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Management Advisory Services: 1 Open Preboard Examination, Batch 3
Management Advisory Services: 1 Open Preboard Examination, Batch 3
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
INSTRUCTIONS: Choose the best answer among the given choices. Policies on academic
honesty are strictly enforced.
1|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
7. The flexible-budget variance for direct cost inputs can be further subdivided into
a. a static-budget variance and a sales-volume variance.
b. a sales-volume variance and an efficiency variance.
c. a price variance and an efficiency variance.
d. a static-budget variance and a price variance.
8. Dane, Inc., has a standard variable overhead rate of P8 per machine hour, with
each completed unit expected to take six machine hours to produce. A review of
the company's accounting records found the following:
Actual variable overhead: P420,000
Variable-overhead efficiency variance: P36,000U
Variable-overhead spending variance: P60,000F
How many units did Bushnell actually produce during the period?
a. 6,750
b. 11,625
c. 9,250
d. 10,750
9. Last year, Septuplets Company reported P750,000 in sales (25,000 units) and a
net income of P25,000. At the break-even point, the company's total contribution
margin equals P500,000. Based on this information, the company's:
a. contribution margin ratio is 40%.
b. break-even point is 24,000 units.
c. variable expense per unit is P9.
d. variable expenses are 60% of sales.
11. Fischer Price Farms is preparing its cash budget for the next year. Sales are
expected to be P100,000 in January, P200,000 in February, P300,000 in March,
and P100,000 in April. Approximately half of all sales are cash sales and the other
half are on credit. Experience indicates that 70% of the credit sales will be collected
in the month following the sale, 20% the month after that, and 10% in the third
month after the sale. What are the budgeted collections in April?
a. P130,000
b. P180,000
c. P260,000
d. P360,000
12. A fixed overhead volume variance based on standard direct labor hours measures
a. Deviation from standard direct labor hour capacity.
b. Deviation from the normal, or denominator, level of direct labor hours.
c. Fixed overhead efficiency.
d. Fixed overhead use.
2|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
17. An unfavorable materials price variance coupled with a favorable materials usage
variance would most likely result from
a. Machine efficiency problems.
b. Product mix production changes.
c. The purchase of lower than standard quality materials.
d. The purchase and use of higher than standard quality materials.
For the next item: Cassano Corporation used the following data to evaluate their current
operating system. The company sells items for P20 each and used a budgeted selling
price of P20 per unit.
Actual Budgeted
Units sold 92,000 units 90,000 units
Variable costs P901,600 P864,000
Fixed costs 190,000 200,000
3|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
22. Pacioli, Inc., has a standard variable overhead rate of P10 per machine hour, with
each completed unit expected to take three machine hours to produce. A review
of the company's accounting records found the following:
Actual production: 19,500 units
Variable-overhead efficiency variance: P18,000U
Variable-overhead spending variance: P42,000F
a. P525,000.
b. P561,000.
c. P609,000.
d. P645,000.
24. Merriam Company uses a standard cost system in which manufacturing overhead
is applied to units of product on the basis of machine hours. During February, the
company used a denominator activity of 160,000 machine hours in computing its
predetermined overhead rate. However, only 150,000 standard machine hours
were allowed for the month's actual production. If the fixed overhead volume
variance for February was P3,200 unfavorable, then the total budgeted fixed
overhead cost for the month was:
a. P48,000.
b. P51,200.
c. P50,000.
d. P49,000.
4|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
25. Michigan Corporation uses two materials in the production of their product. The
materials, Low and High, have the following standards:
27. If there was limited capacity, all of the following amounts would change EXCEPT
a. opportunity costs.
b. differential costs.
c. variable costs per unit.
d. the minimum acceptable price.
For the next two items): The iCARE Company, a merchandising firm, has budgeted its
activity for December according to the following information:
5|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
31. After the goals of the company have been established and communicated, the next
step in the planning process is development of the
a. Production Budget
b. Sales Budget
c. Direct Materials
d. Cash Budget
34. Problems that should be avoided when identifying relevant costs include all
EXCEPT
a. assuming all variable costs are relevant.
b. assuming all fixed costs are irrelevant.
c. using unit costs that do not separate variable and fixed components.
d. using total costs that separate variable and fixed components
6|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
38. Activity-based costing and generally accepted accounting principles differ in that
ABC
a. does not define product costs in the same manner as GAAP.
b. cannot be used to compute an income statement, but GAAP can.
c. is concerned only with costs generated from automated processes, but
GAAP is concerned with costs generated from both manual and automated
processes.
d. information is useful only to managers, while GAAP information is useful to
all organizational stakeholders.
40. Which cost estimation method may utilize time-and-motion studies to analyze the
relationship between inputs and outputs in physical terms?
a. The account analysis method
b. The least squares regression method
c. The industrial engineering method
d. The conference method
41. The opportunity cost of making a component part in a factory with no excess
capacity is the:
a. variable manufacturing cost of the component.
b. net benefit foregone from the best alternative use of the capacity required.
c. fixed manufacturing cost of the component.
d. cost of the production given up in order to manufacture the component.
42. Costs that increase as the volume of activity decreases within the relevant range
are
a. Total fixed costs.
b. Average variable cost per unit.
c. Total variable costs.
d. Mixed cost per unit.
7|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
44. The Computer Corporation has 1,000 obsolete monitors that are carried in
inventory at a manufacturing cost of P10,000. If the monitors are re-machined for
P2,500, they could be sold for P4,500. Alternatively, the monitors could be sold for
scrap for P500. Which alternative is more desirable and what are the total relevant
costs for that alternative?
a. re-machine and P12,500.
b. re-machine and P2,500.
c. scrap and P10,000.
d. scrap and P9,500.
