UNIVERSITY OF THE EAST- CALOOCAN

COLLEGE OF BUSINESS ADMINISTRATION

DEPERTMENT OF ACCOUNTANCY, BUSINESS LAW, AND TAXATION
FINAL EXAMINATION
BAC317- MANAGEMENT ACCOUNTING, PART 1
2ND SEMESTER- SY 2015 TO 2016

Multiple Choice
Identify the choice that best completes the statement or answers the question. In your answer sheet
shade the circle that correspond to the letter of your choice using pencil number 2 only. Strictly no
erasure is allowed in the answer sheet.

1. The primary objective of managerial accounting is

a. to provide banks and other creditors with information useful in making
credit decisions.
b. to provide stockholders and potential investors with useful information for
decision making.
c. to provide the Internal Revenue Service with information about taxable
income.
d. to provide management with information useful for planning and control of
operations.
2. ABC Company issued additional shares of stock for cash. The effect of the transaction is
a. the return on total assets increased.
b. the earnings per share increased.
c. the debt-to-equity ratio increased.
d. the current ratio was increased.
3. Which concept answers the following question: “If budgeted revenues are above
breakeven and decline, how far can they fall before the break-even point is reached?”
a. Contribution margin c. None of these
b. Margin of safety d. Operating leverage
4. The point where the profit line intersects the left vertical axis on the profit-volume chart
represents
a. Maximum possible operating loss
b. Costs incurred at zero-production
c. Fixed expenses
d. All of these
5. The use of either absorption or variable costing will make little difference if
a. Company sells exact amount of inventory it produces for the period
b. Company has no beginning inventory for the period
c. Company has no fixed operating expenses for the period
d. Company possesses a large amount of inventory at the end of the period
6. The cost estimation method that gives the most mathematically precise cost prediction
equation is
a. the contribution margin method c. the high-low method.
b. the scatter-diagram method. d. regression analysis.
7. In flexible budget, when production levels are expected to decline within a relevant range,
the effect would be a/an:
a. No effect on fixed costs and variable costs per unit
b. Increase in both fixed and variable costs per unit
c. Decrease in fixed costs per unit only
d. Increase in fixed costs per unit only
8. All of the following budgets are prepared by merchandising companies except:
a. Capital Expenditure Budget c. All of these
b. Budgeted Income Statement d. Manufacturing Overhead Budget

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 9. Variance analysis for overhead normally focuses on
a. the controllable variance as a lump-sum amount.
b. efficiency variances for machinery and indirect production costs.
c. the difference between budgeted and applied variable overhead.
d. volume variances for fixed overhead costs.
10. Budgets are used for all of the following except:
a. Controlling the operation c. Recording actual results
b. Direct operations d. Planning for the future
11. Expense A is variable; expense B is fixed. During the year the activity level has
increased, but within relevant range. In terms of cost per unit, which is not true?
a. Expense B has decreased.
b. Expense A has remained unchanged.
c. Both A and C
d. Expense A has decreased.
12. The variance in an absorption costing system that measures the departure from the
denominator level of activity that was used to set the fixed overhead rate is the:
a. Efficiency variance c. Spending variance
b. Sales volume variance d. Production volume variance
13. The efficiency variance computed on a three-variance approach is
a. computed as actual variable overhead minus the flexible budget for
variable overhead based on actual hours worked.
b. computed as the difference between applied variable overhead and actual
variable overhead.
c. equal to the variable overhead spending variance plus the variable
overhead efficiency variance computed on the four-variance approach.
d. equal to the variable overhead efficiency variance computed on the four-
variance approach.
14. Which of the following is a use of budgets for control?
a. If conditions change between the formation of the budget and the current
time, budgets can be quickly adapted.
b. Communication is improved.
c. Budgets set a standard against which results can be compared.
d. Plans can be made for the future.
15. In a (n) ____, as one month expires, an additional month in the future is added to the
budget so that the company always has a 12-month plan on hand.
a. financial budget c. continuous budget
b. operational budget d. yearly budget
16. Looking backward to determine what actually happened and comparing it with the
previously planned outcomes is
a. control. c. decision making.
b. communicating. d. strategic planning.
17. The master budget is
a. typically for a 1-year period corresponding to the fiscal year of the
company.
b. used for misinformation and coordination.
c. the selective financial plan for the organization as a whole.
d. broken down into daily and weekly budgets.
18. The first step in creating the master budget is the creation of the
a. production budget. c. sales budget.
b. direct labor budget. d. cash budget.

