INTEGRATED REVIEW 2: Management
Advisory Services (MAS)
#1 | Basic Framework of Management Accounting & Costs in Management Accounting
1. The term “committed costs” refers to costs that A. Are likely to respond to the amount of attention devoted to them by a specified manager B. Are governed mainly by past decisions that established the present levels of operating and organizational capacity and that only change slowly in response to small changes in capacity C. Fluctuate in total in response to small changes in the rate of utilization of capacity D. Management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by b y customers (CRC-ACE, May 2018 Batch)
2. Costs that cannot be changed by any decision made now or in the future are A. Sunk costs B. Indirect costs C. Avoidable costs D. Fixed costs (CRC-ACE, May 2018 Batch)
3. Management accountants must satisfy their users; therefore, they should all do the following, EXCEPT A. Provide them with high quality information B. Provide specialized information that specific managers can use C. Focus on preparing information for external financial reporting D. Continuously strive to provide better quality information faster and at a lower cost (RESA, May 2018)
4. It is an approach to continuous improvement that focuses on serving customers and uses frontline workers to identify and solve problems systematically. A. ABC system B. Just-in-time (JIT) system C. Total quality management (TQM) D. Process value analysis (RESA, May 2018) 5. The drivers that explain changes in costs as units produced changed are called: A. Non-unit-level drivers B. Activity based cost drivers C. Unit-level drivers D. All of these (PRTC, May 2018)
6. The cost behavior method that may use time and motion studies to determine d etermine the activities and amounts for cost behavior analysis is A. Account analysis method B. Industrial engineering method C. Regression analysis D. High-low method (PRTC, May 2018) 7. Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis? A. Total direct material costs B. A consultant paid P75 per hour with a maximum fee of P1,200 C. Employees who are paid P10 per hour and guaranteed a minimum weekly wage of P200 D. Rent on exhibit space at a convention (PRTC, May 2018)
8. Harem Company uses an annual cost formula for overhead of P72,000 + 1.60 for each direct labor hour worked. For the upcoming month, Karla plans to manufacture 96,000 units. Each unit requires five minutes of direct labor. Harem Co mpany’s budgeted overhead for the month is A. P 12,800 B. P 18,800 C. P 84, 800 D. P 774, 000 (Bobadilla, 2011) 9. The controller of Jema Company has requested a quick estimate of the manufacturing ma nufacturing supplies that it needs for the month of July when the expected production are 470,000 units. Below are the actual data from the prior three months of operations. Production in Units Manufacturing Supplies March 450, 000 P 723, 060 April 540, 000 853, 560 May 480, 000 766, 560 Using these data and the high-low method, what is the reasonable estimate of the cost of manufacturing supplies that would be needed for July? (Assume that this activity is within the relevant range) A. P 805,284 B. P 1,188,756 C. P 755,196 D. P 752,060
6. The cost behavior method that may use time and motion studies to determine d etermine the activities and amounts for cost behavior analysis is A. Account analysis method B. Industrial engineering method C. Regression analysis D. High-low method (PRTC, May 2018) 7. Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis? A. Total direct material costs B. A consultant paid P75 per hour with a maximum fee of P1,200 C. Employees who are paid P10 per hour and guaranteed a minimum weekly wage of P200 D. Rent on exhibit space at a convention (PRTC, May 2018)
8. Harem Company uses an annual cost formula for overhead of P72,000 + 1.60 for each direct labor hour worked. For the upcoming month, Karla plans to manufacture 96,000 units. Each unit requires five minutes of direct labor. Harem Co mpany’s budgeted overhead for the month is A. P 12,800 B. P 18,800 C. P 84, 800 D. P 774, 000 (Bobadilla, 2011) 9. The controller of Jema Company has requested a quick estimate of the manufacturing ma nufacturing supplies that it needs for the month of July when the expected production are 470,000 units. Below are the actual data from the prior three months of operations. Production in Units Manufacturing Supplies March 450, 000 P 723, 060 April 540, 000 853, 560 May 480, 000 766, 560 Using these data and the high-low method, what is the reasonable estimate of the cost of manufacturing supplies that would be needed for July? (Assume that this activity is within the relevant range) A. P 805,284 B. P 1,188,756 C. P 755,196 D. P 752,060
(Bobadilla, 2011)
10. The Overland Company wants to develop a cost estimating equation for its monthly cost of electricity. It has the following data: Month Electricity Cost Direct Labor Hours January P 6,750 1,500 April 7,500 1,700 July 8,500 2,000 October 7,250 1,600 Using the high-low method, what is the reasonable equation? equ ation? A. Y= P 750 + P5.00X B. Y= P1,500 + P3.50X C. Y= P 750 + P3.50X D. Y= P1,500 + P5.00X (Bobadilla, 2011)
11. A management information system should emphasize satisfying A. external demands for information. B. external and internal demands for information. C. internal demands for information. D. the Accounting Department's demands for information.
