Dv ¥ The Review School of Accountancy FINAL PREBOARD EXAMIMATION 10 April 2016 11:30 AM - 2:30 PM PlanagemerA Cdlwisorg, Services INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box Corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. SetB Z. Me contribution margin ratio always increases when the a. Breakeven point increases b, Breakeven point decreases G. Variable costs as a percentage of net sales increase @ variable costs as a percentage of net sales decrease A> Burope Company manufactures products Lisbon and Madrid from a joint process. Product Lisbon has been allocated P 5,000 of total joint costs of P 40,000 for the 1,000 units produced. lisbon can be sold at the split-off point for P 6 per unit, or it can be processed further with additional costs of P 2,000 and sold for P 10 per unit. If Lisbon is processed further and sold, the result would be an Over-all loss of P 2,000 fu X [ow = Over-all loss of P 3,000 Additional gain of P 2,000 from further processing Ta |. Additional gain of P 4,000 from further processing Gy mw = * Gow? #. ttaly Company plans to replace an old machine with a new one. For capital budgeting purposes, which of the following shall be considered in the calculation of initial cost of net investment? Cost of the old machine and salvage value of the new machine Cost of the new machine and salvage value of the old machine c. Cost and salvage value of the old machine d. Cost and salvage value of the new machine ¥. Vatican Company is preparing its cash budget for November. Vatican expects 50% of credit sales to be paid in the month of sale. 30% in the month following the sale, and the remainder paid two months after the month of sale. Vatican expects the following cash and credit sales: Cash Credit November P 17,000 P 100,000 October 222 P 90,000 September P 15,000 P 80,000 = August P 18,000 P 95,000 Assuming no bad debts and a projected total cash inflow of P 107,000 in October, what is Vatican's expected October cash sales? - P 20,000 Gi = 15/000 . P 16000 a. P 14,000 ¥. France company’s present current ratio is 4 times. What transaction will most likely cause the current ratio of the company to increase? ; Purchase of inventory on credit , Collection of trade receivables © eeveancict castont tex obligations d. Borrowing of cash based a 12-month loanMANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) 10 AM to 2:30 PM Page 2 f- In an income statement prepared as an internal report using the variable costing method, variable selling and administrative expenses would Be considered in computing gross profit and operating income Be considered in computing operating income and contribution margin c. Be considered in computing operating income but not considered in computing contribution margin d. Be considered in computing contribution margin but not considered in computing gross profit and operating income 7% Rome Company has average daily cash collections of P 3 million, based on a 360-day year. A new system is estimated to reduce the average collection period by two days without affecting sales. The new system's annual cost is P 100,000 plus 0.01% of collections. Rome. estimates that it would earn 68 on additional funds. Whgt is the estimated annual net benefit from the new system? G P 152, 000 ki b. P 180,000 c. P 260,000 a. P 360,000 A. Two goods, Alpha and Beta, are substitutes. what will an increase in th price of Beta cause? 0) ‘The denand curve for Alpha to shift right- The supply curve for Alpha to shift right ¢. The demand curve for Alpha to shift left d. The supply curve for Alpha to shift left A. At 408 capacity, overhead cost is P 1,450; at 75% capacity, overhead cost is P 2,150. Determine the variable overhead cost at 80% capacity. a. P 20 . BP 650 @ 2 ives - P 2,250 j-Wnen would a business most likely offer credit terms of 2/10, n/30? a. The business can borrow funds only at a rate higher than the effective annual interest rate of these terns. b. The business can borrow funds at a rate lower than the effective annual interest rate of these terms. (©, Sombie eae eIR ee teeters ec try ul shese ans cash shortage 4. Competitors are not offering terms and the business has a cash surplus WA.The following information regarding a capital project was given for consideration: Estimated life 10 years Cost of capital 208 Initial investment P 6,500 Cash inflows per year P 1,000 Straight-line depreciation P 325 What is the unadjusted rate of return of the capital project? 