The Review School of Accountancy FIRST PREBOARD EXAMIMATION 06 February 2016 t what B a. BS x0 under fuli 4. P 140, margin of saf P 60, 4. P 144 d. None, si 6. How many unit b. 18,889 un: 1,121 un: 8:00 AM - 10:00 AM Momagemert Servicer t the correct swer for each of the following y one answer for each item by shading the box letter of your choice on the answer sheet provided. ALLOWED. Usé only the ormation ides the following information for the month roduction of 20,000 unit P 50,000 30,000 rhead cost 20,000 ory overhead cost 25,000 1 administrative expenses 40,000 c nistrative expenses 15,000 t product t under variab: sting? ,, rc will earna gt it of P per unit under wha h f goods manufactured if work- duction and sales are equal, what is the y's based on a unit selling price of 2.00: a i 00 ,000 units), is the required 2 ak-even for the month e the compa erty ¢ the company y at n point s f e costing pi s higher thanMANAGEMENT SERVICES §SA)) First Preboard Examinations (May 2016 Batch) (06 Februaury 2016 * 8:00 AM to 10:00 AM Page 2 Ih f following t not h type of ‘ice eto the Lest! of ri x mpany produc produ: Al, an ) in the same plant. Fixed overhead costs are ap > product don dire s Per unit data for the th ducts ar follow: ng pri P60 P 64 F ariable f ion co 04 34 ed overhead appli 4 24 27 rubbing’ need: 3 2 1 hat th 1 r t 1 mus y one of five 7 ed employ To r tion i by these five em what. sh he p ity ranking to lowest) of Highest Mi w Which sequen ¢ polars) ye bility x fi er, rm nter en , revenue center, fp nt a D ration 1 disclosed follo} ata ng t t lat t 5 t 1,000 contracted lat ate P en what the actual labor I cro Cn what w fect de £ roduct rather an its suppl I , 2 a dee < e product h lation co ents represents the weakestMANAGEMENT SERVICES First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 © 8:00 AM to 10:00 AM Page 3 13.A retail manager is preparing a budget for the coming year and is considering the various costs of retail store. What is the best approach for the manager to take when budgeting for the cost of the store's merchandise? a. The total costs will stay the same as last year, but the unit cost will change with each sale b. The total cost of merchandises sold for the year and the unit cost will remain constant with each sale c. The total cost of merchandises sold for the year will depend on the amount of sales, but the unit cost of each sale will stay fairly constant d. The total costs will stay the same as last year, and the unit cost will remain constant with each sale 14.An investment center’s return on sales is 20% when its return on investment (RoI) i2 258. What is the center’s investment turnover? | a. 0.05 b. 0.45 + 0.80 d, 1.25 15.CPAs are in a more advantageous position than members of other professions to render MAS because a: The CPA is already familiar with the client and its business and enjoys the confidence of the client b. CPAs are professionals with recognized standing . Most CPAs are highly trained and educated d. Only CPAs may render MAS Items 16 to 18 are based on the following information Marinara Company uses a standard costing system in the manufacture of its single product. The 35,000 units of raw material in inventory were purchased for P 105,000, and two units of raw material are required to produce one unit of final product. .In November, the company produced 000 units of product. The standard allowed for material was P 60,000; and there was an. unfavorable quantity variance of P 2,500: 16.What is Marinara’s standard price for one unit of material? a. P 2.00 b. P 2.50 c. P 3.00 d. P 5.00 17. How many units were used to produce November output? a. 12,000 units b. 12,500 units c. 23,000 units d. 25,000 units 18.What was the materials price variance’ for the units used in November? a. P 12,500 unfavorable w b, P 11,000 unfavorable c. ‘PB 3,500 unfavorable d. P 2,500 unfavorable 19.When there is no excess capacity, the minimum acceptable transfer price must cover a. Opportunity costs only b, Variable and fixed manufacturing costs. ¢. Variable costs associated with the transfer d. Variable manufacturing costs plus contribution margin foregone on lost regular units.7 \ MANAGEMENT SERVICES )) First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 * 8:00 AM to 10:00 AM Page 4 -Under the master budget, which of the folfowing