MAS( shuffled)

​ Question 1
​ 1 Point
​ LL Company sells two products. Product A provides a contribution margin of P3 per unit, and
Product B provides a contribution margin of P4 per unit. If LL's sales mix shifts toward
Product A, which one of the following statements is correct?
1. The overall contribution margin ratio will increase.
2. Operating income will decrease if the total number of units sold remains constant.
3.
4. The contribution margin ratios for Products A and B will change.
5.
6. The total number of units necessary to break even will decrease.
7.
​
​ Question 2
​ 1 Point
​ In a managed floating exchange rate system:
1. the currency rate is supported by interventions by central banks in order to stabilize
or alter rates.
2. currency exchange rates are determined solely by market supply and demand.
3.
4. the currency exchange rate is changed only when approved by the central bank
administrators.
5.
6. the currency rate is tied to a certain relationship to the price of gold.
7.
​
​ Question 3
​ 1 Point
​ From the pairs indicated, the first individual is related to the second individual by staff
authority except
1. Controller; Assistant Controller
2.
 3. Controller; VP- Production
4. VP-Finance; Personnel Director
5.
6. Treasurer; Controller
7.
​
​ Question 4
​ 1 Point
​ Which of the following is not considered a weakness of ratio analysis?
1. Firms may use different valuation methods on inventory (FIFO, LIFO,
Weighted-average, etc.).
2. Markets change from year to year, and comparing ratios over time is problematic.
3. A firm in multiple industries has difficulty comparing its ratios to any one industry.
4.
5. Firms may use different depreciation methods (straight-line, double-declining
balance, etc.).
6.
​
​ Question 5
​ 1 Point
​ QQ Company's capital structure consists entirely of long-term debt and common equity. The
cost of capital for each component is shown below.

QQ pays taxes at a rate of 40%. If QQ's weighted average cost of capital is 10.41%, what
proportion of the company's capital structure is in the form of long-term debt?
1. 55%
2.
3. 34%
4.
5. 66%
6.
 7. 45%
​
​ Question 6
​ 1 Point
​ For cost estimation simple regression differs from multiple regression in that simple
regression uses only
1. one independent variable, while multiple regression uses more than one independent
variable.
2. dependent variables, while multiple regression can use both dependent and
independent variables.
3.
4. one dependent variable, while multiple regression uses more than one dependent
variable.
5.
6. one dependent variable, while multiple regression uses all available data to estimate
the cost function.
7.
​
​ Question 7
​ 1 Point
​ The JK Company produced 100,000 units of Product and sold 75,000 units at 3.00 per unit in
20x1. Variable unit costs are: Manufacturing – P1.60; selling- 0.15. Fixed costs for 20x1
include 30,000 of fixed manufacturing costs and 41,250 of fixed selling and administrative
expenses. What would be the net income for 20x1, using the variable costing?
1. P25,000
2.
3. P17,500
4.
5. P22,500
6.
7. P30,000
8.
​
​ Question 8
​ 1 Point
​ The schedule below shows the demand and elasticity coefficients for computers.

​
​

A computer manufacturer has experienced a weekly demand of 100 computers, at a price of

P1,200 per computer. Weekly revenues, therefore, have been P120,000. However, at that
price, the manufacturer has been experiencing a loss. At what price will the manufacturer
see the highest revenues?
1. P1,300
2.
3. P900
4.
5. P1,100
6.
7. P1,400
8.
​
​ Question 9
​ 1 Point
​ ZZ Company has an investment opportunity with expected after-tax cash flows of P25,000 a
year in Years 1 and 2, P30,000 a year in Years 3 and 4, and P37,500 in Year 5. The initial
outlay of this investment is P125,000 today. The firm uses 4 years as a maximum payback
criterion. Assume cash flows occur evenly during the year. What is the payback period for
this investment and should the firm accept the project?
1. 4.4 years; reject the project.
2.
3. 4.2 years; reject the project.
4.
 5. 5 years; reject the project.
6.
7. 4 years; accept the project.
8.
​
​ Question 10
​ 1 Point
​ Which of the following correctly defines the relationship between profit margin and asset
turnover?
1. There is no relationship between profit margin and asset turnover.
2.
3. ROA using the DuPont model is calculated by subtracting asset turnover from profit
margin.
4.
5. ROA using the DuPont model is calculated by multiplying profit margin times asset
turnover. Nasa net
6.
7. ROA using the DuPont model is calculated by dividing profit margin by asset
turnover.
8.
​
​ Question 11
​ 1 Point
​ SS Corporation won a settlement in a law suit and was offered four different payment
alternatives by the defendant's insurance company. A review of interest rates indicates that
8% is appropriate for analyzing this situation. Ignoring any tax considerations, which one of
the following four alternatives should the controller recommend to SS management?
1. P20,000 per year at the end of each of the next four years.
2.
3. P2,500 now and P2,500 per year at the end of each of the next nine years, plus a
lump-sum payment of P100,000 at the end of the tenth year.
4.
5. P67,500 now.
 6.
7. P2,500 now and P10,000 per year at the end of each of the next ten years.
8.
​
​ Question 12
​ 1 Point
​ HH Inc. plans to manufacture a newly designed high-technology propeller for airplanes. HH
forecasts that as workers gain experience, they will need less time to complete the job.
Based on prior experience, HH estimates a 70% cumulative learning curve and has
projected the following costs.