15.388 20.778 30.778 Cannot be determined from the given informationre s (EZ. MANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) X27" 10 April 2016 + 10:30 AM to 2:30 PM. Page 3 og yf. Germany Corporation has preferred stock with a market value of P 107 per share, a face value of P 100 per share, underwriting costs of P 5 per share, and annual dividends of P 10. Germany's tax rate is 208. > What is Germany's approximate cost of capital for preferred stock? a. 6.9% 9.38 © sis 10.58 13. A.staff position f a. Is superior in authority to a line position b. Relates directly to the carrying out the basic objectives of the organization ¢. Is not in any way associated with primary role of the chief management accountant @ ts supporting in nature, providing service and assistance to other parts of the organization Items 14 and 15 are based on the following information The manufacturing capacity of London Company’s facilities is 30,000 units of product a year. A summary of operating results for calendar Year 1 is as follows: Sales (P 50 per unit) P 900,000 * Variable manufacturing and selling costs (495, 000) Contribution margin 405, 000 Fixed costs (247,300) Operating income P_1S7, 500 PFtthat is London's margin of safety in ear )1? a. 11,000 units = @. 5,000 units Assume a tax rate of 25%, how many more units shall be sold in year 2 to earn an after-tax profit of P 236,250? a. 25,000 units 21,500 units 7,000 units d. 3,500 units y-What is characteristic of a period of rising inflation? a. Increases the purchasing power of money Increases the price level and decreases the purchasing power of money @ mereases the price level, which benefits anyone who is owed 2 specific amount of money d. Benefits anyone who is owed a specific amount of money and, harms anyone who owes specific amount I-A project's net present value, ignoring income tax considerations, is nogmally affected by the Proceeds from the sale of the asset to be replaced b. Amount of annual depreciation on the asset to be replaced ¢. Carrying amount of the assets to be replaced by the project d. Amount of annual depreciation on fixed assets used directly on the projectMANAGEMENT ADVISORY SERVICES (24) Final Preboard Examinations (May 2016 Batch) 10 April 2016 * 10:30 AM to 2:30 PM Page 4 Item: 18 and 19 are based on the following information Tnventory balances and manufacturing cost data for the month of January for England Company, Under England’s cost system, any over- or under-applied overhead is closed to the cost of goods sold account at the end of the calendar year. Inventories: Beginning Ending Direct ‘materials P 15,000 P 20,000 Work-in-process 7,800 10,000 Finished goods 32,500 25,000 Month of January Cost of goods manufactured P 257,500 Factory overhead applied 75,000 Direct materials used 95,000 Actual factory overhead 72,000 @.What was the total amount of direct material_purchases during January? : a. P 90,000 b. P 95,000 3 . P 97,500 i G = 100,000 far wa f) How much direct labor cost was incurred during January? t a. P 85,000 P 87,500 i P 90,000 d. P 93,000 Z-Wy is equity capital generally more expensive than debt financing? ‘a. Interest on bonds is a legal obligation b. Dividends fluctuate more than interest rates © Investors expect to be paid more for exposure to higher risk Investors have a greater demand for equity investments than for debt investments (Zi. Belgium Company sells 500,000 botties of condiments annually at P 3 per bottle. Variable costs are P 0.60 per bottle and fixed costs are P 110,000 annually. Belgium has annual interest expense of P 60,000 and a 30% income: tax rate. What is Belgium’s approximate degree of financial leverage? 7 a. 1.04 @ 06 2. 