. 1¢ 1D, 54. What was Meemon's breakeven point In number of units last year? 2 6,000 Wye Ny ©. 21,000 b, 15,000 4. 18,000 a A 55. How many units of product would Meemon have had to sell last yepr to earn P77,000 in net income. after.taxes? a 7 a. 29,000 ’ ©. 22,700 b. 23,000 d. 29,300 > ¢ 56. If Meemon holds the sales price constant and makes the suggested changes, how many units of product must be sold in the coming year to break even? a, 15,200" €. 19,125 b, 18,750 “4a iow d. 21,000 57. If Meemon holds the sales price constant and makes the su; changes, how many A units of product will the company have to sell to make the same net income after taxes as last year? PT gus a 31,6257 4 ¢, 33,500 b. 31,250 d, 25,300 58, If Meemon wishes to maintain the same contribution margin ratio, selling price per + D> iitof product myst be It charge next year to cover the increased material costs? ‘a. 27.00 ven c P32.50 Sor). d, P28.33 b, P25.00 =MANAGEMENT Aviso! Es Page 13 of 20 pages Frome 7ambacn \VISORY SERVICES es — BP © et D5. The Beng Company manufactures and sells a specialty perfume. The company budgets a margin of safety of 20% for 2012. Fixed costs are budgeted at P270,000 annually. Varlable costs are 6.60 per ml. If the sales price per mi iS P12, the budgeted level of Sales revenue for 2012 is hts sv! te 2 Ve ce 2 P589,330 sim sys $P I Me, PABO,000 can EY b. P720,000 Ye bu Sid. P750,0007 gar) FC. cm og ast 3507 D 60. A manufacturer can sell its single product for P660. Below are the, cost data for the product: Direct materials P170 Direct labor 225 Manufacturing overhead 90 ‘The relevant margin amount when beginning a theory of constraints (TOC) analysis is | 2 PIS gee 7 eS PaaS What 6 THreoneh Put MARLIN 2 b. p25 fhe 4. P490 TMV reste | Rain 440 | THEORIES Ay Software package that Is used with a large set of organized data that presents the “Coomputer ‘aS an expert on a particular topic Is referred to as a(n) a. Data mining. ¢. Artficial Intelligence, b. Expert system. d. Virtual reality, A 2. Computer memory which is used to store Programs that must be accessed immediately by the central processing unit is a. Primary storage. . Tertiary storage, b. Secondary storage. d. Tape storage, 9 3. The most common gutput device is a(n) a, Mouse. ¢. Expert system, b, Printer, d, Keyboard, D, 4. An “office suite” of software is least likely to Include a(n) a. Databases. . Spreadsheet, b. Operating system. 4. Word processing. C5: 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, ¢. Potential national income will exceed actual national Income, d, Actual national income will exceed potential national income. 6. For a given level of tax collections, prices, and interest rates, a decrease in mental C purchases will result in a(n) governt a. Increase in aggregate demand. Decrease in aggregate demand. b, Increase In aggregate supply. d, Decrease in aggregate gue "3MANAGEMENT ADVISORY SERVICES Page 14 0f20 pohes Preweek 7et D) 7 Innational income terms, agaregate demand Is the a 11. ° b 12, D 14, . When a firm finance: . Demand for money by the community In a period of full employment. b. Total expenditure 2 capital as by enemy during ja period of full employment. | ¢. Demand that is needed if a country’s economy Is to operate at optimum level and the level of investment is to be raised. ‘ 4. Total expenditures on consumer goods and Investment, Including] government and foreign expenditures, during a given period. Which one of the following would not be included In the calculation of the gross domestic product (GDP)? ' a. Purchase of a new home. cc. A doctor's fee. b. An automotive worker's wages. d. Purchase of common stock. An upturn in economic activity is indicated by all of the following, except a. Increased housing starts. b. Reduction in the quantity of unemployment claims. ¢. Increase in personal travel. d. Reduction in the amount of luxury purchases. ). A measure that describes the risk of an investment project relative to other investments in general is the a, Coefficient of variation. © ¢. Standard deviation. b. Beta coefficient. d. Expected return. The return pald for the use”of. borrowed capital Is referred to as a. Cash dividends. c. Interest. b. Stock dividends, 4, Principal payment. Short-term interest rates are a. Usually lower than long-term rates. i b. Usually higher than long-term rates. c. Lower than long-term rates during perlods of high Inflation only. d, Not significantly related to long-term rates, ch_asset with a financial Instrument of the same.approximate maturity as the life of the asset, it is applying “a. Working capital management, b, Return maximization, ¢. Financial leverage. d, A-hedging approach. .. All of the following capital budgeting analysis techniques use cash flows as the primary the calculation except for the a He present value. vc! Col ¢. Discounted payback period, Cum Wel = COT . 