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19. The purpose of identifying manufacturing variances and assigning their responsibility to a
person/ department should be to:
a. pinpoint fault for operation problems in the organization
b. use the knowledge about the variances to promote learning and continuous
improvement in the manufacturing operations
c. determine the proper cost of the products produced so that selling prices
can be adjusted accordingly
d. trace variances to finished goods so that the inventory can be properly
valued at year end
20. The difference between the actual amounts and the flexible budget amounts for the actual
output achieved is the:
a. Flexible budget variance c. Standard cost variance
b. Sales volume variance d. Production volume variance
21. RVC Company's net income was PHP80,000 last year. The company has 20,000 shares
of common stock and 5,000 shares of PHP100 par value, 7% preferred stock
outstanding. There was no change in the number of common or preferred shares
outstanding during the year. The earnings per share of common stock was
a. PHP4.00. b. PHP3.72. c. PHP3.20. d. PHP2.25.
22. The following transactions occurred last year at RVC Inc.

Issuance of common stock PHP 50,000

Dividends paid to common stockholders 3,000
Depreciation expense 6,000
Repayment of principal on the company's own bonds 40,000
Sale of equipment 17,000
Purchase of land 120,000

Based solely on the above information, the net cash flows from financing activities for the
year on the statement of cash flows would be
a. PHP(6,000). c. PHP(103,000).
b. PHP249,000. d. PHP7,000.
23. The following information pertains to RVC Company:

Break-even point in unit sold 1,000

Variable costs per unit PHP500
Total fixed costs PHP150,000

How much will be contributed to profit before income taxes by 1,001st unit sold?
a. PHP150 c. PHP650
b. PHP0 d. PHP500
24. At the end of RVC Company’s first year of operations, 1,000 units of inventory remained
on hand. Variable and fixed manufacturing cost per unit were PHP90 and PHP20,
respectively. IF PS uses absorption costing rather than direct costing, the result would be
a higher pretax income of:
a. PHP20,000 c. PHP70,000
b. PHP90,000 d. PHP0

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25. At the end of the year, MS Company encountered fire in its offices which burnt some of its
accounting records. Your manager, immediately asked you, the cost accountant, to
provide information about the company’s costs incurred for the last quarter but
unfortunately, data were included in those burnt in the fire. Below are the remaining data
gathered that might help you in the data that you need.

Period Activity in hours Cost

Quarter 1 40 PHP5,000
Quarter 2 60 PHP7,500
Quarter 3 70 PHP8,000
Quarter 4 50 ?

The company uses the least-square regression model in estimating its cost and it is also
recallable on your end that the variable cost per unit that you computed (including the
data for Quarter 4) was PHP110 per unit. Estimated fixed costs would be:
a. PHP450 c. PHP525
b. PHP300 d. PHP600
26. MS Corporation's flexible budget cost formula for supplies, a variable overhead cost, is
PHP2.17 per unit of output. The company's flexible budget performance report for last
month showed a PHP4,531 favorable variance for supplies. During that month, 19,700
units were produced. Budgeted activity for the month had been 19,400 units. The actual
costs incurred for indirect materials must have been closest to:
a. PHP1.94 per unit c. PHP2.40 per unit
b. PHP2.63 per unit d. PHP2.67 per unit
27. At the beginning of the year, MS Industry budgeted PHP600,000 of fixed overhead and
chose a denominator level of activity of 100,000 direct labor-hours. At the end of the year,
fixed overhead variance was PHP8,000 unfavorable. Its fixed overhead volume variance
was PHP21,000 favorable. Actual direct labor-hours for the year were 96,000. What was
the actual fixed overhead for the year?
a. PHP629,000 c. PHP608,000
b. PHP563,000 d. PHP579,000
28. MS Corporation has the following budget estimate for the current year:

Sales PHP2,800,000
Income before tax 10% of sales
Selling and administrative expenses 25% of sales
Conversion cost 70% of manufacturing cost

Inventories are budgeted as follow:

Ending Beginning
Materials PHP176,000 PHP216,000
Work-in-process 200,000 240,000
Finished goods 280,000 336,000

Budgeted purchases of raw materials is:

a. PHP477,200 c. PHP574,800
b. PHP534,800 d. PHP614,800

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 Figure 11-1.
PPS, Inc. produces leather purses. PPS has developed a static budget for the first
quarter, based on 20,000 direct labor hours. During the quarter, the actual activity was
22,000 direct labor hours. Data for the first quarter are summarized as follows:

Static budget Actual costs

(20,000 hours) (22,000 hours)
Direct materials cost PHP 80,000 PHP 87,000
Direct labor cost 160,000 174,000
Building rental 48,000 50,000
Total PHP288,000 PHP311,000

29. Refer to Figure 11-1. What is the flexible budget amount for the first quarter?
a. PHP311,000 c. PHP312,000
b. PHP288,000 d. PHP261,000
30. Refer to Figure 11-1. What is the flexible budget variance for the first quarter?
a. PHP23,000 F c. PHP1,000 F
b. PHP1,000 U d. PHP23,000 U
31. The following purchases budget was prepared by RVC Corp:

Month Budgeted Purchases (PHP)

January 460,000
February 380,000
March 400,000
April 440,000
May 420,000

Purchases are paid for in the following manner:

10% in the month of purchase.

