MANAGEMENT SCIENCE

1. Dantzig - An American scientist, developed linear programming for the use of US Air
Force in assigning soldiers, weapons, and supplies during WWII.
2. The most common linear programming problems are the:
Answer: Product-mix problem and Blending problem
3. Product-mix problem - The decision-maker has to solve for which products to include
and in what quantities in the production plan that will achieve profit maximization.
4. Blending problem - It deals with finding the best mix of available raw materials or
ingredients that will contribute to cost efficiency.
5. Decision Variables - Element of linear programming whose values are to be
determined. These values are usually denoted by X1, X2…. Xn and are usually
controllable, continuous and non-negative.
6. Objective Function - It is a mathematical expression of the relationship between the
decision variables and a single goal, given as total profit, total cost, market share, etc.
7. Profit or Cost Coefficients - Expressed as the rate of which the value of the objective
function is increased based on the decision variables that are included in the
problem solution.
8. The use of resources has limitations or production has certain requirements, and
these are considered as _____________, expressed in the form of linear inequalities or
equalities.
Answer: Constraints
9. Input output coefficients - Express the rate at which a resource is put to use which
appear on the left side of the constraints.
10. Capacities - Availability of the varying resources that are indicated by their highest or
lowest limit found at the right side of the constraints.
11. Optimization - it means that the goals of the objective can be either maximize or
minimize.
12. Non negativity - Decision variables are required to be non-negative (0 or positive)
values.
13. Identify the decision variables. - Gather data on the constraints and explore the
applicable objective function. Then use the appropriate symbolic notation and units
of measurement for the decision variables.
14. Identify the data /information related to the problem . - Identify the constraints and
parameters.
15. Formulate the objective function. - First, decide whether the objective is maximization
or minimization. Then express it in linear mathematical terms using the decision
variables, taking into consideration the problem’s desired goal (profit or cost)
16. Formulate the constraints. - Express the constraints in linear equality or inequality
based on the identified decision variables.
17. Back Flush Costing - An accounting method whereby the costs associated with
producing a good or service are recorded only after the good or service is actually
produced, completed or sold.
18. Throughput costing - Is a costing approach under which only direct materials are
recorded as inventory costs while all other manufacturing costs (including direct
labor and variable factory overhead) are expensed as period costs. Selling and
administrative costs are expensed as period costs as well.
19. Which is not included in a life cycle product costing?
a. Research and development
b. Product design, prototyping and testing
c. Manufacturing, inspecting, packaging, and warehousing
d. Marketing, promotion and distribution
e. Sales and Service
f. None of the above
20. Management accounting - It is the process of identification, measurement,
accumulation, analysis, preparation, interpretation, and communication of financial
information, which is used by management to plan, evaluate, and control activities
within an organization.
21. Which of the following is not an objective and scope of Management Accounting?
a. It is concerned with providing information to managers who control and direct the
business operations.
b. It provides variety of reports on performance, key indicators, analysis of business
situation and investigation on specific problems.
c. It involves actively in the process of managing the entity that includes strategic, tactical
and operating decisions.
d. None of the above
22. S1-True; S2-True - Statement 1(S1) Both management accounting and financial
accounting  use the accounting information system to derive financial and non-
financial information useful in making economic decisions.
Statement 2(S2)- Cost Accounting  is a new interest in Management Accounting
because the former is a systematic set of procedures for recording and reporting
measurement of the costs of producing and selling goods and services  that is vital in
management planning, controlling and decision making.
23. Which of the following is not a limitation of financial statements analysis?
a. Not absolute measures; only indicators of profitability.
b. Accounting data is based on estimates and judgment
c. Performance measures are absolute, not relative
d. Management override to influence outcome
24. Cash Conversion Cycle - Measures the length of time required to convert cash to
finished goods; then to receivable; then to cash.
25. Assets turnover - Measures the efficiency of the firm in managing all assets
26. JPC Corporation produces and sells two products, Product A and B. The contribution
margin per unit of A is P 10, while that of B is P 15. Two types of materials, X and Y,
are used to produce both products. At present, the company is experiencing some
difficulties in acquiring the said materials, so it could not produce as much quantity
of A and B as it wants to produce. To properly allocate the available materials and at
the same time, maximize its total contribution margin, the following model will be
used:
Max CM= 10A + 15B
Subject to: 5A + 4B=< 800
                  3A + 6B=< 500
The mathematical functions that the company will use to allocate the scarce
materials and maximize total contribution margin are an example of a/an
ANSWER: Linear Programming Model
27. In the mathematical function given in problem 26 above, Max CM=10A+ 15B is the
___________.
ANSWER: objective function
28. Same problem in no. 26, the two inequality functions are:
ANSWER: constraints
29. Same problem as in no. 26, the point at which A=60 and B=40
ANSWER: is a feasible point
30. To solve a linear programming problem, slack, surplus, and artificial variables must
be employed. Which of the following statements about a slack variable is correct?
a. It is the benefit foregone by using a scarce resource in a given way
b. Its total amount varies with change in cost driver, but its cost per cost driver is constant
within the relevant range
c. It represents unused capacity and is added to inequalities of the =< type to convert
them into equalities
d. It refers to the benefit of moving the feasible area.