MAS REVIEW PART 1 1 The Standards of Ethical Conduct for Management Accountants developed by the Institute of Management Accountants

contain a policy regarding confidentiality that requires management accountants to refrain from disclosing confidential information acquired in the course of their work: A) except when authorized by management. B) in all situations. C) except when authorized by management, unless legally obligated to do so. D) in all cases not prohibited by law. Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries, Inc. Samantha has just discovered evidence that some of the corporation's marketing managers have been wrongfully inflating their expense reports in order to obtain higher reimbursements from the firm. According to the Institute of Management Accountants' Standards of Ethical Conduct, what should Samantha do upon discovering this evidence? A) notify the controller. B) notify the marketing managers involved. C) notify the president of the corporation. D) ignore the evidence because she is not part of the Marketing Department. Process Reengineering includes all of the following steps except: A) constructing a diagram flowcharting the current process. B) redesigning the process. C) elimination of non-value-added activities. D) elimination of all constraints. During the month of January, direct labor cost totaled P17,000 and direct labor cost was 60% of prime cost. If total manufacturing costs during January were P82,000, the manufacturing overhead was: A) P11,333 B) P53,667 C) P28,333 D) P65,000 The following information is taken from the records of DW Company for last year: Direct materials ............................................. Direct labor ................................................... Manufacturing overhead ............................... Ending work in process inventory ................ Cost of goods manufactured ......................... P8,000 P3,000 P11,000 P5,000 P19,000 C The amount of beginning work in process inventory is: A) P24,000 B) P2,000 C) P22,000 D) P3,000 6 Aable Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is P45,000 and if direct materials are P53,000, the manufacturing overhead is: A) P11,250 B) P13,250 C) P180,000 D) P24,500 The nursing station on the fourth floor of Central Hospital is responsible for the care of patients who have undergone orthopedic surgery. The costs of drugs administered by the nursing station to patients would be classified as: A) direct costs of the patients. B) indirect costs of the patients. C) overhead costs of the nursing station. D) period costs of the hospital. Fisher Company uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The following information about Fisher Company's Work in Process inventory account has been provided for the month of May: May 1 balance ........................................ Debits during May: Direct Materials ...................................... Direct Labor ........................................... Manufacturing Overhead ........................ P26,000 P40,000 P50,000 P37,500 A

2

A

7

A

3

D 8

A

4

B

5

B

During the month, Fisher Company's Work in Process inventory account was credited for P120,500, which represented the Cost of Goods Manufactured for the month. Only one job remained in process on May 31; this job had been charged with P9,600 of applied overhead cost. The amount of direct materials cost in the unfinished job would be: A) P10,600 B) P16,700 C) P12,800 D) P23,400 Page 1 of 4

MAS REVIEW PART 1 Sold, after adjustment for any over- or underapplied overhead, for the year must have been: A) P98,000 B) P73,000 C) P71,000 D) P69,000 13 Williams Company uses the FIFO method in its process costing system. The beginning work in process inventory in a particular department consisted of 10,000 units, 100% complete with respect to materials and 60% with respect to conversion costs. The total cost in the beginning work in process inventory was P48,200. During the month, 25,000 units were transferred out of the department. The costs per equivalent unit were computed to be P3.10 for materials and P4.50 for conversion costs. The total cost of the units completed and transferred out of the department was: A) P190,000 B) P189,200 C) P180,200 D) P132,000 At a sales level of P365,000, Lewis Company's gross margin is P20,000 less than its contribution margin, its net operating income is P70,000, and its selling and administrative expenses total P130,000 At this sales level, its contribution margin would be: A) P295,000 B) P180,000 C) P220,000 D) P200,000 Cardiv Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume ............................. 4,000 units Direct materials .............................. P85.80 per unit Direct labor .....................................P56.10 per unit Manufacturing overhead ................ P73.60 per unit D 5,000 units P85.80 per unit P56.10 per unit P62.10 per unit C

9

Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 17,500 hours. At the end of the year, actual direct labor-hours for the year were 16,000 hours, the actual manufacturing overhead for the year was P233,000, and manufacturing overhead for the year was underapplied by P15,400. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been: A) P249,375 B) P217,600 C) P228,000 D) P238,000 Rio Manufacturing Company uses a job order cost system. At the beginning of February, Rio only had one job in process, Job #594. The direct costs assigned to this job at that time were P800 of materials and P650 of labor. Job #594 was finished during February incurring additional direct costs of P120 for materials and P370 for labor. Job #595 was started and finished during February. The direct costs assigned to this job were P310 for materials and P190 for labor. Job #596 was started during February but was not finished by the end of the month. The direct costs assigned to this job were P740 for materials and P300 for labor. Rio applies manufacturing overhead to its products at a rate of 200% of direct labor cost. What is Rio's cost of goods manufactured for February? A) P2,440 B) P3,750 C) P4,860 D) P6,500 On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents: A) the amount of cost charged to Work in Process during the period. B) the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period. C) the amount of cost placed into production during the period. D) the amount of cost of goods completed during the current year whether they were started before or during the current year. In the Vasquez Company, any over- or underapplied overhead is closed out to Cost of Goods Sold. Last year, the company incurred P27,000 in actual manufacturing overhead cost, and applied P29,000 of overhead cost to jobs. The beginning and ending balances of Finished Goods were equal, and the Company's Cost of Goods Manufactured for the year totaled P71,000. Given this information, Cost of Goods