​
​

The estimated cost of an order for seven additional propellers, after completing production of
the first propeller, would be
1. P34,880
2.
3. P92,000
4. P54,880
5.
6. P98,000
7.
​
​ Question 13
​ 1 Point
​ BY Company is planning to acquire a P125,000 machine that will provide increased
efficiencies, thereby reducing annual operating costs by P40,000. The machine will be
depreciated by the straight thereby reducing annual operating costs by P40,000. The
machine will be depreciated by the straight-line method over a five-year life with no salvage
 value at the end of five years. Assuming a 40% income tax rate, the machine's payback
period is:
1. 4.81 years.
2.
3. 3.21 years.
4. 3.68 years.

5. 3.13 years.
6.
​
​ Question 14
​ 1 Point
​ Which one of the following statements about a balanced scorecard is incorrect?
1. It is directly derived from the scientific management theories.
2.
3. It relies on the perception of the users with regard to service provided.
4.
5. The notion of value chain analysis plays a major role in the drawing up of a balanced
scorecard.
6.
7. It seeks to address the problems associated with traditional financial measures used
to assess performance.
8.
​
​ Question 15
​ 1 Point
​ A high sales to working capital ratio could indicate
1. The firm is undercapitalized
2. The firm is not susceptible to liquidity problems
3. Unpredictable use of working capital
4.
5. Sales are not adequate relative to available working capital
6.
​
​ Question 16
​ 1 Point
​ Which of the following is not an example of a form of political risk associated with foreign
direct investment?
1. Nationalization of factories.
2.
3. Civil war.
4.
5. Change in government regime.
6.
7. Uncontrolled inflation.
8.
​
​ Question 17
​ 1 Point
​ Which of the following best describes a potential pitfall of the net present value (NPV)
method?
1. NPV generally ignores risk or uncertainty.
2.
3. NPV is only as reliable as the discount rate used.
4.
5. NPV uses cash flows rather than net earnings and ignores depreciation.
6.
7. NPV cannot be used to evaluate a project where the required rate of return varies
over the life of the investment.
8.
​
​ Question 18
​ 1 Point
​ All of the following are assumptions of cost-volume-profit analysis except
1. variable costs per unit change proportionately with volume.
2.
 3. sales mix for multi-product situations do not vary with volume changes.
4.
5. revenues change proportionately with volume.
6.
7. total fixed costs do not change with a change in volume.
8.
​
​ Question 19
​ 1 Point
​ Management should implement a different and / or more expensive accounting system only
when
1. The benefits of the system exceed the cost
2.
3. The cost of the system exceeds the benefits
4.
5. The board of directors dictates a change
6.
7. Management thinks it is appropriate
8.
​
​ Question 20
​ 1 Point
​ To insure that a divisional vice president places appropriate focus on both the short-term and
the long-term objectives of the division, the best approach would be to evaluate the vice
president’s performance by using
1. financial and nonfinancial measures, including the evaluation of quality, customer
satisfaction, and market performance.
2.
3. residual income since it will eliminate the rejection of capital investments that have a
return less than ROI but greater than the cost of capital.
4.
5. division segment margin or profit margin.
6.
 7. return on investment (ROI) which permits easy and quick comparisons to other
similar divisions.
8.
​
​ Question 21
​ 1 Point
​ A push system that manufactures finished goods for inventory on the basis of demand
forecasts is referred to as:
1. economic order quantity.
2.
3. relevant total cots.
4.
5. materials requirements planning (MRP).
6.
7. just-in-time purchasing.
8.
​
​ Question 22
​ 1 Point
​ Which of the following are the shortcomings of learning curve analysis?
I. Most new employees will improve at their tasks.
II. The learning curve approach is not as effective when robotics perform repetitive tasks.
III. The learning rate is assumed to be constant, but actual learning rate and declines in
production times are not constant.
IV. Data that show improvements in productivity may be mistakenly assumed to be due to
learning when they are in fact due to other factors.
1. II, III, and IV only.
2.
3. I and III only.
4.
5. II and IV only.
6.
7. I, II, III, and IV.
 8.
​
​ Question 23
​ 1 Point
​ EF Incorporated has to manufacture 10,000 blades for its electric lawn mower division. The
blades will be used evenly throughout the year. The set up cost every time a production run
is made is 80. And the cost to carry a blade in inventory for the year is 0.40. EF’s objective is
to produce the blades at the lowest cost possible. Assuming that each production run will be
for the same number of blades, how many production runs should EF make?
1. 5….
2.
3. 3
4.
5. 4….
6.
7. 6
8.
​
​ Question 24
​ 1 Point
​ If XX Industries has a beta value of 1.0, then its:
1. price is relatively stable.
2.
3. volatility is low.
4.
5. return should equal the risk-free rate.
6.
7. expected return should approximate the overall market.
8.
​
​ Question 25
​ 1 Point
​ GH Company began operations on January, and produces a single product that sells for 9
per unit. GH uses an actual cost system. 100, 000 units were produced and 90, 000 units
were sold in 20x1. There was no work-in-process inventory at December 31, 20x1.
Manufacturing costs and selling and administrative expenses for 20x1 were as follows:

​
​

What would be GH’s operating income for 20x1 using the direct costing method?
1. P181,000
2.
3. P281,000
4.
5. P371,000
6.
7. P271,000
8.
​
​ Question 26
​ 1 Point
​ Which one of the following statements is correct when comparing bond financing
alternatives?
1. A bond with a call provision typically has a lower yield to maturity than a similar bond
without a call provision.
2.
3. A convertible bond must be converted to common stock prior to its maturity.
4.
5. A call premium requires the investor to pay an amount greater than par at the time of
purchase.
6.
7. A call provision is generally considered detrimental to the investor.
 8.
​
​ Question 27
​ 1 Point
​ DD Company's beginning and ending inventories for the month of November are:

​
​

DD uses one factory overhead control account and charges factory overhead to production
at 70% of direct labor cost. The company does not formally recognize over/underapplied
overhead until year-end.

DD Company's net charge to factory overhead control for the month of November is
1. P80,000 debit, underapplied.
2.
3. P80,000 debit, overapplied.
4.
5. P80,000 credit, overapplied.
6.
7. P80,000 credit, underapplied.
8.
​
​ Question 28
​ 1 Point
​ A company uses simple regression to predict one of its semi-variable costs. The computed
equation of Y = -25,000 + 2.5X appears to have a good visual fit. The cause of the negative
term in this equation could be that
1. the zero level of output is outside of the relevant range.
2.
3. too many outliers were included in the data.
 4.
5. an inappropriate cost driver was used as the independent variable.
6.
7. the cost does not exhibit semi-variable behavior.
8.
​
​ Question 29
​ 1 Point
​ What is the effective annual interest rate on a P3 million loan with an interest rate of 6%, a
commitment fee of ½ %, and a compensating balance of 7%?
1. 7.95%.
2.
3. 6.99%.
4.
5. 6.5%.
6.
7. 6%.
8.
​
​ Question 30
​ 1 Point
​ Recent economic conditions are forcing AZ to drop its price from P50 to P40 per unit, but the
company expects its sales to rise from 600,000 to 750,000 units. The company's current cost
of production is P38 per unit. Suppose AZ would like to maintain a 16% target operating
income on its sales revenue. To achieve this target, the company must lower its cost of
production by:
1. P4.40 per unit.
2.
3. P33.60 per unit.
4.
5. P2.00 per unit.
6.
7. P6.40 per unit.
 8.
​
​ Question 31
​ 1 Point
​ A company sells two products, X and Y. The sales mix consists of a composite unit of 2 units
of X for every 5 units of Y (2:5). Fixed costs are P49,500. The unit contribution margins for X
and Y are P2.50 and P1.20, respectively.