108 a. 120 When a flexible budget is used, an increase in production levels within the relevant range would a. Change total fixed costs Not change total variable costs Not change fixed costs per unit Not change variable costs per unit activity generally is categorized as a value-added activity? Rework Material moves Filing tax returns Operating production equipment.id MANAGEMENT ADVISORY SERVICES })) Final Preboard Examinations (May 2016 Batch) Z/ 10 April 2016 10:30 AM to 2:30 PM Page 5 pA Austria Company is considering a change in collection procedures that would result in an increase of the average collection period from 28 to 36 days. Austria anticipates that next year’s sales to be P 9 million and that 80% of the sales will be on credit. Austria estimates short-term interest rates at 6% and uses a 360-day year for decision making. What minimum savings in collection costs would the procedure change have to generate to offset the increased investment in accounts receivable? P 1,200 P 9,600 . P 12,000 d. P 33,600 Pp- The residual income of a company segment is positive when a. Sales variances are favorable Costs variances are unfavorable @ winimun not is Lover than the sequent’s Kol d. Minimum Rol is based on company’s cost of capital Fe-Netherland Company must maintain a compensating balance of P 50,000 in its checking account as one of the conditions of its short-term 6% bank ‘loan. of 500/000. Netherland’s checking Account. caxns’ 20 Gncereut | Geierityy ‘Netheriind youla aciicain e 2 20,000) balancd fay thas aetoiine ne RSE Mcicl iirpooek+ AWHait ap stn canes abproxinate ettective interest rate? PW | ROS b. 6.17% © 6.255 a. 6.268 A ibe youtea's Bak aioe Leda’ Bo! amctonsd! che dadecy secBk ot Vidlbinthay? a. Sales variability increases b. Transportation time increases Sales volume permanently increases 6 Cost of carrying inventory increases pO.Berlin Manufacturing uses a predetermined factory overhead application rate based on direct labor cost. Berlin's budgeted factory overhead was P 300,000, based on a budgeted volume of 25,000 direct labor hours, at a standard direct labor rate of P 6.00 per hour. Actual factory overhead amounted to P 310,000, with actual direct labor cost of P 162,500. Factory-overhead was a. P 12,500 over-applied © ® 15,000 over-applied ene he %. _P 12/500 under-applied d. P.15,000 under-applied -Which working capital policy has the greatest likelihood that a firm Will be unable to meet obligations as they become due? Financing all current assets with long-term debt @) Financing all current assets with short-term debt c. Financing fluctuating current assets with short-term debt and permanent current assets with equity d. Financing fluctuating current assets with short-term debt and permanent current assets with long-term debt Perfect information <MANAGEMENT ADVISORY SERVICES Ce te Creare aac) S57 10 April 2016 + 10:30 AM to 2:30 PM Page 6 ; jp-Amsterdam Company sells a single product for P 40 per unit, which it purchases for P 20. ‘he salespeople receive a salary plus a commission of 58 of sales. Last year the organization's net income * (after) taxes was P 100,800. The organization is subject to an income tax rate of 30%. The fixed costs of the organization are Advertising P 124,000 Rent 60,000 Salaries 180,000 Other fixed costs 32,000 Total 2396, 000 The organization is considering changing the compensation plan for sales personnel. If the organization increases the commission to 10% of sales and reduces salaries by P 80,000, what peso sales volume must the organization have in order to earn the same net income as last year? a. P 1,042,000 . P 1,100,000 & ® 280/000 P 1,630,000 A zA-wet present value as used in investment decision-making is “stated in tegms of which of the following options? GO. cash tow acter tax . Cash flow before tax c. Earnings before interest and tax d. Earnings before tax but after interest 4 yA. Scotland Company .uses a standard cost system. For April, total overhead is budgeted at P 80,000 based on the normal capacity of 10,000 direct-labor hours. At standard, each unit of finished product requires two direct-labor—hours. The following data are available for April production activit: Equivalent units of product 4,750 Direct-labor hours worked 9,250 Actual total overhead incurred P 79,500 What amount should Scotlamd credit to applied factory overhead account for April? PB 76, 000/ PB 78,000 