D

10

C

14

C

11

D 15 B

12

The best estimate of the total cost to manufacture 4,300 units is closest to: A) P877,200 B) P909,400 C) P901,925 D) P926,650 Page 2 of 4

MAS REVIEW PART 1

16

As the level of activity increases, how will a mixed cost in total and per unit behave? In Total Increase Increase Increase Decrease Decrease Per Unit Decrease Increase No effect Increase No effect

A

20

A) B) C) D) E) 17

The contribution margin ratio always increases when the: A) break-even point increases. B) break-even point decreases. C) variable expenses as a percentage of net sales decrease. D) variable expenses as a percentage of net sales increase. How much will a company's net operating income change if it undertakes an advertising campaign given the following data: Cost of advertising campaign ...................................... P25,000 Variable expense as a percentage of sales ................... 42% Increase in sales .......................................................... P60,000 A) P200 increase B) P25,200 increase C) P15,000 increase D) P9,800 increase

C

21

D

Anderson Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume ......................... 4,000 units Direct materials .............................. P99.20 per unit Direct labor .................................... P45.50 per unit Manufacturing overhead ................ P94.00 per unit 5,000 units P99.20 per unit P45.50 per unit P77.60 per unit

D

18

The best estimate of the total monthly fixed manufacturing cost is: A) P388,000 B) P954,800 C) P376,000 D) P328,000 The “Dog Hut” hot dog stand expects the following operating results for next year: Sales ............................................... Net operating income .................... Contribution margin ratio .............. P280,000 P21,000 70%

22

Birney Company has prepared the following budget data: Sales .............................................................. Selling price .................................................. Variable expenses ......................................... Fixed manufacturing expenses ..................... Fixed selling and admin. expenses ............... 150,000 units P25 per unit P15 per unit P800,000 P700,000

A

D

What is Dog Hut's break-even point next year in sales pesos? A) P120,000 B) P181,300 C) P196,000 D) P250,000 19 A P2.00 increase in a product's variable expense per unit accompanied by a P2.00 increase in its selling price per unit will: A) decrease the degree of operating leverage. B) decrease the contribution margin. C) have no effect on the break-even volume. D) have no effect on the contribution margin ratio. C 23

An advertising agency claims that an aggressive advertising campaign would enable the company to increase its unit sales by 20%. What is the maximum amount that the company can pay for advertising and obtain a net operating income of P200,000? A) P100,000 B) P200,000 C) P300,000 D) P550,000 The following information relates to Snowbird Corporation: Sales at the break-even point ......... Total fixed expenses ...................... Net operating income .................... P312,500 P250,000 P150,000 Page 3 of 4 B

MAS REVIEW PART 1 What is Snowbird's margin of safety? A) P62,500 B) P187,500 C) P100,000 D) P212,500 24 The following information relates to Zinc Corporation for last year: Sales ........................................................... Net operating income ................................ Degree of operating leverage .................... P500,000 P25,000 5 28 Sales at Zinc are expected to be P600,000 next year. Assuming no change in cost structure, this means that net operating income for next year should be: A) P30,000 B) P45,000 C) P50,000 D) P125,000 25 Moruzzi Corporation is a single-product company that expects the following operating results for next year: Sales ...........................................................P320,000 Contribution margin per unit ..................... P0.20 Contribution margin ratio .......................... 25% Degree of operating leverage .................... 8 How many units would Moruzzi have to sell next year to break-even? A) 50,000 B) 200,000 C) 280,000 D) 350,000 30 26 The Breiden Company sells rodaks for P6.00 per unit. Fixed expenses total P37,500 per month and variable expenses are P2.00 per unit. How many rodaks must be sold each month to realize a profit before income taxes of 15% of sales (to the nearest whole unit): A) 9,375 units B) 11,029 units C) 12,097 units D) 9,740 unit C D 29 C 27 Johnson Company produces a single product. Last year, the company had 25,000 units in its ending inventory. Johnson's variable production costs were P10 per unit and fixed manufacturing overhead costs were P5 per unit. The company's net operating income last year was P10,000 higher under variable costing than it was under absorption costing. Given these facts, the number of units of product in beginning inventory last year must have been: A) 24,000 units B) 27,000 units C) 23,000 units D) 24,333 units Olympia Company produces a single product. Last year, the company had a net operating income of P92,000 using absorption costing and a net operating income of P98,600 using variable costing. If the fixed manufacturing overhead cost was P3.00 per unit for the last two years, and if production was 18,000 units, then sales in units last year were: A) 24,600 B) 20,200 C) 15,800 D) 15,000 Stead Company produces a single product. Last year, the company's net operating income computed by the absorption costing method was P6,400, and its net operating income computed by the variable costing method was P9,100. The company's unit product cost was P17 under variable costing and P20 under absorption costing. If the ending inventory consisted of 2,100 units, the beginning inventory in units must have been: A) 1,200 B) 2,100 C) 3,000 D) 4,800 A company that produces a single product had a net operating income of P85,500 using variable costing and a net operating income of P90,000 using absorption costing. Total fixed manufacturing overhead was P150,000, and production was 100,000 units. Between the beginning and the end of the year, the inventory level: A) increased by 4,500 units B) decreased by 4,500 units C) increased by 3,000 units D) decreased by 3,000 units B

B

C

C

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