Considering the company as a whole, the number of composite units to break even is:
1. 22,500
2.
3. 4,500
4.
5. 8,250
6.
7. 1,650
8.
​
​ Question 32
​ 1 Point
​ Standard & Poor's downgrades an A-rated bond to a BB rating. What is the likely impact of
this downgrade if the corporation issues future bonds?
1. Future returns will be highly speculative.
2.
3. The principal will yield higher returns.
4.
5. The issuer will need to offer higher interest rates.
6.
7. The issuer will need to offer lower interest rates.
8.
​
​ Question 33
​ 1 Point
​ company is considering three alternative machines to produce a new product. The cost structures
A
(unit variable costs plus avoidable fixed costs) for the three machines are shown as follows. The
selling price is unaffected by the machine used.

Single purpose machine P0.60x + P20,000

Semi-automatic machine P0.40x + P50,000
Automatic machine P0.20x + P120,000

The demand for units of the new product is described by the following probability distribution.

Demand Probability

200,000 0.4

300,000 0.3

400,000 0.2

500,000 0.1

Using the expected value criterion,

1. The single purpose machine should be used because of the low expected demand.
2.
3. The automatic machine has the lowest expected cost.
4.
5. The semi-automatic machine should be used because it has the lowest expected
cost.
6.
7. The automatic machine should be used because of the high expected demand.
8.
​
 ​ Question 34
​ 1 Point
​ BB Company is a retail sporting goods store that uses accrual accounting for its records.
Facts regarding BB's operations are as follows:
1. Sales are budgeted at P22,,000 for December year 1 andP20,000 for January year
2.
2. Collections are expected to be 60% in the month of sale and 38% in the month
following the sale.
3. Gross margin is 25% of sales.
4. A total of 80% of the merchandise held for resale is purchased in the month prior to
the month of sale and 20%is purchased in the month of sale. Payment for
merchandise is made in the month following the purchase.
5. Other expected monthly expenses to be paid in cash areP2,260.
6. Annual depreciation is P21,600.
​
Below is BB Company's statement of financial position at November 30, year 1.

Cash P2,200

Accounts receivable 7,600

(net of P400 allowance for uncollectible
accounts)

Inventory 13,200

Property, plant, and equipment 87,000

(net of P68,000 accumulated depreciation)

Total assets P110,000

Accounts payable P16,200

Common stock 80,000

 Retained earnings 13,800

Total liabilities and stockholders' equity P110,000

​
​ The budgeted income (loss) before income taxes for December year 1 is
1. Some amount other than those given.
2.
3. P3,240
4.
5. P1,000
6.
7. P2,800
8.
​
​ Question 35
​ 1 Point
​ FF Corporation anticipates the following sales during the last six months of the year:

​
​ 20% of FF's sales are for cash. The balance is subject to the collection pattern shown below:

​
​ What is the planned net accounts receivable balance as of December 31?
1. P36,000
2.
 3. P27,930
4.
5. P29,400
6.
7. P36,750
8.
​
​ Question 36
​ 1 Point
​ TT Company sells its single product for P30 per unit. The contribution margin ratio is 45%
and TT has fixed costs of P10,000 per month. If 4,000 units are sold in the current month,
TT's operating profit would be:
1. P30,500
2.
3. P44,000 4k units x 13.50= 54k 54k-10k=44k-ini tama
4.
5. P90,000
6.
7. P49,500
8.
​
​ Question 37
​ 1 Point
​ The regression equation is Y = a + bX. Which of the following is true?
1. a represents the amount of Y when X = 0.
2.
3. X represents the dependent variable.
4.
5. b represents the amount of Y when X = 0.
6.
7. b represents fixed cost per unit.
8.
​
​ Question 38
​ 1 Point
​ NN Industries is considering a P1 million investment in stamping equipment to produce a
new product. The equipment is expected to last nine years, produce revenue of P700,000
per year, and have related cash expenses of P450,000 per year. At the end of the 9th year,
the equipment is expected to have a salvage value of P100,000 and cost P50,000 to
remove. The IRS categorizes this as 5-year Modified Accelerated Cost Recovery System
(MACRS) property subject to the following depreciation rates.