12. In comparing financial and management accounting, which of the following more accurately describes management accounting information? A. historical, precise, useful B. required, estimated, internal C. budgeted, informative, adaptable D. comparable, verifiable, monetary
13. Management accounting A. is more concerned with the future than is financial accounting. B. is less concerned with segments of a company compan y than is financial accounting. C. is more constrained by rules and regulations than is financial accounting.
D. all of the above are true.
14. A managerial accountant who prepares clear reports and recommendations after analyzing relevant facts is exercising which of the following standards? A. objectivity
C. competence
B. integrity
D. confidentiality
15. The plans of management are often expressed formally in: A. financial statements.
C. budgets.
B. ledgers.
D performance reports.
16. The person MOST likely to use ONLY ON LY financial accounting information is a A. factory shift supervisor.
C. current shareholder.
B. manager.
D. vice president of operations.
17. Control measures should A. be set and not changed until the next budget cycle. B. be flexible to allow for employees who are slackers. C. be kept confidential from employees so that competitors don’t have an opportunity to gain a competitive advantage. D. be linked by feedback to planning.
18. The person(s) directly responsible for the attainment of organizational objectives is/are A. the treasurer.
C. the controller.
B the chief financial officer
D. management.
19. A well-conceived plan allows managers the ability to A. not make decisions again until the next planning session. B. keep lower-level managers from implementing change. C. underestimate costs so that actual operating results will be favorable when comparisons are made.
D. take advantage of unforeseen opportunities.
20. 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 v erifiable and reliable. D. provides information that is generally available only on a quarterly or annual basis. 21. In financial accounting, certain rules and regulations must be followed on how financial statements must be presented to readers. In managerial accounting, no such restrictions generally apply because it is A. An entirely different field that need not observe the broad guidelines in financial accounting B. Designed to provide management with non-financial information for decisionmaking. C. Designed to provide accounting and other financial data to assist management in making business decisions D. A discipline that does not require preparation of financial statements (Roque, 2016) 22. The basic accounting records that are used to provide data for external accounting. In combining and reporting these data to management, however, the accountant can relax the verifiability constraint necessary in public financial reporting and instead prepare data which, although not adequately verifiable for external reporting, are more useful to management. This principle of management managemen t accounting considers co nsiders the following factors are more important than others. A. B. C. D.
Verifiability, objectivity, and accuracy Conservatism Relevance, flexibility and timeliness Consistency and disclosure (Roque, 2016)
23. These costs are long-term in nature and cannot be eliminated even for short periods of time without affecting the profitability or long-term goals of the firm
A. B. C. D.
Avoidable costs Committed fixed costs Variable costs Controllable costs (Roque, 2016)
For numbers 24 to 26, Meng Company is preparing a flexible budget for next year and requires a breakdown of the factory maintenance cost into the fixed and variable elements.
