No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

ICARE MAS Final Preboard Examination Batch 6 Joshua

1. Your company is purchasing a transport equipment as part of its territorial expansion strategy. The
technical services department indicated that this equipment needs overhauling in year 4 or year 5
of its useful life. The overhauling cost will be expected during the year the overhauling is done.
The finance officer insists that the overhauling be done in year 4, not in year 5. The most likely
reason is
a. There is lower tax rate in year 5. c. The time value of money is considered.
b. There is higher tax rate in year 5. d. Due statements A and C above.

2. means reporting and interpreting information that helps managers to focus on

operating problems, imperfections, inefficiencies, and opportunities.

a. Scorekeeping
b. Attention directing
c. Problem solving
d. None of the above

3. Management accounting
a. focuses on estimating future revenues, costs, and other measures to forecast activities and
their results.
b. provides information about the company as a whole.
c. reports information that has occurred in the past that is verifiable and reliable.
d. provides information that is generally available only on a quarterly or annual basis.

4. Which of the following is (are) true statement(s) about cost behavior in incremental analysis?

Statement I: Fixed costs will not change between alternatives

Statement II: Fixed costs may change between alternatives
Statement III: Variable costs will always change between alternatives

a. Statement I
b. Statement III
c. Statement II
d. Statement II and III

5. The following data pertains to activity and costs for two months:

March April
Activity level in units 10,000 20,000
Variable costs …............... P20,000 P ?
Fixed costs ......................... 15,000 ?
Mixed costs ........................ 10,000 ?
Total costs ......................... P45,000 P70,000

Assuming that these activity levels are within the relevant range, the total fixed costs for April were:
a. P15,000.
b. P35,000.
c. P20,000.
d. P40,000.

6. A good example of monopolistic competition is the

a. Agriculture market.
b. Fast food industry.
c. Steel industry.
d. Auto industry.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

7. Catherine, Co. provides two products, A and B. A accounts for 60 percent of total sales, variable
cost as a percentage of selling price are 60% for A and 85% for B. Total fixed costs are P225,000.
If fixed costs will increase by 30 percent, what amount of peso sales would be necessary to
generate an operating profit of P48,000?
a. P1,350,000 c. P486,425
b. P1,135,000 d. P910,000

8. Which one of the following examples best depicts the law of diminishing returns?
a. Small electric generating plants are less efficient than large plants.
b. A manufacturing company purchases its supplier of materials.
c. An automobile assembly plant has lower per-unit costs at 85% of capacity than at 95% of
capacity.
d. Passenger airplanes operate at high costs per passenger when they fly half-empty.

9. Which of the following statements about step costs is FALSE?

a. If the individual chunks of cost are relatively large and apply to a specific, broad range of
activity, the step cost is considered to be a fixed cost over that range of activity.
b. When individual chunks of cost are relatively small and apply to a narrow range of activity,
step costs are considered to be variable costs.
c. Some step costs can be assumed to be variable costs for planning purposes with little loss
of accuracy.
d. Step costs are the same as mixed costs.

10. The following activity and cost data that were provided by Mirabela Corporation would help in
estimating its future casita costs:
Units Casita Cost
3 P450
7 P530
11 P640
15 P700

Using the least-squares regression method to estimate the cost formula, the expected total cost for
an activity level of 10 units would be closest to:
a. P612.50. c. P595.84.
b. P601.50. d. P581.82

11. Economic growth can be depicted as an outward shift of the production possibilities curve. Which
of the following factors would result in such a shift?
a. A reduction in unemployment.
b. Increased use of plant capacity.
c. An increase in the quantity and/or quality of resources.
d. A reduction in inefficiency.

12. Which of the following instruments of monetary policy is the most important means by which the
money supply is controlled?
a. Open market operations.
b. Manipulation of government spending.
c. Changing the discount rate.
d. Changing tax rates.

For the next item: The financial transactions for a country with values stated in billions of pesos follow.