1. Co} WC. 4. Accounting rate of return, 0: WE A: 8 b. Payback period. ae aad1S. The segmented income statement for a retall company with three product lines is Presented below: Total Product Product ‘Volume (in units) 20,000 28,000 50,000 Sales revenue 2,000,000 800,000 + P700,000 Costs and expenses: Administrative P 180,000 P-60,000P 60,000 Advertising 240,000 ,000 84,000 Commissions 40,000 16,000 14,000 Cost of sales 980,000 360,000 420,000 Rent 280,000 84,000 140,000 Salaries 110,000 54,000 —_32,000 Total costs and expenses 1,830,000 P670,000 P750,000 Operating profit (loss) 170,000 130,000 (50,000) The company buys the goods In the three product lines directly from manufacturers’ Tepresentatives, Each product line Is directed by a manager whose salary Is Included In the administrative expenses. Administrative expenses are allocated to the three product lines ‘equally because the administration is spread evenly among the three. product lines. Salaries-represent payments to the workers in each product line and therefore are ‘Taceable costs of each product line. Advertising promotes the entire company rather than ‘the individual product lines. As a result, the advertising expense is allocated to the three Product lines in proportion to the sales revenue. Commissions are paid to the sales ersons in each product line based on 2% of gross Sales. Rent represents the cost of the retail store and warehouse under a lease agreement with 5 years remaining. The product lines share the retall and warehouse space, and the rent Is allocated to the three product lines based on the square footage occupied by each of the product lines, The segmented income statement for this retail company does not facilitate performance evaluation because it does not distinguish between controllable and uncontrollable costs. Cc ‘The only costs and expenses controllable at the product-line level for this retall company are: : v a. Administration, advertising, and rent c. Commissions, cost of sales, and sélarles b. Commissions, cost of sales, and rent d. Advertising, cost of sales, and salaries B 16. Which of the following expresses the relationship between risk and return? a. Inverse relationship. . Negative relationship. b. Direct relationship, d. No relationship. P17. fan investment project has a profitability Index af 1.15, then the a. Project's internal rate of return Is 15%. b. Project’s cost of capital is greater than its Internal rate of return. ¢. Project's internal rate of return exceeds Its net present value, d._ Net present value of the project is positive. b 18 Which tool would most likely be used to determine the best course of action under conditions of uncertainty? 8, Cost-volume-profit analysis, b. Expected value (EV). c. Program evaluation and review technique (PERT). d. Scattergraph method. Which type of economic market structure Is.characterized by a few large sellers of a ice, engaging primarily In nonprice competition? Pr pa i ¢. Perfect competition. b. Oligopoly. , Monopolistic competition. P19.MANAGEMENT bree a ADVISORY SERVICES Page 16 of 20 pages N 20, The balanced scorecard. generat bay ee IY uses performance measures one Parepectives. Which of the folowing performance measures would be part of those used for the internal business processes perspective? aa eon Senso es & Cycle time,” €, Hours of traning per employed? = {0% 8 b. Employee satisfaction(® d. Customer retention. © breech f\ 21, Alta Manufacturing Co, has had a Problem with Its product quality. The company has had 2 large amount of costs related to product recalls. In considering cost of quality methodology, if the ‘Company wants to reduce these costs, the most likely piace to incur Costs would be for Prevention..." ¢. Internal failure. b. Appraisal, 4, External failure. (C22, Jayon Co. Is considering a Project that will use 2,000 square feet of storage space at one of Its facilities to store used equipment. What will determine Jayson’s opportunity cost? 2. The net present value of the project. b, The internal rate of return of the project. ©. The value of the next best use of the space, d. The depreciation expense on the space, % 23. The ABC Company Is trying to decide between keeping an existing machine and replacing It with @ new machine. The old machine was purchased just two years ago for P50,000 and had an expected life of 10 years. It now costs P1,000 a month for maintenance and tepairs due to a mechanical problem. A new machine is being considered to repiace it at a Cost of P60,000. The new machine is more efficient and it will only cost P200 a month for maintenance and repairs. The new machine has an expected life of 10 years. In deciding to replace the old machine, which of the following factors, ignoring income taxes, should ‘ABC not consider? a, Any estimated salvage value on the old machine. b. The original cost of the old machine. crmle uct c. The estimated useful life of the new machine. | 4, The lower maintenance cost on the new machine. : A 24. Which of the following characteristics distinguishes computer wijoassiig from manual processing? a. Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing. b. Errors or fraud in computer processing will be detected soon after thelr occurrences. The potential for systematic error Is ordinarily greater in manual processing than In computerized processing. d. Most computer systems are designed so that transaction trails useful for audit purposes do not exist. ‘a Opportunity cost is recorded as a normal business expense. b,T The accounting rate of return considers the time value of money. 