​
​ NN's effective income tax rate is 30% and NN expects, on an overall company basis, to
continue to be profitable and have significant taxable income. If NN uses the net present
value method to analyze investments, what is the expected net tax impact on cash flow in
Year 2 before discounting?
1. Negative P128,000 impact.
2.
3. Positive P21,000 impact.
4.
5. Positive P28,000 impact.
6.
7. Negative P100,000 impact.
8.
​
​ Question 39
​ 1 Point
​ KK Theater stages a number of summer musicals at its theater in northern Philippines.
Preliminary planning has just begun for the upcoming season, and KK has developed the
following estimated data.
​
​

KK will also incur P565,000 of common fixed operating charges (administrative overhead,
facility costs, and advertising) for the entire season, and is subject to a 30% income tax rate.

If management desires Wonderful Tonight to produce an after-tax contribution of P210,000

toward the firm's overall operating income for the year, total attendance for the production
would have to be
1. 20,800
2.
3. 31,000
4.
5. 25,000
6.
7. 25,833
8.
​
​ Question 40
​ 1 Point
​ WW Inc., located in Belgium, currently manufactures products at its domestic plant and
exports them to the U.S. since it is less expensive to produce at home. The company is
considering the possibility of setting up a plant in the U.S. All of the following factors would
encourage the company to consider direct foreign investment in the U.S. except the:
1. depreciation of the U.S. dollar against Belgium's currency.
2.
3. widening of the gap in production costs between the United States and Belgium
locations.
4.
5. expectation of more stringent trade restrictions by the U.S.
6.
 7. changing demand for the company's exports to the U.S. due to exchange rate
fluctuations.
8.
​
​ Question 41
​ 1 Point
​ Which of the following are elements of earnings quality?
I. Management's discretion in choosing from among accepted accounting principles
II. Management compensation in relation to net earnings
III. The degree to which assets are maintained
IV. The effect of cyclical and other economic forces on the stability of earnings
1. II and IV only.
2.
3. I, II, III, and IV.
4.
5. I and III only.
6.
7. I, III, and IV only.
8.
​
​ Question 42
​ 1 Point
​ The level of risk that an organization will face can increase as a result of all of the following
except:
1. Variability of expected returns.
2.
3. The cash reserves the company holds.
4.
5. Decreasing the expected time to complete a project.
6.
7. Increasing the expected time to complete a project.
8.
​
​ Question 43
​ 1 Point
​ Which of the following are methods used to maintain a fixed exchange rate system?
I. Government intervention in foreign exchange markets
II. Government purchases of a devaluing currency against unchanging demand
III. Trade policies decreasing a trade deficit or increasing a trading surplus
IV. Placing controls on currency exchange
V. Making domestic macroeconomic adjustments that decrease the supply of the country's
currency in the market
1. I and II only.
2.
3. II and IV only.
4.
5. I, III, and IV only.
6.
7. I, II, III, IV, and V.
8.
​
​ Question 44
​ 1 Point
​ Which of the following statements best describes a characteristic of a factory-overhead
control report prepared for use by a production line department head?
1. The report should include information on all costs chargeable to the department,
regardless of their origin or control
2.
3. The report should be stated in pesos rather than in physical units so the department
head knows the financial magnitude of any variances
4.
5. It is more important that the report be precise than timely
6.
7. The cost in the report should include only those controllable by the department head
8.
​
​ Question 45
​ 1 Point
​ Segment X generated sales revenue of P250,000 and variable operating expenses of
P112,500. Its controllable fixed expenses were P2,500. It was assigned 40% of P125,000 of
fixed costs controlled by others. The common fixed costs were P16,000. What was Segment
X's controllable segment profit margin?
1. P135,000
2.
3. P112,500
4.
5. P69,000
6.
7. P85,000
8.
​
​ Question 46
​ 1 Point
​ Of the following pairs of variances found in a flexible budget report, which pair is most likely
to be related?
1. Material usage variance and labor efficiency variance.
2.
3. Labor rate variance and variable overhead efficiency variance.
4.
5. Labor efficiency variance and fixed overhead volume variance.
6.
7. Material price variance and variable overhead efficiency variance.
8.
​
​ Question 47
​ 1 Point
​ The following performance report was prepared for EE Manufacturing for the month of April.
​
​

Using a flexible budget, EE's total sales-volume variance is:

1. P200,000 unfavorable.
2.
3. P40,000 unfavorable.
4.
5. P60,000 favorable.
6.
7. P160,000 favorable.
8.
​
​ Question 48
​ 1 Point
​ The major disadvantage of a top-down budgeting process is:
1. lack of involvement by upper-level management.
2.
3. inconsistencies of goals with strategic plans.
4.
5. the introduction of budgetary slack.
6.
7. lack of buy-in by middle and lower-level management.
8.
​
​ Question 49
​ 1 Point
​ A manufacturer has been approached by a new customer who wants to place a one-time
order for a component similar to one that the manufacturer makes for another customer.
Existing sales will not be affected by acceptance of this order. The manufacturer has a policy
of setting its targeted selling price at 60% over full manufacturing cost. The manufacturing
 costs and the targeted selling price for the existing product are presented as follows.

​
​

The manufacturer has excess capacity to produce the quantity of the component desired by
the new customer. The direct materials used in the component for the new customer would
cost the manufacturer P0.25 less than those used in the component currently being made.
The variable selling expenses (packaging and shipping) would be the same, or P0.90 per
unit.

Under these circumstances, the minimum unit price at which the manufacturer would accept
the special order is one exceeding:
1. P14.80
2.
3. P9.25
4.
5. P8.35
6.
7. P14.00
8.
​
​ Question 50
​ 1 Point
​ Kern Manufacturing has several divisions and evaluates performance using segment
income. Since sales include transfers to other divisions, Kern has established a price for
internal sales as cost plus 10%. Red Division has requested 10,000 units of Green Division's
product. Green Division is selling its product externally at a 60% markup over cost. The
corporate policy will encourage the Green Division to:
 1. transfer the product to the Red Division if it does not require the Green Division to
give up any external sales.
2.
3. transfer the product to the Red Division because all costs are being covered and the
division will earn a 10% profit.
4.
5. accept the sale to the Red Division if it is operating at full capacity and the sale will
contribute to fixed costs.
6.
7. reject the sale to the Red Division because it does not provide the same markup as
external sales.
8.
​
​ Question 51
​ 1 Point
​ DW Company invested in a two year project having an internal rate of return of 12%. The
project is expected to produce cash flow from operations, net of income taxes, of 60,000 in
the first year and 70,000 in the second year. The present value of 1 for one period at 12% is
0.893 and for two periods at 12% is 0.797. How much will be the project cost?
1. P116,090
2.
3. P103,610
4.
5. P122,510
6.
7. P109,370
8.
​
​ Question 52
​ 1 Point
​ PP Retail Inc. has total assets of P7,500,000 and a current ratio of 1.7 times before
purchasing P750,000 of merchandise on credit for resale. After this purchase, the current
ratio will:
 1. be lower than 1.7 times.
2.
3. remain at 1.7 times.
4.
5. be higher than 1.7 times.
6.
7. be exactly 1.93 times.
8.
​
​ Question 53
​ 1 Point
​ UU Inc. grants credit terms of 1/15, net 30 and projects gross sales for the year of
P2,000,000. The credit manager estimates that 40% of customers pay on the 15th day, 40%
of the 30th day and 20% on the 45th day. Assuming uniform sales and a 365-day year, what
is the projected amount of overdue receivables? (Round answer to the nearest hundred.)
1. P400,000.
2.
3. P49,300.
4.
5. P83,300.
6.
7. P116,700.
8.
​
​ Question 54
​ 1 Point
​ YY Savings Bank has received loan applications from three companies in the auto parts
manufacturing business and currently has the funds to grant only one of these requests.
Specific data, shown below, has been selected from these applications for review and
comparison with industry averages.
​
​

Based on the information above, select the strategy that should be the most beneficial to YY
Savings.
1. Grant the loan to GHI as the company has the highest net profit margin and degree
of financial leverage.
2.
3. Grant the loan to DEF as both the debt/equity (D/E) ratio and degree of financial
leverage (DFL) are below the industry average.
4.
5. Grant the loan to ABC as all the company's data approximate the industry average.
6.
7. YY Savings Bank should not grant any loans as none of these companies represents
a good credit risk.
8.
​
​ Question 55
​ 1 Point
​ Risks that an organization may face related to short-term and long-term debt and equity
decisions are commonly called:
1. Operational risks.
2.
3. Strategic risks.
4.
5. Hazard risks.
6.
7. Financial risks.
8.
​
​ Question 56
​ 1 Point
​ James JJ is the general manager of the Industrial Product Division, and his performance is
measured using the residual income method. JJ is reviewing the following forecasted
information for his division for next year:

​
​

If the imputed interest charge is 15% and JJ wants to achieve a residual income target of
P2,000,000, what will costs have to be in order to achieve the target?
1. P10,800,000
2.
3. P25,690,000
4.
5. P9,000,000
6.
7. P25,150,000
8.
​
​ Question 57
​ 1 Point
​ GG Products sells sweatshirts and is preparing for a World Cup soccer match. The cost per
sweatshirt varies with the quantity purchased as follows:

​
​ GG must purchase the shirts one month before the game and has analyzed the market and
estimated sales levels as follows.
​
​

The estimated selling price is P25 for sales made before and at the game day. Any shirts
remaining after game day can be sold at wholesale to a local discount store for P10.

The expected profit if GG purchased 6,000 shirts is:

1. P69,000.
cost of purchase = 6000* 13= 78000

expected sales = .15*4000 +0.2*5000+ 6000*.35+7000*.30= 5800 units *25= 145000

200 units supply * 10 =(2000+ 145000)- 78000= 69000 expected profit

2. P64,500.
3. P66,000.
4. P72,000.
​
​ Question 58
​ 1 Point
​ In order to increase production capacity, OO Industries is considering replacing an existing
production machine with a new technologically improved machine effective January 1. The
following information is being considered by OO Industries.
1. The new machine would be purchased for P160,000 in cash. Shipping, installation,
and testing would cost an additional P30,000.
2. The new machine is expected to increase annual sales by20,000 units at a sales
price of P40 per unit. Incremental operating costs are comprised of P30 per unit in
variable costs and total fixed costs of P40,000per year.
3. The investment in the new machine will require an immediate increase in working
capital of P35,000.
4. OO uses straight-line depreciation for financial reporting and tax reporting purposes.
The new machine has an estimated useful life of five years and zero salvage value.
5. OO is subject to a 30% corporate income tax rate.
6. OO uses the net present value method to analyze investments.
​
 The acquisition of the new production machine by OO Industries will contribute a discounted
net-of-tax contribution margin of:
1. P421,559.
2.
3. P454,920.
4.
5. P530,740.
6.
7. P277,501.
8.
​
​ Question 59
​ 1 Point
​ CX Corporation was organized on January 1, 20x1 with the following capital structure:

​
​ CX’s net income for the year ended December 31, 20x1 was P450,000, but no dividends
were declared.

How much was CX’s book value per common stock at December 31, 20x1?
1. 49….
2.
3. 50
4.
5. 44—
6.
7. 45
8.
​
​ Question 60
​ 1 Point
​ AA Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other
institutions. The table tops are manufactured by AA, but the table legs are purchased from
an outside supplier. The Assembly Department takes a manufactured table top and attaches
the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company
follows a policy of producing enough tables to ensure that 40% of next month's sales are in
the finished goods inventory. AA also purchases sufficient raw materials to ensure that raw
materials inventory is 60% of the following month's scheduled production. AA's sales budget
in units for the next quarter is as follows:
July 230,000
August 250,000
September 210,000