50% in the month after purchase.
40% two months after purchase.

Total disbursements for the period March to May amount to:

a. PHP1,285,000 c. PHP1,352,000
b. PHP1,232,000 d. PHP1,825,000
32. RVC, Inc. produces a specialized machine part used in forklifts. For last year's
operations, the following data were gathered:

Units produced: 55,000

Direct labor: 29,000 hours @ PHP9.00
Actual variable overhead: PHP135,000

RVC employs a standard costing system. During the year, a variable overhead rate of
PHP5.00 was used. The labor standard requires 0.50 hours per unit produced.

The variable overhead spending and efficiency variances are, respectively

a. PHP10,000 F and PHP7,500 U. c. PHP7,500 U and PHP10,000 F.
b. PHP10,000 F and PHP7,500 F. d. PHP10,000 U and PHP7,500 U.

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33. PPS Lamp Company manufactures lamps. The estimated number of lamp sales for the
last three months of 2014 are as follows:

Month Sales
October 10,000
November 14,000
December 13,000

Finished goods inventory at the end of September was 3,000 units. Ending finished
goods inventory is budgeted to equal 25% of the next month's sales. PPS Lamp expects
to sell the lamps for PHP25 each. January 2015 sales are projected at 16,000 lamps.

How many lamps should be produced in November?

a. 10,500 lamps c. 13,750 lamps
b. 14,000 lamps d. 11,000 lamps
34. RVC Company budgeted the following production in units for the second quarter of the
year:

April 45,000
May 38,000
June 42,000

Each unit requires four pounds of raw material. RVC's policy is to have 30% of the
following month's production needs for materials in inventory. This policy was met in
March.

Raw materials purchases budgeted for May in pounds equal:

a. 202,400 c. 45,600
b. 156,800 d. 171,600
35. PPS Company purchased PHP40,000 of goods in July and expects to purchase
PHP60,000 of goods in August. PPS typically pays for 25% of purchases in the month of
purchase and 75% in the following month. What are PPS Company's total expected cash
disbursements for purchases in the month of August?
a. PHP40,000 c. PHP60,000
b. PHP65,000 d. PHP45,000

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FINAL DEPARTMENTAL EXAM IN MAS
Answer Section

MULTIPLE CHOICE

1. ANS: D
DIF: Difficulty: Moderate
OBJ: LO: 1-2 NAT: BUSPROG: Analytic
STA: AICPA: BB-Industry | IMA: Cost Management | ACBSP: APC-25-Managerial
Characteristics/Terminology KEY: Bloom's: Knowledge

PTS: 1 NOT: RVC

2. ANS: D
DIF: Difficulty: Moderate
OBJ: LO: 16-3 | LO: 16-4 | LO: 16-5 NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | IMA: FSA | ACBSP: APC-23-Financial Statement
Analysis
KEY: Bloom's: Comprehension NOT: 3 min.

PTS: 1 NOT: RVC

3. ANS: B PTS: 1 NOT: MS
4. ANS: D PTS: 1 NOT: MS
5. ANS: A PTS: 1 NOT: MS
6. ANS: D
.

PTS: 1 NOT: PS
7. ANS: D

PTS: 1 NOT: MS
8. ANS: D PTS: 1 NOT: MS
9. ANS: B PTS: 1 DIF: Moderate OBJ: 7-3
10. ANS: C PTS: 1 NOT: MS
11. ANS: D PTS: 1 NOT: MS
12. ANS: D PTS: 1 NOT: MS
13. ANS: D PTS: 1 DIF: Easy OBJ: 7-3
14. ANS: C
DIF: Difficulty: Moderate
OBJ: LO: 9-1 NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min.

PTS: 1 NOT: RVC

15. ANS: C
DIF: Difficulty: Easy
OBJ: LO: 9-1 NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min.

PTS: 1 NOT: RVC

16. ANS: A
DIF: Difficulty: Easy
OBJ: LO: 9-1 NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min.

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 PTS: 1 NOT: RVC
17. ANS: A
DIF: Difficulty: Easy
OBJ: LO: 9-1 NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min.