6. A sens ofthe payback method I that ts based onprotatity) y+, 4, Capital budgeting is based on predictions of an uncertain future,” Pee ich of the following topics Is the focus of managerial a ng? o * ” Financial statements and other financial reports. =e b. Historical coat principles, » The needs of litors. é The needs of the organization's internal parties, > 25: Which of the following statements is correct regarding financial earrewnek 76th Bath ee ENE ON 27. The primary reason for adapting total quality management is t achieve b 28, p 29 p 30, / 3 32, 5B @ greater customer xatisfaction greater employee participation b, reduced delivery charges a, reduced delivery time A.company will proctuce 20,000 unite of product A at a unit variable cost of P7 and @ unit selling price of P13, Mixed costa are oO. However, the company will stilt have 40% Idle capacity. The company can une this Idla capacity %& produce 6,000 units of a different product 8, Which It can sell for PY per unit, The Incremental variable cost of procucing & Unit of B is P6, Presen* fixed costa that will be allocated to B amount to 10,000. To decide whether to produce @, the company should use a. Markov chain analvals ¢, Information economics: b, Differential cost analysis 4, Regression analysis ‘When the number of units manufactured Increases, the most significant change In average Git cost\will be reflected ax /u dae 2. an increase In the gemivartabla element ¢, a decrease in the variable element . an increase In the nuvariable element d, a decrease in the novariable element The IMA Statement of Ethical Professional Practica includes an integrity standard, which requires an IMA member to a, refuse gifts from anyone, b. disclose confidential Information whan authorized by his/her firm or required under the law, ¢. report any relevant Information that could Influence users of financial statements. d. identify and make known anything that may hinder his/her judgment or prevent satisfactory completion of any duties, Jay Manufacturing’ Co. prepares Income statements using both standard absorption and variable costing methods. For Year 2, unit standard costs were unchanged from Year 1. In Year 2, the only beginning and ending Inventories were finished goods of 5,000 units. How would Jay’s ratios using absorption costing compare with those using variable costing? Pas Current Ratio ® = Return.on Equity 4 a. Greater « Smaller AV b. Greater Same GQ Same ‘Smaller qd Same Same A company’s net income recently Increased by 30% while Its Inventory Increased to equal a full year’s sales requirements. Which of the following accounting methods would be most likely to produce the favorable Income results? a. Standard direct costing c, Direct costing b, Variable costing d. Absorption costing ‘When standard costs are used In ® process costin: units of production (EUP) involved or used in the ea port Screg inet: a, The standard equivalent units are multiplied by the actual cost per unit, b. The actual equivalent units. ere multiplied by the standard cost per.unit. ¢, Equivalent units are computed using @ special approach, d. Equivalent units are not used,A Whe oo F A perspective’ ~ o "HOwng variences is of leas: significance from a Dehanece cOrer> a. Fb aro Overhead volume. variance resulting from managements. decsion Bev ay ugh the fiscal year to reduce its budgeted output by 20%. Vendor aterals.price variance obtalned by purchasing raw materials from @ new ' Unfavorable Jabor efficiency-varlance amounting to 10% more than the budgeted hours for the output attained, ‘i d. Unfavorable materials quantity varlance amounting to 20% of the quantity allowed for the output attained, : ¢ 35. Using the balanced scorecard approach, an organization evaluates managerial Performance based on . multiple financial measures only b, multiple ronfinancial measures only . multiple financial and nonfinancial, measures » d. a single ultimate measure of operating results, such as residual income \ 36, A company has two divisions, A and B, each operated as a profit center. A charges B P35 per unit for each unit transferred to B. Other data follow: A's variable cost per unit P30, A's fixed costs 10,000 A’s annual sales to B - units 5, A’s sales to outsiders ~ units 50,000 A\ls planning to raise its transfer price to P50 per unit. Division B can purchase units at P40 each from outsiders, but doing so would Idle A’s facilities now committed to producing {units for B, Division A cannot Increase its sales to outsiders. From the perspective of the company as a whole, from whom should Division B acqulrethe, units, assuming Bis market Inunstfected? ¢ Ae addi 107 a, DivisiortA) despite the increased transfer price, b. Division A, but only until after fixed costs covered, then from outside vendors. ¢, Outside vendors d. Division A, but only at the variable cost per untt. &) Cn) The following Information Is avallable for Ports Company for its past two fiscal years: Year 1 Year2 Statistical process control P 70,000 P 100,000 Quality audits - 35,000 50,000, Training 40,000 80,000 Inspection and testing E 400,000 150,000 Rework 90,000 . Spoilage 80,000 55,000 Warranties 180,000 80,000 Estimated customer losses 800,000 450,000 Net sales 3,000,000 3,200,000 In its cost of quality report for[Year 2, Ports will disclose that the ratio of a. conformance costs to net sales equaled 8.17% in Year 2. b, nonconformance costs to net sales equaled'19.84% in Year 1 ¢. nonconformance costs to total quality costs Increased from 62.56% In Year 1 to 82.44% In Year 2. 