shall be classified as a financial budget? a. Sales budget b. Capital budget c. Materials budget d. Production budget 2i.The following cost data for different hours of operations are made available to you by Carbonara Manufacturing Company for your analysis: Number of Months Lo aan Sum of Hours 3500 35% Sum of Costs 1,000 #3 Sum of Hours x Costs 39,200. ¢n9 Sum of Hours Squared 14,250 4x* Using the least-squares method, what is the value of the slope of the cost line? a. P 2.10 per hour b. P 26.50 per month c. P 316,00 per year @. P 735.00 for 10 months 22.How should the monthly ‘rental of a factory machine be treated? a. Direct product cost under absorption costing b. Indirect product cost under variable costing €. Dixect period cost under absorption costing d. Indirect period cost under variable costing 23.Under the three-variance method for analyzing factory overhead, budget or spending variance is computed by subtracting from actual factory overhead costs incurred the a. Budget allowance based on actual hours b. Budget allowance based on normal hours c. Budget allowance based on standard hours d. Budget allowance based on budgeted hours 24. Spaghetti Company manufactures a single product. The company keeps inventory of raw materials at 50% of the coming month's budgeted production. Each unit of product requires 3 pounds of materials. The production budget is (in units): May, 1,000; June, 1,200; duly, 1,300; August, 1,600. Determine the raw materials purchases in_dune. a. 3,450 pounds b. 3,600 pounds ¢. 3,750 pounds @. 4,350 pounds 28.Which of the following matters is most likely the con controller rather than a treasurer? a. The is already late in filing its periodic tax returns b. the company is in default of an account payable to a supplier ¢. The company is guilty of unplanned material bank overdraft d. The company is in need of financing from external sources 26. Profit + Margin of Safety - a. Break-even point* b. Contribution margin ¢. Contribution margin ratio d. No meaningful or useful amount(aa) MANAGEMENT SERVICES CE et re (tay 2016 nc) 06 Februaury 2016 * 8:00 AM to 10:00 AM Page 5 27.For convenience purposes, insignificant amounts of production variances are closed to the a. Cost of goods sold only b. Cost of goods sold and finished goods inventory Cost goods sold, finished goods inventory and work in J. Cost of goods sold, finished goods inventory, work in process and direct materials e Chan produces tw products, A and B. Relevant data fol Product A Product B Direct materials P 28 P25 Direct labor 3 2 variable overhead 6 4 Variable selling expenses 4 2 d costs P 50,000 Production/sales (units 2,000 1,000 The company allocates f costs the basis on the. direct labordas®. What should be the ling price of Product B if the markup based on full cost is 308? 59.00 59.15 P 60.00 The Pesto ollowing information ng historical pattern on its credit n of after sale n the second month after sale 4% collected in the third month after sale 1% uncollecti The sales on open account have been budgeted for the last six months of 2016 are shown below: nly P 60,000 August September October 90,000. November 100, 0 December 85, 00¢ Determine the projected third quarter sal a. P 21,400 b. P 43,000 c. P 84,400 ad. P 100 ections in the month of October from a6. Determine the projected net accounts receivable balance ai of January 1, 2017. 31.A decrease in the income 2 a. Increases sales required to earn b. Decreases sales require particular pre-tax profit particular pre-tax profit ¢. Increases sales required to earn a particular after-tax profit d. Decreases sales required to earn a particular after-tax profMANAGEMENT SERVICES First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 + 8:00 AM to 10:00 AM Page 6 -What cost segregation technique requires the use of gbservation and judgement to the variable and fixed components of a mixed cost? a. High-low method b. Step down method ¢. Scattergraph method d. Least-Square regr 33 to 35 are bas don the »wing information modore, Inc, evaluates manufacturing overhead in its factory by using variance analysis. The January information shows the following Actual Budget Number of frames manufa: 20,000 ariable overhead cost P 2-per hour xed overhead costs P P 20,000 Direct labor hours 0.1 hour per fraine Labor payrol P 4.50 per h 38.What