Sy The Professional CPA Review School ‘ain: 3. Vlarman i, 873 P, Compa Secor Espana, Samrat, Mana “‘® (02) 735 8901 / 735.9031 / 0922 861 0191 ‘mall ad: c_ace@yahoo.com fuel gv, Lover Mabe a igo Slang, Baguley S/F GCAM Bldg. Monteverde St. Davao City ‘w(074) 442-1440 /0522-0499196 ‘a (082) 265-8505 /0925-7272223 MANAGEMENT ACCOUNTING SERVICES (MAY 2018 BATCH FINAL PRE-BOARD EXAMINATION ew ws PRE 2010: tEAM 2:10PM INSTRUCTIONS: Select the correct answer for gach of the following questions. Mark only one answer for each item by writing a SHADING corresponding to the letter of your choice on the answer sheet. Situation 1 - FORT Company makes a single product — a fire-resistant commerce, filing cabinet ~ that is slls to office furiture distributions. “The company has a simple ABC system that it uses for internal decision making, The company has two overhead departments whose cost are listed as follows: ‘Manufacturing overhead 50,000 Selig and administrative overhead 30,000 Total overhead costs Paooo ‘The company has the following activity cost pools and activity measures: Activity Cost Pool Activity measuse Assembling units Number of units : Processing orders Number of orders Supporting customers Number of customers (Other ‘Not applicable Coste assigned to the “Other” activity cost pool have no activity measure: they consist of the costs of tanused capital and organization — sustaining costs-acther of which are assigned to orders, customers or the prods. : : FORT Company distributes the costs of manufacturing overhead and of selling and administrative ovecheed to the activity cost pools based on employee interviews, the results of which are reported below. Distibution of Resource Consumption Acréas Activity Cost Pools [Assembling Supporting | Oca] Toul ni Cortomess Wamiacang ovahead [50% 3% iw 00 Seng fe administative | 10% a 2i%e | 100 Howl actvgy 00 un TOV customer 1. How much f the costs ar allocated to the activity cost pool of Procesing orden? A. P10,000 C, P11,000 B. 31,000 . 26,000 2. What's the activity ate forthe activity cost pool of Sappoting Costes? A. PI20 ©. Piz B. P10 D. Pa 3. A Corp. is a customer of FORT Co. Assuming A Corp ordered 80 units offing cabinets and ordered 4 times during the year, how much of the ovethead costs attributed to A Corp? A. P2,836 C.P2,340 B. PA96 D.P2240 4, The selling price of the fling cabinet is P59.50. The cost of direct materials is P18 per filing cabinet, and direct labor is PS pee filing cabinet. What is the customer matgin from the sale of 80 fling cabinet toA Cop? AL P84 680 B. P58 . D. P2920ut 2 13, 4 15, 16. 17 18, 19, How many pounds of raw materials ate required to be purchased in Year 2? A. 2,617,000 C. 2,040,000 B. 2,663,000 D. 1,796,000 ‘What is the amount of expected total cash payments for Year 2? A. P2,071,960 C. P2,093,600 B.P1,796,000 D. 1,908,960 [Miller Inc. vise stight-line depreciation for both tax and financial reporting purposes. The following data relate to Machine No. 108, which cost P400,000 and is being written-off over a five-year life. P150,000 200,000, 225,000 225,000 175,000 All of these amounts are on-a before-tax basis, Miller is subject co a 40% income tax rate. The company strives for a 12% rate of return. The traditional payback period for Machine No. 108 would bes AL 258 yenis C244 years Bo 2.14 years D. 3.41 years 1 2 3 4 5 Red Company has.2 revolving credit line of P300,000 with « one-year matutity. The terms call for 2 6% interest rate and a 2% commitment fee on the unused portion of the line of credit. The average loan balance during the year was P100,00. What is annual cost of this financial arrangement? A. P7,500 ©. P7,000 B. P6500 D. 6,000 ‘The stage of the capital budgeting process which chooses projects for implementation is the AL Search stage © Identification stage B. Seleetion sage D. Management-control stage : ‘An organization offers its customer credit terms of $/19 net 20. One-third of the customers take the ‘cath discount and che remaining pay on day 20. On average, 20 units ate sold per day, priced at P10,000 each. The rate of sales is uniform throughout the year. Using a 360-day year, the organization has days sales outstanding in accounts receivable, to the nearest full day of, A. 13 days © 15 days B. 20 days. D. 17 days BBD Corporation bought a piece of machinery. Selected