45. Rock Company produces 50,000 units of Product Cue and 6,000 units of Product
Si during a period. In that period, four set-ups were required for color changes. All
units of Product Cue are black, which is the color in the process at the beginning
of the period. A set-up was made for 1,000 blue units of Product Si; a set-up was
made for 4,500 red units of Product Si; a set-up was made for 500 green units of
Product Si. A set-up was then made to return the process to its standard black
coloration and the units of Product Cue were run. Each set-up costs P500. If set-
up cost is assigned on a volume basis for the department, what is the approximate
per-unit set-up cost for Product Z?
a. P0.010
b. P0.036
c. P0.040
d. None of the above
46. Historical records show the highest cost of P276,000 and the lowest cost of
P208,000. The data shows P74,000 as the highest level of sales and P48,500 as
the lowest level. What is the variable cost per peso sales?
a. P4.27
b. P2.67
c. P3.72.
d. P23.78
8|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
50. Costs that increase as the volume of activity decreases within the relevant range
are
a. Total fixed costs.
b. Average cost per unit.
c. Average variable cost per unit.
d. Total variable costs.
51. Which of the following topics is of more concern to management accounting than
to cost accounting?
a. inventory measurement
b. cost of goods sold measurement
c. impact of economic conditions on company operations
d. generally accepted accounting principles
9|P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
57. If a firm's net income does not change as its volume changes, the firm('s)
a. contribution margin is 100%.
b. must have no fixed costs.
c. operating leverage is equal to 1
d. sales price must equal its variable costs.
(For the next two items) Beeda Company has 400 obsolete scientific calculators that are
carried in inventory at a total cost of P13,400. If these calculators are upgraded at a total
cost of P5,000, they can be sold for a total of P15,000. As an alternative, the calculators
can be sold in their present condition for P5,600.
60. Assume that Beeda decides to upgrade the calculators. At what selling price per
unit would the company be as well off as if it just sold the calculators in their
present condition?
a. P4.00
b. P15.00
c. P26.50
d. P33.50
61. The level of production affects income under which of the following methods?
a. Full costing
b. Direct costing
c. Absorption costing
d. Both a and c
10 | P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
The normal selling price of the product is P172.20 per unit. An order has been received
from a VIP customer for 2,000 units to be delivered this month at a special offer price.
This order would have no effect on the company's normal sales and would not change
the total amount of the company's fixed costs. The variable selling and administrative
expense would be P2.40 less per unit on this order than on normal sales.
62. Suppose there is ample idle capacity to produce the units required by the VIP
customer and the special discounted price on the special order is P152.80 per unit.
By how much would this special order increase (decrease) the company's net
operating income for the month?
a. (P34,000)
b. P26,800
c. P96,000
d. (P10,000)
63. Suppose the company is already operating at capacity when the special order is
received from the VIP customer. What would be the opportunity cost of each unit
delivered to the VIP customer?
a. P65.0
b. P16.8
c. P19.4
d. P14.4
64. Suppose there is not enough idle capacity to produce all of the units for the VIP
customer and accepting the special order would require cutting back on production
of 700 units for regular customers. The minimum acceptable price per unit for the
special order is closest to:
a. P172.20.
b. P157.80.
c. P138.20.
d. P127.55.
65. On a cost-volume-profit chart (break-even graph), where are the total fixed costs
shown if the X axis represents the volume while the Y axis represents the peso
value?
a. As the point where the sales line intersects the vertical axis
b. As the point where the sales line crosses the total cost line
c. As the point where the sales line crosses the horizontal axis
d. As the point where the total cost line intersects the vertical axis
11 | P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
66. Net profit under absorption costing may differ from net profit determined under
direct costing. How is this difference calculated?
a. Change in the quantity of all units produced times the relevant fixed costs
per unit.
b. Change in the quantity of all units in inventory times the relevant fixed costs
per unit.
c. Change in the quantity of all units in inventory times the relevant variable
cost per unit.
d. Change in the quantity of all units produced times the relevant variable cost
per unit.
67. Under absorption costing, if sales remain constant from period 1 to period 2, the
company will report a larger income in period 2 when
a. period 2 production exceeds period 1 production.
b. period 1 production exceeds period 2 production.
c. variable production costs are larger in period 2 than period 1.
d. fixed production costs are larger in period 2 than period 1.
(For the next two items) Meliodas Company sells a single product for P50. It had no
beginning inventories. Operating data for 200Y follows:
12 | P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
70. Alphabet Company sells products A, B & C. Alphabet sells three times units of A
for each unit of C, and two units of B for each unit of A. The contribution margins
are P1 per unit of A, P1.50 per unit of B and P3 per unit of C. Fixed costs are
P600,000. How many units of A would Alphabet Co. sell at the breakeven point?
a. 40,000
b. 120,000
c. 360,000
d. 400,000
-Nothing Follows-
13 | P a g e JBUGATAN/JSARIPADA
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
1. D 41. B
2. B 42. D
3. A 43. C
4. D 44. B
5. B 45. B
6. D 46. B
7. C 47. C
8. C 48. B
9. C 49. B
10. A 50. B
11. B 51. C
12. B 52. C
13. C 53. C
14. D 54. C
15. D 55. A
16. A 56. D
17. D 57. D
18. C 58. A
19. C 59. B
20. D 60. C
21. D 61. D
22. B 62. C
23. D 63. A
24. B 64. D
25. B 65. D
26. B 66. B
27. C 67. A
28. D 68. A
29. B 69. D
30. B 70. B
31. B
32. B
33. A
34. D
35. C
36. B
37. A
38. A
39. D
40. C
14 | P a g e JBUGATAN/JSARIPADA