MIDTERM EXAMINATION LVON, CPA

FATHER SATURNINO URIOS UNIVERSITY

ACCOUNTANCY PROGRAM
Management Accounting

Instructions: PRAY. Write the letter of your answer before the number. The exam is good for 2 hours &
30 minutes. ERASURES ARE STRICTLY NOT ALLOWED.

1. A person who is qualified by education, experience, technical ability, and temperament to

advise or assist businessmen on a professional basis in identifying, defining & solving specific
management problems involving the organization, planning, direction, control, and operation of
a firm is called
a. Management Consultant c. Accounting Technician
b. Certified Public Accountant d. Management Accountant

2. Consulting services differ fundamentally from the CPA’s function of attesting to the assertions of
other parties. In a consulting service,
a. The practitioner expresses a conclusion about the reliability of a written assertion that is the
responsibility of the assertor.
b. The work is generally performed only for the use and benefit of the client.
c. The client develops the findings, conclusions, and recommendations.
d. The nature and scope of work is determined solely by the consulting services practitioner.

3. Management consulting (or management consultancy)

a. Is limited to CPAs
b. Is not limited to CPAs
c. May be practiced by anybody since it is not limited to CPAs
d. Is regulated by law, such that an individual must pass a government licensure examination
first before he could practice the same.

4. The primary purpose of management advisory services is

a. To achieve the objectives of MAS firm
b. To help the client maximize its resources
c. To improve the client’s use of its capabilities and resources to achieve the objectives of
such client’s organization.
d. To help the client identify its problems.

5. Do management consultants implement solutions to company problems?

a. Yes c. Maybe
b. No d. No idea.

6. It is a field of accounting that provides economic and financial information for internal user,
particularly the managers or decision-makers in an organization.
a. Managerial Accounting c. Cost Accounting
b. Financial Accounting d. Responsibility Accounting

7. Management accounting is used by a company’s management for a multitude of purposes

which are as follows, except
a. Assurance of accountability
b. Planning
c. Marketing
d. Reporting

8. Management accounting includes the following processes, except

a. Measurement c. interpretation
b. Communication d. delegation

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9. Controllers are ordinarily concerned with

a. Investor relations
b. Credit extension and collection of bad debts
c. Short term financing
d. Preparation of tax returns

10. The treasury function includes:

a. Preparation of tax returns
b. Cash custody and banking
c. Reporting to the government
d. Financial reporting

11. Which of the following is false?

a. Cost accounting is a tool of both financial and managerial accounting
b. Managerial Accounting draws heavy on economics, statistics, operations research, and other
disciplines as necessary as necessary in providing accounting and financial information.
c. In management accounting, emphasis is given to identifying or matching costs with
functions, projects, or responsibilities rather than with time periods.
d. Financial accounting provides information to individuals within the business organization,
while management accounting provides information to parties outside the business
entity.

12. That type of accounting that deals with how accounting and other financial data can be used for
decision-making in controlling, monitoring, and directing business activity is called
a. Management Accounting c. Financial Accounting
b. Responsibility Accounting d. General Accounting

13. In JIT, the flow of goods is controlled by a ‘pull’ approach. It means that
a. Work is initiated only in response to customer orders
b. Customers are pulled to buy more units to reduce the company’s inventory
c. Production supervisors see to it that there is always something to do to keep everyone busy
d. Warehouses should always be full to be sure that customer demands are always met

14. JIT purchasing can be used by

a. Retailers
b. Wholesalers
c. Manufacturers
d. All of the above

15. After careful planning, Change Style, Inc. has decided to switch to a just-in-time inventory
effective on July 1, the corporation has 70 units of product in inventory. It has 1000 labor hours
available for the month of July. These hours could produce 250 units of product. Customer
demand for July is 200 units. If just-in-time principles are correctly followed, how many units
should Change Style, Inc. plan to produce in July?
a. 200 c. 180
b. 130 d. 250

16. Management accounting is considered successful when it

a. Is relevant
b. Is accurate
c. Helps managers improve their decisions
d. Is in accordance with GAAP

17. The primary objective of management accounting is

a. To provide banks and other creditors with information useful in making credit decisions
b. To provide management with information useful for planning and controlling of
operations
c. To provide stockholders and potential investors with useful information for decision making

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d. To provide supervising government agencies with information about the company’s

management affairs
18. Management accounting is used by a company’s management for a multitude of purposes that
do not include:
a. Planning c. Reporting
b. Marketing d. Evaluation

19. To which function is the is the Cost-Volume-Profit (CVP) Analysis most applicable?
a. Planning c. Organizing
b. Directing d. Controlling

20. As projected benefits increases, the

a. Breakeven point goes down
b. Margin of safety stays constant
c. Contribution Margin goes up
d. Degree of Operating leverage declines