1 d. Conformance costs to total quality costs increased from 17.56% In Year 1 to 37.449 In Year 2. tD) 38. 41, 42. 43, 45. All of compete 8 ie bes that companies in developed countries generally may 2. Technology, leveloping Countries scent b. Customer service, feces resources ll Co. changed from a traditi wi tional manufacturing philosophy to a just-in-time philosophy? v hat are the expected effects of this change on Bat’s Inventory turnover and inventory as Percentage of total assets reported on Bell's balance sheet? Inventory turn a Decrease? nveiony percenege | b. Decrease Increase G Increase Decrease da. Increase Increase Which of the following events would gecrease the Internal rate of return of a proposed asset purchase? a. Decrease tax credits on the asset. b. Decrease related working capital requirements. . Shorten the payback period. d, Use accelerated, instead of straight-line depreciation. Management accounting: 7 @, focuses on estimating future revenues, costs, and other measures to forecast activities and their results b. provides information about the company as a whole reports information that has occurred in the past that is verifiable and reliable 4. provides information that is generally available only on a quarterly or annual basis The terms direct costs and indirect ‘costs are commonly used in accounting. A particular cost might be considered a direct cost of a manufacturing department but an indirect cost of the product produced in the manufacturing department. Classifying the cost as either direct or indirect dey 2. Whether an expenditure is unavoidable because it cannot be changed regardless of any action taken. b. The cost object to which the cost Is being related. c. Whether the cost is expensed in the period in which It Is incurred, d. The behavior of the cost in response to volume changes. Costs are allocated to cost objects in many ways and for many reasons, Whic following Is purpose of cest allocation? Y ich one of the 2. Aiding in variable costing for intemal reporting. b. Budgeting cash and controlling expenditures, c. Measuring income and assets for external reporting. d, Evaluating revenue center performance, Which of the following is correct regarding a relevant range? a, The relevant range cannot be changed after being established, b. Actual fixed costs usually fall outside the relevant range. ¢. ‘Total fixed cost will not change, d. Total variable costs will not change, “Discretionary costs” are costs that a. will be unaffected by current managerial decisions, ¢ b. are governed mainly by past decisions that established the Present leveis of ‘operating and organizational capacity and that only chang vin response ‘small changes in capacity. y inge_siowly. in toMANAGEMENT ADVISORY Preweek 76th Batch aa oepetealt | are they: to respond to the amount of attention devoted to them, by a specified ager. ore d. management decides to incur in the current period to enable the company to achleve objectives other than the filling of orders placed by the customers. 13 4. An \mputed costs “* Mr6 ws a. - @ cost that continues to be incurred even though there is no activity. 1 vity. ! b. a cost that does not entall any peso outlay but Is relevant to the decision-making Process, ! G 1 * @ Cost that cannot be avoided because it has already been incurred. ©, i d. the difference In total costs that results from selecting one alternative instead of another, C 47. An accounting system that collects financial and operating data on the basis of th ~ underlying nature and extent of the cost drivers is , 7 a. Variable costing ¢Activity-based costing b. Cycle-time costing @. Direct costing | C48. A difference between standard costs used for cost control and budgeted costs ‘i @. cannot exist because they should be the same amounts. : b. can exist because budgeted costs are historical costs, whereas standard costs are based on engineering studies. @ can exist because standard costs represent what costs should have been, whereas 3 budgeted costs represent expected actual costs. can exist because standard costs must be determined after the budget is completed. 0 49: A standard costing system is most often used by a frm in conjunction wit a. flexible budgets ¢. target (hurdle) rates of return b. participative management programs —_ d,“ management by objectives b 50. The use of activity-based costing (ABC) normally results in a. equalizing set-up costs for all product lines, b. decreased set-up costs being charged to low volume products, ¢, substantially lower unit costs for low-volume products th product costing. Prod 1an Is reported by traditional ( substantially greater unit costs for low-volume tk -* traditional product costing. Products than is reported by ~END-