c. P 79,500 a. P 80,000 of the following shall most likely, not form part of inventory under variable costing? Supplies used in factory operations Supervisory salary of plant officers Annual rental of manufacturing facilities Cost of blueberries used in the producing berry juices 35. For performance evaluation purposes, the variable costs of a service departient should be charged to operating departments using: @. The actual variable rate and the budgeted level of activity for the period. AG res eggs Feat cece anc thobacenel| lave oe tacieiay for the period. c. The budgeted variable rate and the budgeted level of activity for the period. a. The actual variable rate and the peak-period or long-run average servicing capacity.MANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) 10 April 2016 10:30 AM to 2:30 PM Page 7 Items 36 and 37 are based on the following information Switzerland Company provides the following information based on its accounting records: Current assets P 2,000,000 Noncurrent assets 7,000,000 Current liabilities 1,000, 000 Noncurrent liabilities 4,000,000 Pretax operating profit 1,500,000 Pretax cost of equity 158 Pretax cost of debt 58 Tax rate 408 The carrying amounts and market values of above amounts do not differ significantly. Fb .tnat 4s suitzeriand’s weighted average cost of capital (Wace)? Cannot be determined from the given information 7 shige ss ors hugnens, aceusele Wallies ecad ava? P 180,000" P 120,900 @. 90,000, Po Bo Mca uda a copassane gralayse cose: Gis eosciemuinge Gree a eenge or Ungpenses otra: that Yo Brusods experiencing? 5 a d Economies of scale Diminishing returns Technological efficiency : Decreasing fixed charges C jh Greece Company plans to sell 80,000 bags of potato chips in June and each of these bags requires five potatees. Pertinent data includ Potato Chips Potatoes Actual June 1 Inventory 15,000 bags 27,000 potatoes Desired June 30 Inventory 18,000 bags 23,000 potatoes How many units of raw materials should Greece plan to purchase? a- 381,000 potatoes 389,000 potatoes 411,000 potatoes 419,000 potatoes go. prague Company produces and sells three products with the following data: Product Al Product B2 Product c3 sales P 30,000 P 60,000 P 10,000 Variable costs 24,000 40,000 5,000 Assuming that the total fixed costs are P 18,600 and the sales mix is proportional to peso sales, how much should be the sale of product Al to break-even? B 6,000 © * 18,000 ©. P 36,000 d. P 60,000Oa MANAGEMENT ADVISORY SERVICES Co Merpeteelpeergie Gea St eR 10 April 2016 * 10:30 AM to 2:30 PM Page 8 Saxe. sntcasianede ais La EY Co tte tee ees sv ncn Present value of cash outflows shall be maximum Present value of cash inflows shall be minimum Cost of capital shall be zero Profitability index is 1.0 -Ireland wants to determine the optimum safety stock level for drug EU-1. The annual carrying cost of BU-1 is 25% of the inventory investment. The inventory investment averages P 10 per unit. The stock out cost is estimated at P 2 per unit. Ireland orders EU-1 20 times annually. Ireland defines the total costs of safety stock as carrying costs plus expected stock out costs. With 100 units of safety stock, there is a 15% probability of a 30-unit stock out per order cycle. What is the total annual cost of the 100 units of EU-1 safety stock? Ones Which of the following is generally considered as a cash outflow and classified as a finanting activity? a. Payment of interests on indebtedness b. Settlement of current tax liabilities - Issuance of company bonds at a discount Acquisition of company’s own shares at treasury 4A. Sweden Company expects next year’s net income to be P 2 million. Sweden’s current capital structure is 30¢ debt, 308 preferred equity, and 40% common equity. Next year, Sweden plans to issue debt and common stock as needed to maintain 30:40 ratio, not issue more preferred stock. Interest payments on Sweden’s 10,000 4%, P 1,000 par value bonds are current. | Sweden can issue up to P 1 million more 4% bonds at face value. Sweden’s marginal tax rate is 30%. There are no dividends in arrears on Sweden’s 10,000 shares 6%, P 1,000 par value cumulative preferred stock. Optimal capital spending for next year is estimated at P 1.4 million. Using a strict residual dividend policy, what is the approximate estimated common stock dividend payout ratio for the next year? . 