Gross domestic product (GDP) P4,000

Transfer payments 500
Corporate income taxes 50
Social Security contributions 200
Indirect business taxes 210
Personal taxes 250
Undistributed corporate profits 25
Depreciation 500
Net income earned abroad for the country 0

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

13. Disposable income is

a. P3,500
b. P3,290
c. P4,500
d. P3,265

14. In multiproduct situations, when sales mix shifts toward the product with the highest contribution
margin, then
a. Total revenues will decrease
b. Breakeven quantity will decrease
c. Total contribution margin will decrease
d. Operating income will decrease

For the next two items: Jurrasic World Company produces genetically modified dinosaurs and other
items for use in the Jurrasic Park and for resale. A new pet dinosaur named Blue has come onto the
discovery that the company is anxious to produce and sell. Enough capacity exists in the company’s
laboratory to produce 16,000 units of Blue each month. Variable costs to manufacture and sell one
unit would be P12.50, and fixed costs associated with Blue would total P4,200,000 per year.
The company’s Attractions Department predicts that demand for Blue will exceed the 16,000 units that
the company is able to produce. Additional laboratory space can be rented from another company at
a fixed cost of P10,000 per month. Variable costs in the rented facility would total P14 per unit, due to
somewhat less efficient operations than in the main laboratory. Blue will sell for P30 per unit.
15. The breakeven units for Blue would be:
a. 20,000 c. 21,000
b. 18,000 d. 22,500

16. How many units should the company need to sell in order to earn a before-tax profit of P150,000?
a. 9,143 c. 31,875
b. 30,375 d. 35,000

17. The best characteristics of a standard cost system is

a. Standard can pinpoint responsibility and help motivation
b. All variances from standard should be reviewed
c. All significant unfavorable variances should be reviewed
d. Standard cost involves cost control which is cost reduction

18. If a company uses a predetermined rate for absorption of manufacturing overhead, the volume
variance is
a. The under- or over-applied fixed cost element of overhead.
b. The under- or over-applied variable cost element of overhead.
c. The difference between budgeted cost and actual cost of fixed overhead items.
d. The difference between budgeted cost and actual cost of variable overhead items.

19. Brick Company manufactures desks with vinyl tops. The standard material cost for the vinyl used
per Model S de A is P27.00, based twelve square feet of vinyl at a cost of P2.25 per square foot. A
production nut of 1,000 desks in March resulted in usage of 12,600 square feet of vinyl at a cost
of P2.00 per square foot. a total cost of P25,200. The usage variance resulting from the above
production run was

a. P1,200 unfavorable c. P1,350 unfavorable

b. P1,800 favorable d. P3,150 favorable

The next question is based on David Company which applied overhead on the basis of direct labor
hours. Two duct labor hours are required for each product unit. Planned production for the period was
set at 9,000 units. Manufacturing overhead is budgeted at P135,000 for the period, of which 20% of
this cost is fixed . The 17,200 hours worked during the period resulted in production of 8.500 units.
Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead cost
was P28,000. Darwin Company uses a four variance method for analyzing manufacturing overhead
20. The fixed overhead volume (denominator) variance for the period is
a. P750 unfavorable c. P2,500 unfavorable
b. P1,500 unfavorable d. P1,000 unfavorable

3|P a g e T SIY /AT ANG/JSaripada/JBugat an

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

21. Selected financial statements items are provided below for BTS Co.

Annual Sales P2,400,000

Prepaid Expenses P70,000
Current Liabilities P750,000
Days sales outstanding (365-day year) 40 days
Inventory turnover ratio 4.80 times
Current ratio 1.20 to 1
Gross profit margin 20%

The company’s current assets consist only of cash, inventories, accountsr eceivables, and
prepaid expenses. How much cash does BTS have on its balance sheet?
a. P166,986
b. P66,986
c. P236,986
d. P136,986

22. Under the direct costing concept, unit product cost would most likely be increased by
a. A decrease in the remaining useful life of factory machinery depreciated on the units-of-
production method.
b. A decrease in the number of units produced.
c. An increase in the remaining useful life of factory machinery depreciated on the sum-of-
the-years’-digits method.
d. An increase in the commission paid to salesmen for each unit sold.

23. During the year just ended, Roberts Company' income under absorption costing was P3,000
lower than its income under variable costing. The company sold 9,000 units during the year,
and its variable costs were P9 per unit, of which P3 was variable selling expense. If production
cost is P11 per unit under absorption costing every year, then how many units did the company
produce during the year?
a. 8,000.
b. 10,000.
c. 9,600.
d. 8,400.

24. A useful tool in financial statement analysis is the common-size financial statement. What does
this tool enable the financial analyst to do?
a. Evaluate financial statements of companies within a given industry of approximately the
same value.
b. Determine which companies in the same industry are at approximately the same stage of
development.
c. Compare the mix of assets, liabilities, capital, revenue, and expenses within a company
over time or between companies within a given industry without respect to relative size.
d. Ascertain the relative potential of companies of similar size in different industries.