data is presented below: Useful life 6 years i Yearly net cash inflow 45,000 Salvage value 0. Internal sate of return 18% Cost of capital 14% The inital cost of the machinery was (round present value factor to four decimal places) ‘A. Impossible to determine From the ioformation given B pi74992. c Pi6s12. D. Pis7.392. ‘The stage of the capital budgeting process which explores alternative capital investments that will achieve organization objectives. |A. Search stage. C. Management stage B. Identification stage. D, Selection sage. Bakio Company has a policy of maintaining an inventory of finished goods equal to 30’percent of the following month's sales. For the forthcoming month of March, Baldo has budgeted the beginniiig inventory at 30,000 units and the ending inventory at 33,000 units. This suggests that ‘A. February siles are budgeted at 3,000 units less than March salesCCRC-ACE/MAS: Final Pe-board exams (May 2028 batch), Page S ‘Management is contemplating the discontinuance of the Restaufant segment since "tis losing money.” If this segment is discontinued, P30,000 ofits fixed costs will be eliminated. In addition, ‘Merchandise and Automotive sales will decrease SY from their current levels. When considering the decision, Whitman's controller advised that one of the financial aspects Whitman should review is ‘contribution margia. ‘Which one of the following options reflects the cucrent contribution maxgin ratios for exch of Whitman's business segments? A. Merchandising: 40%, Automotive: 50%, Restaurant: 30%. 1B. Merchandising: 60%, Automotive: 50%, Restaurant: 70%. C_-Merehandising: 40%, Automotive: 50%, Restaurant: 70%, 1D. Merchandising: 60%, Automotive: 50%, Restaurant: 30%. 30, ABC Company has fixed costs of P300,000 per month. Total output per month is 150,000 units, ‘Minimum pay for production line workers is P5.85 per hous, and total variable costs are currently 275,000 pet moth. If variable costs inczease to P350,000 per month and production output increases to 250,000 per month, what are the average fixed costs before and after the increase in production? "A. P3.83 per unit before and P2.60 per urit after the increase in production, B. 2 per unit before sad P1.20 per unit after the increase in production. C.__P2 per unit before and aftes the increase in production. D. - P1.83 per unit before and 1.40 per unit ater the increase in production 31. ~ Bargain Press is consideting publishing a new textbook, The publisher has developed the following cost data felated to a production run of 6,000, the minimum possible production run. Bargain Press ‘vl sell the textbook for PAS per copy. The estimated cost of producing 6,000 copies follows: ‘Development (Reviews, class testing, editing) 35,0000 ~ ‘Typesetting, 18,500 Depreciation on Equipment 9,320 General and Administraive Expense 7,500 Miscellaneous Fixed Expense 4400 Printing and Binding 30,000 Sales staf commission (2% of selling price) 5,400 Bookstore commission (25% of selling price) 67,500 ‘Author's Royalties (10% of selling price) 27,000 How many textbooks must Bargain Press cell in order to generate operatiig earnings (carnings before interest and taxes) of 20% on sales? (Round your answer up to the nearest whole textbook.) A. 2,076 copies. C. 5,412 copies. B. 5,207 copies D. 6,199 copies. 32 Which one of the following transactions would increase the current satio and decrease net profit? |. An income tax payment due from the previous year is paid B. Vacant land js sold for less than the net book value. CC. -Along-term bond is retired before maturity at a discount. : D. _ Uncollectible accounts receivable are written off against the sllowance account 33, Finn Product, a start-up company, wants to use cost-based pricing for its only product, a unique new ‘ideo game. Fina expects to sell 10,000 units in the upcoming year. Vasiable costs will be P65 per unit snd annual fixed operating costs (including depreciation) amount to PB0,000. FFina's balance sheet is as follows. Assets Liabilities and Equity ‘Current Assets P 100,000 Accounts Payable P 25,000 Property and Equipment 425,000 Debt . 200,000 Equity 300,000 ‘YOTAL 525,000 TOTAL 525,000 1€ Finn wants to carn a 20% return on equity (ROE), at what price should it sell the new produc? ‘A. P78.60 per unit. C. P7500 per unit. B.—P79.00 per unit. D. P8100 per unit.