168 308 +e. 358 a. 708 #8. What is the primary reason for nations for devalue their currencies? ®) “Improve the balance of trade b. Slow inflation by increasing imports ¢. Discourage exports without using quotas d. Encourage citizens to make foreign investments (6.which of the following non-value-added costs associated with manufactured work in process inventory is most significant? a. The cost of labor that cannot be traced to-any individual peace coe Hes The cost of additional resources consumed to produce any individual productMANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) 10 April 2016 * 10:30 AM to 2:30 PM Page 9 48. -Milan Company provides the following information for its standard material cost for one unit of its finished product: STANDARD: 4 meters @ P 2.00 per meter = P @ per unit Actual data also showed the following dat Materials, January 1 10,000 meters | Materials, December 31 15,000 meters 3 Materials purchases for the year 220,000 meters Average purchase price for the year PB 2.50 How many finished units were produced if materials suankisy variance computed as P 30,000 unfavorable? 50,000 units ES b. 50,750 units = 1 x ¢. 51,250 units : d. 52,000 units In determining the need for system changes, several types of feasibility studies can be made. The most commonly recognized feasibility studies are . 5 a. Legal, environmental and economic Practical, technical and operational Grecia ora) and geen Technical, economic, legal and practical Norway Company is considering discontinuing Department 25, one of the three departments it currently maintains. The following information has been gathered for the three departments: Dept. 22 Dept. 25 Dept. 28 sales P 60,000 P 50,000 P 80,000 Cost of goods sold 40,000 42,000 60,000 Operating expenses: Salaries 8,000 6,400 12,000 Rent 21000 2/000 3; 000 Utilities 1,000 2,700 2,000 Net income B_9,000 2100) — P_3, 000 If Department 25 is eliminated, the space it occupies will be divided equally among Departments 22 and 28. Utilities are allocated on the basis of floor space occupied. 70 percent of the salaries in Department 25 would be eliminated; the other 30 percent would be split equally between Departments 22 and 25. Should Department 25 be eliminated? a. Yes, overall net income increases by P 3,100 b. Yes, overall net income increases by P 12,000 No, overall net income decreases by P 3,520 @. No, overall net income decreases by P 5,380 Simple regression analysis provides the means to evaluate a line of regression which is fitted to a plot of data and represents @. te way costs change in response to independent variable b. The way costs change in response to dependent variable €. The variability of expense with pesos of operation d. The variability of expense with pesos of production(EE MANAGEMENT ADVISORY SERVICES. (3) Final Preboard Examinations (May 2016 Batch) 27 10 April 2016 + 10:30 AM to 2:30 PM Page 10 9. the normal operating cycle is 150 days while payable turnover is 6 times. How many cash conversion cycles are there within a 300-day 3 cycles 4 cycles c. 5 cycles 6 cycles Vienna Company presented the following data for the year 2016: 8 Ackiiver duesten 4,000 units Normal production 5,000 units Fixed manufacturing costs P 100,000 Variable manufacturing costs P 20 per unit Assuming Vienna sells 6,000 units in 2016 and closes any volume variance to the cost of goods sold account, what is the difference in profit between absorption and variable costing? e 20,000 @ & 40/000 @. $0,000 d. P 90,000 ) pArtate company is concerned about! the company’s account’ receivable turnover ratio. The company currently offers customers terms of 3/10, net 30. Which of the following strategies would most likely improve the company’s accounts receivable turnover ratio? a. Changing customer terms to 1/10, net 30 b. Changing customer terms to 3/20, net 30 Pledging the accounts receivable to a finance company Entering into a factoring agreement with a finance company ish, Natabntusiny tinves ced’ ta. da.taa-Veer jproJact-)/ Avalatw contitor capital is 8 percent. Additional information on the project is as fellows Year’ ‘Poot-Gak cashiinflow Pv of 1 at sy 7 P 2,000 0-326 2 2,200 0.857 - 3 2,400 0784 4 2,600 0.735 Assuming a net present value of P 2,500, what is the project's payback period? * Between 2 years and 2.5 years b. Between 2.5 years and 3 years c. Between 3 years and 3.5 years d. Between 3.5 years and 4 years ph: The first order of 500 units incurred P 120,000 of labor costs; the next order of 500 units required an additional P 72,000 of labor cogts. What percentage of learning occurred? 