21. A variance shows a deviation of actual results from standard or budgeted results. In deciding
whether to investigate a variance or not, management may consider the following factors,
except.
a. The amount of the variance and the cost of investigation
b. Whether the variance is favorable or unfavorable
c. The possibility that investigation will eliminate future occurrences of the variance
d. The trend of the variances over time

22. Standard costing systems may be used with

a. Just-in-time systems
b. Computer integrated manufacturing systems
c. Total quality management
d. Al of the above

23. Which if the following is correct?

a. A standard cost system can never be used in both the job order and process costing systems
b. Standard costing can be used in job order costing system, but not in process costing system
c. Standard costing can be used in either the job order costing system or process costing
system
d. A standard cost system can be used in process costing system, but not in job order costing
system
24. Amanda Co. manufactures and sells product A. During the previous month,77500 units were
sold. The total fixed costs amounted to 189,100. Its margin of safety was 15,500 units or
PhP65,875. The variable cost per unit of Product A is.
a. 1.20 c. 0.96
b. 4.24 d. 2.44

25. Jing Inc. has sales of 500,000.00, a breakeven sales ratio of 60%, and a variable cost ratio of 70%.
How much is Jing’s profit?
a. 90,000 c. 150,000
b. 60,000 d. Insufficient Data
26. An unfavorable material spending variance coupled with a favorable materials efficiency
variance would most likely result from
a. The purchase and use of lower than standard quality materials
b. The purchase and use of higher than standard quality materials
c. Problems involving machine efficiency
d. Changes in product mix
27. The difference between the actual time used and the amount of time should have been used for
actual production, multiplied by the actual quantity or actual time is
a. Efficiency Variance c. Time Variance
b. Quantity Variance d. Spending Variance

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ITEMS 28 – 33 ARE BASED ON THE FOLLOWING INFORMATION:

April Joy company produces a product with the following standard costs:
Materials, 2 pcs @5.00 per piece P10
Labor, 4 hours @ 8.00 per hour 32
Variable overhead 4 hours 6.00 per hour 24
Fixed overhead* 4 hours @ 4 per hour 16
Total standard manufacturing cost per unit P82

*(based on capacity level of 5000 units)

28. If a flexible budget for 4500 units, 5000 units, and 5500 units is prepared for a month, the
budgeted costs are
4500 units 5000 units 5500 units
a. 369,000 410,000 451,000
b. 297,000 330,000 363,000
c. 377,000 410,000 443,000
d. 0 410,000 0

29. Assume that X is the number of units to be produced and TBC is a the total budgeted cost, the
flexible budget formula that the company may use to compute total budgeted cost for any value
of X, within the relevant range is
a. TBC = 82x
b. TBC = 66x
c. TBC = 80,000
d. TBC = 66x + 80,000

30. Assume that during the month, the company actually produced 4,800 units and incurred actual
manufacturing costs of P400,000, how much is the flexible budget for the actual production?
a. P400,000 c. P393,600
b. P396,000 d. P316,800.

31. How much is the flexible budget for the month?

a. P3,200 unfavorable c. P10,000 favorable
b. P6,400 unfavorable d. P83,200 unfavorable

32. How much is the total standard cost that should have been incurred for the actual production of
4,800 units?
a. P396,000 c. P393,600
b. P400,000 d. P316,000

33. How much is the total standard cost variance?

a. P3,200 unfavorable c. P10,000 favorable
b. P6,400 unfavorable d. P83,200 unfavorable

ITEMS 138 TO 140 ARE BASED ON THE FOLLOWING INFORMATION:

Robert Soap, Inc. uses a standard cost system in its Powder Soap Division. The standard cost of
manufacturing one sack of Sabong Pulbos is as follows:
Materials 48 Kilos @75 per kilo P3,600
Labor 4 hours @ 140 per hour 160
Factory overhead P50 per direct labor hour 200
Total standard cost per sack P3960

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The budgeted fixed factory overhead is P14,400 for a normal monthly production of 180 sacks of Sabong
Pulbos. During the month, Robert Soap produced 160 sacks of Sabong Pulbos. The actual costs were:

Materials purchased and used - 7700 kilos @ P73 per kilo P562,100
Labor – 650 hours at P38 per hour 24,700
Factory overhead: Fixed factory overhead 14,400
Variable overhead 20,800
TOTAL ACTUAL COST P622,000

The Materials cost Variances are:

a. Price Variance ____________________________15400f
b. Quantity Variance _________________________1500u
The labor cost variances are:
a. Spending Variance ____________________________1300f
b. Efficiency Variance ____________________________400u

The factory overhead cost variances are:

a. Controllable _________________________________1600u
b. Volume _____________________________________1600u