25. All else being equal, which of the following will increase a company’s current ratio?
a. An increase in accounts receivable.
b. An increase in accounts payable.
c. An increase in net fixed assets.
d. Statements a and b are correct.

26. The financial statements of Brews, Inc., provide the following information for the current year:
Dec 31 Jan. 1
Accounts receivable P260,000 P230,000
Inventory 250,000 240,000
Prepaid expenses 64,000 60,000
Accounts payable (for merchandise) 226,000 211,000
Accrued expenses payable 63,000 69,000
Net sales 2,950,000
Cost of Goods sold 1,550,000
Operating expenses (including depreciation of P90,000) 350,000

4|P a g e T SIY /AT ANG/JSaripada/JBugat an

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

Compute the amount of cash received from customers during the current year.
a. PhP2,950,000. c. PhP2,920,000.
b. PhP3,210,000. d. Some other amount.

27. Specific Mills is reviewing its financial condition. Sales are P18 million from which the firm
generated an operating profit of P5,220,000 and a net profit after tax of P2,622,000. If the firm’s
interest expense was P850,000, what is the firm’s degree of financial leverage?
a. 1.34
b. 1.66
c. 1.19
d. 1.81

(For the next two items): Blade Automotive Company manufactures fuel-injection systems. It
manufactured and sold 60,000 units in 200A and 64,000 units in 200B at P25 per unit. In 200A the firm
used 75,000 pounds of alloy X-45 at P7.20 per pound and spent 10,000 direct labor-hours at an hourly
wage rate of P30. In 200B the firm used 89,600 pounds of alloy X-45 at P6.80 per pound and spent
10,847 direct labor-hours at an hourly wage rate of P32. The total amount for all other expenses
remains the same at P450,000 each year. RoadRunner, CEO, was disappointed that while the total
sales increased, the P195,616 operating income earned in 200A is only 93 percent of the amount
earned in 200B, which was P210,000.
28. The operational partial productivity of direct material for 200A and 200B are

200A 200B
a. 0.8 0.7143
b. 0.1111 0.105
c. 6.0 5.9002
d. 0.2 0.1844

29. The financial partial productivity of the direct labor for 200A and 200B are
200A 200B
a. 0.8 0.7143
b. 0.1111 0.105
c. 6.0 5.9002
d. 0.2 0.1844

30. A target in the balanced scorecard framework is

a. a statement of what the strategy must achieve and what is critical to its success.
b. a key action program required to achieve strategic objectives.
c. the level of performance or rate of improvement needed in the performance measure.
d. a diagram of the cause-and-effect relationships between strategic objectives.

31. Elsa Products has a budget of P1,800,000 in 2020 for prevention costs. If it decides to automate a
portion of its prevention activities, it will save P120,000 in variable costs. The new method will
require P36,000 in training costs and P240,000 in annual equipment costs. Management is willing
to adjust the budget for an amount up to the cost of the new equipment. The budgeted production
level is 150,000 units.

Appraisal costs for the year are budgeted at P1,200,000. The new prevention procedures will save
appraisal costs of P60,000. Internal failure costs average P31.50 per failed unit of finished goods.
The internal failure rate is expected to be 3.25% of all completed items. The proposed changes will
cut the internal failure rate by 33.69% Internal failure units are destroyed. External failure costs
average P109 per failed unit. The company's average external failures average 2.67% of units sold.
The new proposal will reduce this rate by 50%. Assume all of the units produced are sold and no
ending inventories to be remained. Management has offered to allow the prevention changes if all
changes take place as anticipated and the amounts netted are less than the cost of the equipment.
What is the net impact of all the changes created by the preventive changes?

a. P156,000
b. P(78,348)
c. P(174,008)
d. P(151,834)

5|P a g e T SIY /AT ANG/JSaripada/JBugat an

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

32. Press Publishers, Inc. is considering replacing an old press that cost P800,000 six years ago with
a new one that would cost P2,250,000. Shipping and installation would cost an additional
P200,000. The old press has a book value of P150,000 and could be sold currently for P50,000.
The increased production of the new press would increase inventories by P40,000, accounts
receivable by P160,000 and accounts payable by P140,000. Press Publishers net initial investment
for analyzing the acquisition of the new press assuming a 35% income tax rate would be
a. P2,450,000
b. P2,600,000
c. P2,425,000
d. P2,250,000

33. The following data pertain to Sunlight Corp., whose management is planning to purchase an
automated tanning equipment.
Economic life of equipment – 8 years.
Disposal value after 8 years – nil.
Estimated net annual cash inflows for each of the 8 years – P81,000.
Time-adjusted internal rate of return – 14%
Cost of capital of Sunlight Corp – 16%
The table of present values of P1 received annually for 8 years has these factors: at 14%
= 4.639, at 16% = 4.344
Depreciation is approximately P46,970 annually.