30 L808 ae b. 858 a [h c. 908 d. 95% Which of the following factors is inherent in a firm's operations if it utilizes only equity financing? 3 ‘ Marginal risk Business’ risk c. Financial risk d. Interest rate risk(aD) MANAGEMENT aDvisORY SERVICES J) Final Preboard Examinations (May 2016 Batch) S27 10 April 2016 * 10:30 AM to 2:30 PM Page 11 ff -Venice Company was analyzing variances for one of its operations. oO The initial budget forecast production of 20,000 units during the A year with a variable manufacturing overhead rate of P 10 per unit. Venice produced 19,000 units during the year. Actual variable manufacturing costs were P 210,000, What amount would be Venice's flexible budget variance for the year? a. P 10,000 favorable b. P 20,000 favorable P 10,000 unfavorable P 20,000 unfavorable , *%.Scandinavia Company produces two automotive parts, carburetors and y air filters. Both products are made in the same manufacturing facilities but are produced under different processes. ‘To accomplish an accurate allocation of production costs, the company uses activity-based costing. The cost accountant for the company provided information about the activities used to produce the company’s products. The activities were organized into the following overhead cost categories. The most appropriate cost driver for each category is also provided. Category’ Estimated Cost Cost Driver Carburetors Air Filters Unit-level P 60,000 Labor hours 900 700 Batch-level P 22,000 Set-ups 20 30 Product ~level. P 45,000 Storage space 2,000 sq.m. 4,000 sq.m. Facility-level P 100,000 Machine hours 7,500 12,500 If carburetors and air filters require the same amount of direct labor, what will be effect if labor hours are used as the allocation base for productlevel costs? a. Air filters will be over costed @. Carburetors will be over costed €. Air filters and carburetors will be over costed d. Air filters and carburetors will be under costed e following information ennis balls at P 25 per dozen from its Items 59 and 60 are based or Spain Sports House buy: wholesaler. Spain will sell 35,000 dozens of tennis balls evenly throughout the year. Spain desires a 12% percent return on investment (cost of capital) on its inventory investment. In addition, rent, insurance and related taxes for each dozen tennis balls in inventory amounts to P 0.50. The cost per order is P 8. Spain uses a 350-day year. A.wnat is the average nunber of tennis balls does spain naintain? a. 200 tennis balls b. 400 tennis balls @- 2,400 tennis balls 4. 4,800 tennis balls 4 gy. How often shall spain place the orders within a year? @ Bvery 4 days Every 5 days c. Every 6 days d. Every week }, §{. Dividend yield is 12% while price-earnings ratio is set § times. Determine the retention or plowback ratio. . 2.46 6 40.05 e. 41.7% d. 608MANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) £7 10 April 2016 * 10:30 AM to 2:30 PM Page 12 Portugal Company manufactures part no. 007 for use in its production cycle. The costs per unit for a 5,000-unit quantity follows: Direct materials P2 Direct labor 2 Variable overhead Fixed overhead applied TOTAL e Dublin Company offered to sell Portugal 5,000 units of part no. 007 for P 27 per unit. If Portugal accepts the offer, some of the facilities presently used to manufacture part 007 can be used to help with the manufacture of part no. 123, and P 3 per unit of the fixed overhead applied to part no. 007 would be totally eliminated. By what amount would net relevant costs be increased or decreased if Portugal accepts Dublin's offer? P 5,000 increase P 15,000 decrease . P 20,000 decrease d. P 