AA's ending inventories in units for June 30 are

Finished goods 190,000
Raw materials (legs) 400,000

The number of tables to be produced during August is

1. 234,000 tables
2.
3. 190,000 tables
4.
5. 140,000 tables
6.
7. 144,000 tables
8.
​
​ Question 61
​ 1 Point
​ An underlying premise when using the capital asset pricing model (CAPM) to estimate a
firm's cost of equity capital is:
1. the required rate of return rate equals the riskless rate of interest plus a premium for
risk.
2.
 3. individual capital components must be weighted based on their contributions to the
firm's capital structure.
4.
5. investor attitudes toward risk will not change.
6.
7. dividends are expected to grow at a constant compound rate.
8.
​
​ Question 62
​ 1 Point
​ Which of the following is not a distinction management accounting and financial accounting?
1. Management accounting emphasizes on objective data while financial accounting
allows subjective data
2.
3. Management accounting generates special purpose reports while financial
accounting generates general-purpose statements
4.
5. Financial accounting must conform to generally accepted accounting principles which
are not imposed in management accounting
6.
7. Management accounting information is directed to internal management while
financial accounting information is primarily intended to external users
8.
​
​ Question 63
​ 1 Point
​ David Laban is manager of claims processing for Philippine Health Care System. His
performance is evaluated using various measures agreed upon in advance with Diane
Nateen, general manager. Nateen asked Laban to recommend several measures to evaluate
the performance of his unit next year. Which one of the following performance measures
would likely have the least positive effect on Laban's motivation and performance?
1. Percentage of claims processed accurately the first time
2.
 3. Processing cost per claim
4.
5. Total dollar amount of claims processed per month
6.
7. Average processing time per claim
8.
​
​ Question 64
​ 1 Point
​ RR Products uses the Economic Order Quantity (EOQ) model as part of its inventory
management process. A decrease in which one of the following variables would increase the
EOQ?
1. Cost per order.p
2.
3. Safety stock level.
4.
5. Annual sales.
6.
7. Carrying costs.
8.
​
​ Question 65
​ 1 Point
​ A company has a direct labor price variance that is favorable. Of the following, the most
serious concern the company may have about this variance is that:
1. actual production is less than budgeted production.
2.
3. the production manager may not be using human resources as efficiently as
possible.
4.
5. the cause of the favorable variance may result in other larger unfavorable variances
in the value-chain.
6.
 7. the circumstances giving rise to the favorable variance will not continue in the future.
8.
​
​ Question 66
​ 1 Point
​ MM Enterprises manufactures 3 products, A, B, and C. During the month of May MM'
production, costs, and sales data were as follows.

​
​ Based on the above information, which one of the following alternatives should be
recommended to MM' management?
1. Sell both Product B and Product C at the split-off point.
2.
3. Process Product C further but sell Product B at the split-off point.
4.
5. Process both Products B and C further.
6.
7. Process Product B further but sell Product C at the split-off point.
8.
​
​ Question 67
​ 1 Point
​ Financial leverage results from the use of a source of funds for which the firm:
1. pays a fixed percentage of income.
2.
3. pays a variable return on each dollar amount raised.
4.
5. earns a higher rate of return from its use than its cost.
6.
7. pays a fixed percentage of revenue.
8.
​
​ Question 68
​ 1 Point
​ A company's management representative consults the production manager to set the
standards for the upcoming quarter. The manager gives him the following information:
1)The defective unit rate per worker per day is 2 out of 10 units.
2)The actual daily production is 10 units per worker.
3)The production department operates for 40 hours in a week.

The management representative includes the following in the quarterly budget:

1)Monthly production target per worker is 200 units with nil defective units.
2)The defective unit rate per worker per day is nil.

The board of directors disapproved the budget stating it to be unattainable.

Under which of the following situations can the given budget be achieved?
1. The budget can be achieved if the production manager allows for normal work
delays, spoilage, waste, employee rest periods, and machine downtime.
2.
3. The budget can be achieved if the production manager only allows for deviation
caused by abnormal and uncontrollable reasons.
4.
5. The budget can be achieved if the production department operates 45 hours in a
week.
6.
7. The budget can be achieved by the most efficient and skilled workers at their best
efficiency all of the time.
8.
​
​ Question 69
​ 1 Point
​ CC Industries employs a standard cost system in which direct materials inventory is carried
at standard cost. CC has established the following standards for the prime costs of one unit
of product.

​
​ During November, CC purchased 160,000 pounds of direct materials at a total cost of
P304,000. The total factory wages for November were P42,000, 90% of which were for direct
labor. CC manufactured 19,000 units of product during November using 142,500 pounds of
direct materials and 5,000 direct labor hours.

The direct materials purchase price variance for November is:

1. P16,000 favorable.
2.
3. P14,250 unfavorable.
4.
5. P14,250 favorable.
6.
7. P16,000 unfavorable.
8.
​
​ Question 70
​ 1 Point
​ VV Products is reviewing its trade credit policy with respect to the small retailers to which it
sells. Four plans have been studied and the results are as follows.

​
​

The information shows how various annual expenses such as bad debts and the cost of
collections change as sales change. The average balances of accounts receivable and
 inventory have also been projected. The cost of the product to VV is 80% of the selling price,
after-tax cost of capital is 15%, and VV's effective income tax rate is 30%. What is the
optimal plan for VV to implement?
1. Plan D
2.
3. Plan A
4.
5. Plan C
6.
7. Plan B
8.
​