Find the required increase in annual cash inflows in order to have the time-adjusted rate of return
approximately equal the cost of capital.
a. P5,501 c. P4,344
b. P6,501 d. P5,871

34. Your company is purchasing a transport equipment as part of its territorial expansion strategy. The
technical services department indicated that this equipment needs overhauling in year 4 or year 5
of its useful life. The overhauling cost will be expected during the year the overhauling is done.
The finance officer insists that the overhauling be done in year 4, not in year 5. The most likely
reason is
a. There is lower tax rate in year 5. c. The time value of money is considered.
b. There is higher tax rate in year 5. d. Due statements A and C above.

35. Madrigal Co. is considering an investment in a new cheese-cutting machine to replace its existing
cheese cutter. Information on the existing machine and the replacement machine follow.

Cost of the new machine P40,000

Net annual savings in operating costs 9,000
Salvage value now of the old machine 6,000
Salvage value of the old machine in 8 years 0
Salvage value of the new machine in 8 years 5,000
Estimated life of the new machine 8 years

What is the expected payback period for the new machine?

a. 4.44 years c. 8.50 years
b. 2.67 years d. 3.78 years

36. Bata Company is considering replacing a machine with a book value of P100,000, a remaining
useful life of 5 years, and annual straight-line depreciation of P20,000. The existing machine has a
current market value of P100,000. The replacement machine would cost P150,000, have a 5-year
life, and save P50,000 per year in cash operating costs. If the replacement machine would be
depreciated using the straight-line method and the tax rate is 40%, what would be the economic
values relevant to me decision?
a. b. c. d.
Net Investment P50,000 P50,000 P150,000 P150,000
Net Incremental Cash Flow P34,000 P42,000 P34,000 P42,000
Net Incremental Annual Income Taxes P16,000 P16,000 P3,000 P8,000

6|P a g e T SIY /AT ANG/JSaripada/JBugat an

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

37. Everest Co. is considering an investment in a machine that would reduce annual labor costs by
P30,000. The machine has an expected life of 10 years with no salvage value. The machine would
be depreciated according to the straight-line method over its useful life. The company’s marginal
tax rate is 30%. Assume that the company will invest in the machine of it generates a pre-tax
internal rate of return of 16%. What is the maximum amount the company can pay for the machine
and still meet the internal rate of return criterion?
a. P180,000 c. P187,500
b. P210,000 d. P144,996

38. Using product cost information to determine sales prices is an example of

A. controlling and planning. C. directing.
B. controlling, directing, and planning. D. directing and controlling.

39. The managerial accountant of Makoto Consulting Inc. reported the following information about the
sales budget for the period ending December 31, 2023:

Makoto Consulting Inc.

Sales Budget
Period Ending December 31, 2023

Q1 Q2 Q3 Q4 Annual
Sales (in units) 2,000 2,400 1,950 1,600 9,550
Unit price 16 14 16.5 19
Total P32,000 P33,600 P32,175 P60,800 P158,575

Observe the Sales Budget and determine which primary responsibility the managerial accountant
uses to determine which quarter generated the most per-unit product sales data in order to adjust
the marketing strategy?
A. Analyzing. C. Directing.
B. Controlling. D. Planning.

40. The average fixed cost curve always has a negative slope because
A. Total fixed costs always decrease.
B. Marginal costs are below average fixe costs.
C. Average variable costs exceed marginal costs.
D. Total fixed costs do not change as output increases.

41. Which of the following is TRUE of budgets when they are administered thoughtfully?
A. They eliminate subjectivity in performance evaluation.
C. They can eliminate the uncertainty faced by a company.
B. They promote coordination within the subunits of a company.
D. They are a substitute to the planning and coordination functions of management

42. .Which of the following statements is true for a company that uses variable costing?
A. Income is greatest in periods when production is highest.
B. Net operating income moves in the same direction as sales.
C. Both variable selling costs and variable production costs are included in the unit product cost.
D. The unit product cost changes as a result of changes in the number of units manufactured.