35,000 decrease #3. Barcelona Company has two decentralized divisions, PG-13 and R-18. Division PG-13 has always purchased certain units from Division R-18 at P 75 per unit. Because Division R-18 plans to raise the price to P 100 per unit, Division PG-13 desires to purchase these units from outside suppliers for P 75 per unit. Division R-18’s costs follow: Division R-18's variable cost per unit P70 Division R-18’s annual fixed costs P 15,000 Division PG-13's purchase 1,000 units If Division PG-13 buys from an outside supplier, the facilities Division R-18 uses to manufacture these units will remain idle. Would it be more profitable for Barcelona to enforce the P 100 transfer price? Yes, net advantage of the company is P 5,000 Yes, net advantage of the company is P 30,000 c. No, net disadvantage of the company is P 25,000 d. No, net disadvantage of the company is P 30,000 64.'The method of least squares was used to develop a cost equation to predict the cost of purchasing goods. Eighty points were used for the regression. ‘The following output was received: Intercept P 30,500 Slope 8.0 Coefficient of correlation 0.75 Standard error PB 1,500 ‘The driver used was ‘number of purchase orders.‘ What is the cost of purchasing if 2,500 orders are processed? P 52,000 @ & 50,500 ¢. P 45,500 d. P 42,875 4D $3. Kaplan and Norton’s Balanced Scorecard model requires that management performance be measured based on the perspective of a. Suppliers b. Creditors Government ShareholdersMANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) 10 April 2016 © 10:30 AM to 2:30 PM Page 13 )) (f-Pnglish Channel makes two products, X and ¥. Their contribution margins are P 50 and P 90, respectively. Each product goes through three processes: cutting, finishing, and painting. The number of hours required by each process for each product and capacities available are given below: Hours Required in Each Process Product Gutting Painting Finishing x 2 4 3 at B: 6 2 Capacities in hours 300 500 250 Which of the following shall not be used in a Linear Programming model for English Channel? Z=50X+ 90 Y XY 20 300 <2x+1¥ 25023X+2¥ ‘/ Fdinburgh Company reports the following balance sheet data: Current liabilities P 280,000 Bonds payable, 16% 120,000 Preferred stock, 14%, P 100 par value 200,000 Common stock, P 25 par value, 16,800 shares 420, 000 Premium on common stock 240,000 Retained earnings 180,000 Income before 40%-tax is P 160,000 while the common stockholders’ equity in the previous year was P 800,000. Assume a market price per common share of P 35, what is the return on common equity? 8.108 8.298 11.438 d, 21.718 | p@.Given the fllowing standard cost data of Athens Company: Actual direct labor costs P 100,000 re Actual factory overhead costs 250,000 Applied factory overhead costs 275,000 Labor spending variance P 25,000 favorable Overhead spending variance P 15,000 unfavorable Labor efficiency variance P 12,500 unfavorable Overhead efficiency variance P 20,000 favorable Materials purchase price variance P 7,500 favorable P 5,000 favorable P 5,000 ‘unfavorable c. P 25,000 favorable d. P 25,000 unfavorable " is the overhead controllable variance? ghorate corporation carries no debt in its capital stricture. rts beta Eoioley Heese pwesvatevie © percent andleneiwdiecees: caaen (on esa ae ab ceeeNn compney nasteu Soeeeneley Coyle vant tH a project that earns 12%. Using Capital Assets Pricing Model (CAPM), Bier ig tare’s Eoseor capital? a. 4.8% See 128 6 3.8MANAGEMENT ADVISORY SERVICES Final Preboard Examinations (May 2016 Batch) 10 PM. 10 April 2016 » 10: 10. AM to Page 14 70.At the start of the year, Mediterranean Company initiated a quality improvement program. and rework costs. improvement program, the following data were current year: In a quality cost sales P 100,000 Scrap 20,000 Rework 25,000 Quality training 10,000 Product warranty 30,000 Product inspection 40,000 Materials inspection 20,000 The program was successful in reducing scrap To help assess the impact of the quality collected for the report prepared by Mediterranean Company, what total amount should be shown as non-conformance costs? a. P 45,000 P 70,000 P 75,000 P 115,000 - END of EXAMINATION -