is the overhead controllable variance? a. P.2,100 favorable b. P 2,300 favorabl ¢. -P 2,100 unfavor. d. P 2,300 unfavorable 34.What is the variable a. P 100 credit b. P 300 credi c. P 100 debit P 300 debit 35.What is the fixed overhead a. P 1,000 over-appli b.. P 1,000 under-applied ; P 3,000 over-applied 4. “P 3,000 under-applied 36.Which set of terms more accurately describes management accounting ormation (rather than financial accounting information)? Historical, precise, useful Required, estimated, internal Budgeted, informative, adaptabl d. Comparable, verifiable, mone 37.Asian Company is subject a 40% income tax rate. The following data pertain to the company’s production and sales of 45,000 units: Sales revenue ~ P 1,350,000 Variable costs 810,000 F 08 000 How many units must Asian C rn ap profit of P 180,000 z 45, 00 feasibility study a. Is mainly based on assumptions and financial forecasts Ensures ‘the viable realization of a proposed business proj xtends up commissioning of the commercial start-up of the proposed business project d. Shall include +marketing and technical aspects but shall exclude the financial aspect of the proposed business projectGE) MANAGEMENT SERVICES ASA) First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 * 8:00 AM to 10:00 AM Page 7 a. Break-even point be h than shutdown point aiidér’ absory x costing to be equal fost P be ir ant in decision-making and ‘ > ly rial and unf ane npany, pect swing monthly results hoe 1 ndal TOTA. F 1 i 00¢ tal cost : 0,000 E P 440, 000 t 000 p40,.00¢ P 110,000 7 11d avoi sd Fixec ‘opping the Shoes c er, the managers b hat if they drop Shoes, sale what be th pany profit a the Shoes segment? a. In he pr “ tal revenue I asing the pr will th tal revenue i. 2¢ against thi f oth r 4 mnonly known a of mpetence, n tiality, ir i b vit i a accor with! xe iene and standard. , t a ntidants ly a d with professional behavi ly an 11 relevant informa ected nf luer er 2 ndi th ortMANAGEMENT SERVICES First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 * 8:00 AM to 10:00 AM Page 8 the means to evaluate a line of t of data and represents > an independent variable ang) 4 dependent variable iability of expense with pesos of operatior ability of exp with pesos of production Company make 000 units per a manufa s b 1 this is Direct materi 17.80 Direct labor 9.0 Fixed manufacturing overhead An outside supplier has offered to sell the parts for P 48.50 p unit. If Aglio Company a this offer, the facilities ‘now being make the part Could be used to make another product that is to contribute an additional margin of P_273,009-per year . If the parts were purchased from the outside supplier, all direct labor cost of the par ald be avoided. However, P the fixed manufacturing overh »st being applied to the part ven if the part were purchased from the outside supplier. anufactur cost would be applied llowing i > make the b total relevant to net advantage of making the The net disadvantage of making t i sis may be included in ‘orm: the following re a ter on. Cost center and revenue center cos venue center and profit center ost evenue center, profit center and investment center 4 r the pe ended, Fettucine generated the following even! 100’ Gros. M 40% Net 5 s the di operating leverage 5.0 timesMANAGEMENT SERVICES First Preboard Examinations (May 2016 Batch) 06 Februaury 2016 © 8:00 AM to 10:00 AM Page 9 {9.When both the selling price and the variable cost per unit are nereased by P 5, b to break-even Fewer i to break-even nereases by P 5 ).For the pas years, Macaroni Company has produced small gas motors that fit its ma duct line of weed-cutting machine. s material costs have steadily increased, the controller of Macaroni is reviewing the decision ‘ontinue making the small motors and has ident the following a) equipment used to manufacture the gas motors has a book alue of P 350,000 E e now occupied by the gas motor manufacturing department used to eliminate the need for storage space now being an be purchased from an outside supplier for P 89.95 of the sons who wi at the gas motor manufacturing department would be terminated and given severance pay g 5,000 unsecured note is still outstanding on the equipment in the manufacturing pre wh >f these items are relevant he decision that the controller is to make © and EN EXAMINATI