43. Kaizen costing helps to

A. reduce product costs of products in the design and development stage.
B. keep the target cost as the primary focus after a product enters production.
C. keep profit margin relatively stable as product price declines over the product life cycle.
D. reduce the cost of engineering change orders during each stage of the product life cycle.

7|P a g e T SIY /AT ANG/JSaripada/JBugat an

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

44. Which of the following is a disadvantage of a focus on return on investment?

A. It can encourage managers to cut inventories and reduce over all investment.
B. It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm.
C. It can encourage managers to focus on the long run at the expense of the short run.
D. It can encourage managers to focus on cost cutting efforts.

45. The learning curve is also known as a(n)

A. experience curve. C. growth curve.
B. exponential curve. D. production curve.

46. Handyman Co. currently manufactures a subassembly for its main product. The costs per unit are as follows:
Direct materials P900
Direct labor 700
Variable overhead 660

Lafa Inc. has contacted Handyman with an offer to sell 2,500 of the subassemblies for P2,700 each.
Handyman will eliminate P850,000 of fixed overhead if it accepts the proposal.

What are the relevant costs for Handyman?

A. P4,800,000 C. P6,500,000
B. P4,850,000 D. P8,000,000

47. Muzan Interiors provides design services to residential and commercial clients. The residential services
produce a contribution margin of P450,000 and have traceable fixed operating costs of P480,000.
Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall
to P370,000 and Muzan’s income will
A. decrease by P80,000 C. increase by P80,000
B. increase by P30,000 D. increase by P340,000

48. Tanjiro is currently selling for P150 per share. If it is selling at a P/E ratio of 100, what is Tanjiro’s recent
earnings per share?
A. P0.15 C. P0.67
B. P0.50 D. P1.50

49. You have the following information about a company:

Total assets P350,000
Ordinary share equity P175,000
Return on equity 14.5%

What are the company’s earnings available for ordinary shareholders?

A. P21,875 C. P43,750
B. P25,375 D. P47,632

50. Suppose that in the coming year, you expect Nezuko stocks to have a volatility of 22% and a beta of 0.9, and
Komi’s stock to have a volatility of 14% and a beta of 1.1. The risk-free interest rate is 3% and the market’s
expected return in 8%.

Which stock has the highest total risk?

A. Komi since it has a higher beta. C. Nezuko since it has a higher volatility.
B. Komi since it has a lower volatility. D. Nezuko since it has a lower beta.

51. In order to enhance wealth of stockholders and to send positive signals to the market, corporations generally
raise funds using the following order:
A. Debt, retained earnings, equity. C. Retained earnings, debt, equity.
B. Equity, retained earnings, debt. D. Retained earnings, equity, debt.

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 No. 125 Brgy. San Sebastian
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52. Kubayashi Corporation forecasts that if all of its existing financial policies are followed, its proposed capital
budget would be so large that it would have to issue new common stock. Since new stock has a higher cost
than retained earnings, Kubayashi would like to avoid issuing new stock. Which of the following actions would
reduce its need to issue new common stock?
A. Increase the proposed capital budget.
B. Increase the dividend payout ratio for the upcoming year.
C. Increase the percentage of debt in the target capital structure.
D. Reduce the amount of short-term bank debt in order to increase the current ratio.

53. A decrease in demand is represented by

A. A shift inward of the entire demand curve.
B. A shift outward of the entire demand curve.
C. A movement along the demand curve in a northwesterly direction.
D. A movement along the demand curve in a southeasterly direction.

54. Which of the following quantitative techniques would be most useful for analyzing the
interrelationships of time and activities to discover potential bottlenecks?

a. PERT-CPM techniques
b. Expected Value analysis
c. Correlation and regression analysis
d. Linear Programming

55. Philip Enterprises, distributor of compact disks is developing its budgeted cost of goods sold for
200A. Philip has developed the following range of sales estimates and associated probabilities for
the year

Sales Estimate Probability

P60,000 25%
85,000 40%
100,000 35%

Philip’s cost of goods sold averages 80% of sales. What is the expected value of Philip’s 200A
budgeted cost of goods sold?
a. P85,000
b. P84,000
c. P68,000
d. P67,200

56. The maximum of the transfer price negotiation range is

a. Set by the selling segment
b. Determined by the buying segment
c. Influenced only by cost factors within the company
d. Negotiated by the parties in the transaction