PTS: 1 NOT: RVC

18. ANS: C
DIF: Difficulty: Easy
OBJ: LO: 9-2 NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min.

PTS: 1 NOT: RVC

19. ANS: B
The purpose of identifying and assigning responsibility for variances is to determine who
is likely to have information that will enable management to find solutions. The
constructive approach is to promote learning and continuous improvement in
manufacturingoperations, not to assign blame. However, information about variances
may be useful in evaluating management performance. (CMA reviewer)

PTS: 1 TOP: Standard Cost and Variances NOT: RVC

20. ANS: A
A flexible budget is a series of several budgets prepared for many levels of activity. A
flexible budget allows adjustment of the budget to the actual level before comparing the
budgeted and actual results. The difference between the flexible budget and the actual
figures is known as the flexible budget variance. (CMA reviewer)

PTS: 1 TOP: Standard Cost and Variances NOT: RVC

21. ANS: D
DIF: Difficulty: Moderate
OBJ: LO: 16-5 NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | IMA: FSA | ACBSP: APC-23-Financial Statement
Analysis
KEY: Bloom's: Application NOT: 2 min.

PTS: 1 NOT: RVC

22. ANS: D
DIF: Difficulty: Moderate
OBJ: LO: 15-2 NAT: BUSPROG: Analytic
STA: AICPA: FN-Reporting | IMA: Reporting | ACBSP: APC-24-Statement of Cash Flows
KEY: Bloom's: Application NOT: 2 min.

PTS: 1 NOT: RVC

23. ANS: A
VC (1,000 units x PHP500) PHP500,000 - 150,000 (fixed costs) = PHP650,000 (sales)

Selling price per unit (PHP650,000/ 1,000) = PHP650 - PHP500 (VC) = PHP150 (CM)

PTS: 1 NOT: RVC

24. ANS: A
1,000 UNITS X PHP20

PTS: 1 NOT: RVC

25. ANS: A

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 X Y XY X^2
Q1 40 5,000 200,000 1,600
Q2 60 7,500 450,000 3,600
Q3 70 8,000 560,000 4,900
Q4 50 m 50m 2,500
Sum 220 20,500 + m 1,210,000 + 12,600
50m

110 = (4(1,210,000+50m) – (220)(20,500+m)) / (4(12,600) – (220)^2)

110 = (4,840,000 + 200m – 4,510,000 – 220m) / 2,000
220,000 = 330,000 – 20m
20m = 330,000 – 220,000
20m = 110,000
m = 5,500
a = (26,000 – (110 x 220)) / 4
a = 450

PTS: 1 NOT: MS
26. ANS: A

PTS: 1
27. ANS: A

PTS: 1 NOT: MS
28. ANS: A

PTS: 1 NOT: MS
29. ANS: C
Supporting calculations:
Direct materials cost (PHP4 ´ 22,000) PHP 88,000
Direct labor cost (PHP8 ´ 22,000) 176,000

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 Building rental 48,000
Total flexible budget PHP312,000

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 11-1

NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Application NOT: 3 min.

PTS: 1 NOT: PPS

30. ANS: C
Flexible Budget Actual Costs
(22,000 hours) (22,000 hours) Variance
Direct materials PHP 88,000 PHP 87,000 PHP1,000
F
Direct labor 176,000 174,000 2,000 F
Building rental 48,000 50,000 2,000 U
Total PHP312,000 PHP311,000 PHP1,000
F

The flexible budget here is created by creating standard rates from the static budget.
PHP80,000 or direct labor/20,000 labor hours yields PHP4/labor hour. This standard rate
is multiplied by the actual labor hours to get the standard labor hours for the actual
activity level.

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 11-1

NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | IMA: Performance Measurement | ACBSP: APC-33-
Incremental analysis KEY: Bloom's: Application NOT: 5 min.

PTS: 1 NOT: RVC

31. ANS: B PTS: 1 NOT: RVC
32. ANS: A
Spending variance = PHP135,000 - (PHP5 ´ 29,000) = PHP10,000 F
Efficiency variance = (29,000 - 27,500)PHP5 = PHP7,500 U

PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 11-2

NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | IMA: Performance Measurement | ACBSP: APC-28-
Variable and Fixed Costs KEY: Bloom's: Application NOT: 5 min.

PTS: 1 NOT: RVC

33. ANS: C
SUPPORTING CALCULATIONS:
(13,000 ´ .25) + 14,000 - (14,000 ´ .25) = 13,750 lamps

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-2

NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Application NOT: 2 min.

PTS: 1 NOT: PPS

34. ANS: B
April May June
Production 45,000 38,000 42,000
x materials per unit x4 x4 x4
Raw materials for 180,000 152,000 168,000
production

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 Desired ending inventory 45,600 50,400
Raw materials needed 225,600 202,400
Less: beginning inventory (54,00 (45,60
0) 0)
Purchases 171,600 156,800

PTS: 1 DIF: Difficulty: Easy OBJ: LO: 9-2

NAT: BUSPROG: Analytic
STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-
Budgeting and Responsibility KEY: Bloom's: Application NOT: 3 min.

PTS: 1
35. ANS: D
Expected cash disbursements = (PHP40,000 ´ 0.75) + (PHP60,000 ´ 0.25) = PHP45,000

PTS: 1

PTS: 1 NOT: PPS

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