57. Childe, the general manager of Fatui Manufacturing Inc. has determined the following forecasted
items for the coming year:

Working capital P4,000,000

Sales 45,000,000
Fixed assets 16,000,000

Determine the operating costs required to be incurred by Childe to achieve a residual income of
P10,000,000 using a minimum rate of return of 18%.
a. P31,400,000
b. P32,120,000
c. P36,900,000
d. P41,400,000

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 No. 125 Brgy. San Sebastian
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58. Lumine Toy Merchandise, a well-known producer of Paimon Figurines, has the following
information:

Move time 3 days

Inspection time 2 days
Processing time 5 days
Storage time 15 days

What is the manufacturing cycle inefficiency?

a. 25%
b. 20%
c. 75%
d. 80%

59. Klee Corporation issued a 10 year serial bonds and used the proceeds to repurchase 30% of its
outstanding ordinary shares. This financial transaction will result to the following, except
a. Current ratio to decrease
b. Interest coverage ratio to decrease
c. Return on assets to decrease
d. Equity multiplier to decrease

60. All of the following represents systematic risks, except

a. Rise in inflation
b. Labor strikes
c. Imposition of new tax laws by the government
d. Interest rate hikes by the BSP

61. An investor uses the capital asset pricing model to evaluate the risk-return relationship on a portfolio
of stocks held as an investment. Which of the following would not be used to estimate the portfolio's
expected rate of return?
a. Standard deviation of the market returns.
b. Interest rate for the safest possible investment
c. Expected risk premium on the portfolio of stocks
d. Expected rate of return on the market portfolio

62. All of the following describes a monopolistic competition economic market

a. Economies of scale
b. Advertisements
c. Single seller of product
d. Heterogeneous products

63. Which of the following organization would most likely advertise that focuses on public relations?
a. A bus company
b. A water utility company
c. A hotel and restaurant chain
d. A car manufacturer

64. The following factors have a direct relationship with the quantity supplied for goods and services,
except
a. Expected future prices
b. Changes in prices of substitute goods
c. Government subsidies
d. Changes in prices of complementary goods

65. Non-compliance with Laws and Regulations (NOCLAR) Framework was created to comply with which
fundamental principles?
A. Integrity.
B. Objectivity.
C. Confidentiality.
D. Professional competence and due care.

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 No. 125 Brgy. San Sebastian
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66. The internal rate of return method assumes that project funds are reinvested at the
A. cost of debt capital. C. hurdle rate.
B. cost of equity capital. D. rate of return earned on the project.

(For numbers 67 to 70)

During its first year of operation, Tartaglia Corporation has operated at 80% capacity and reported the
following condensed income statement:

Sales ₱10,000,000
Cost of sales 4,000,000
Gross margin 6,000,000
Operating expenses 2,500,000
Income before tax 3,500,000
Income tax (30%) 1,050,000
Net income ₱2,450,000

Additional information is provided to you as follow:

 Return on assets is 25% and the Company’s cost of capital is 8%
 Tartaglia’s property and equipment acquired at the beginning of 2020 has a carrying amount of
₱6,300,000, net of accumulated depreciation. Fixed assets are depreciated on a straight-line basisfor
10 years. There were no fixed assets sold or disposed of during the year.
 Other fixed costs amounted to ₱1,300,000, which are paid in cash.
 Unit selling price is ₱5.00 and expected to be constant in the next year.
 The Company’s total shareholder’s equity as at December 31, 2020 amounted to ₱6,450,000. The
Company has no long-term debt outstanding as at the year end.
 The Company plans to increase its sales to 3,000,000 units next year and expects to distribute
80% of the increase in earnings as dividends.
 The Company operates 360 days/year

67. How much is the total assets as of December 31, 2020?

a. ₱8,900,000
b. ₱14,000,000
c. ₱9,800,000
d. ₱25,800,000

68. How much is the net working capital as of December 31, 2020?
a. ₱150,000
b. ₱2,950,000
c. ₱850,000
d. ₱2,590,000

69. What is the contribution margin ratio for the year ended December 31, 2020?
a. 48%
b. 52%
c. 45%
d. 55%

70. Refer to the original information and assuming the Company intends to push its plan for the next
year, what is the external funding needed?
a. (P660,000)
b. P2,175,000
c. P2,490,000
d. 0

11 | P a g e T SIY /AT ANG/JSaripada/JBugat an