The maintenance cost and machine hours (the selected cost driver) for the past 6 months are as follows:
January February March April May June
Maintenance Costs 15,500 10,720 15,100 15,840 14,800 10,600
Machine Hours 1800 1230 1740 2190 1602 1590
24. If Meng Company uses the high low method of analysis, the estimated variable rate of maintenance cost per machine hour is A. Php 7.23 B. Php 8.73 C. Php 5.46 D. Php5.33 (Roque, 2016) 25. The average annual fixed maintenance cost amounts to A. Php 4,160 B. Php 8,320 C. Php 49,920 D. Php 5,120 (Roque, 2016) 26. What is the average rate per hour at a level of 1500 machine hours? A. Php 5.33 B. Php 8.11 C. Php 7.23
D. Php 5.46 (Roque, 2016) For numbers 7 and 8, RTW Company, in producing Lot No. 647 which called for 2,500 dresses, Style No. 34, incurred costs as follows: Materials, P240/dress; Labor, P165/dress; Factory Overhead, P135/dress. When the lot was completed, inspection rejected 200 spoiled dresses which were sold for P324 each. 27. Assuming spoilage is normal what is cost per unit of good output? A. Php 540 B. Php 324 C. Php 558.78 D. Php 586.96 28. Assuming spoilage is abnormal, what is the cost per unit of good output? A. Php 540 B. Php 324 C. Php 558.78 D. Php 586.96 (PRIA Handout, 2018) For numbers 9 and 10, The following data for the month of September were taken from the cost records of Department A of NLP which uses average costing:
Work in process, beginning (All materials, 50% converted) Materials Labor Factory Overhead Put into Production Materials Labor Factory Overhead Units completed and transferred Units in process, End (all materials, 60% converted) 29. The unit cost of material for the month is A. P 5.00
Unit 500
Cost P 2,400 1,500 760
5,000 25,100 19,380 14,900 4,800 700
B. P 5.50 C. P 4.00 D. P 4.50
30. The equivalent production for labor is A. 7200 B. 5220 C. 4970 D. 5500 (PRIA Handout, 2018) 31. Which of the following is/are false? A. Managerial accounting is as concerned with providing information to stockholders as it is with providing information to managers. B. Managerial accounting focuses more on the segments of an organization rather than on the organization as a whole. C. Managerial accounting need not follow the Generally Accepted Accounting Principles (GAAP). D. Managerial accounting is not mandatory, i.e., not required by any external law or regulation. (Roque, 2016) 32. In which of the following aspects is managerial accounting similar to financial accounting? A. Users of reports B. Emphasis between the past and future C. Type of data provided to users D. Reliance on the accounting database (Roque, 2016) 33. An activity that causes resources to be consumed is called a A. Non-value-added activity B. Cost driver C. Just-in-time activity D. Extracurricular activity (Roque, 2016) For numbers 34 to 35: The following are costs incurred by Abtina Manufacturing Corporation during the previous month:
Direct materials Indirect materials Direct labor Indirect labor Factory utilities Advertising costs Sales commissions Depreciation on administration building Salaries of administrative personnel Depreciation - delivery equipment Overtime pay - factory workers Rework cost on defective products discovered during quality inspection
P 5,000 2,000 6,000 1,000 4,000 8,000 12,000 3,000 20,000 2,000 1,000 2,500
(Roque, 2016) 34. Total product costs: A. P67,000 B. P45,000 C. P22,000 D. P18,000 35. Total period costs: A. P67,000 B. P45,000 C. P49,000 D. P22,000
For number 36: Maco Corporation’s Research and Development Department was able to develop a new product – a flashlight powered by solar energy. After reviewing the data prepared by the company’s controller, Maco’s management is confident that the new product will contribute profit to the company.
The data prepared by the controller are as follows:
Suggested selling price Costs: Materials Parts fabrication (P10 per hour) Assembly (P6 per hour) Variable overhead (P4 per hour) Fixed overhead (P3 per hour) Tota cost
P200 P60 40 18 28 21 P167
The total research and development costs incurred to develop the new product amounted to P200,000. The company is planning to spend half of this amount for promotion and advertising. The company’s fixed overhead includes rent, equipment depreciation, and salaries of factory supervisors. (Roque, 2016)
36. For Maco’s new flashlight, total prime costs amount to A. P118 B. P167 C. P146 D. P107 For numbers 37 to 39: Frances Corporation conducted a regression analysis of its factory overhead costs. The analysis yielded the following cost relationship:
Total factory overhead cost = P50,000 per month + 5H* *H = number of direct labor hours, the selected cost driver for overhead costs
Each unit of product requires 6 direct labor hours. The company’s normal production is 20,000 units of product per year. (Roque, 2016) 37. The total overhead cost for a month’s production of 2,000 units is A. P60,000 B. P50,000 C. P110,000 D. P0 38. The predetermined fixed overhead rate per hour is
A. B. C. D.
P6.00 P5.00 P2.50 P0.42
39. The total predetermined factory overhead rate per hour is A. P5.00 B. P7.50 C. P10.00 D. P35.00 40. The following costs were incurred in February: Direct materials ......................... $43,000 Direct labor ............................... $16,000 Manufacturing overhead ........... $37,000 Selling expenses ........................ $17,000 Administrative expenses ........... $26,000 Conversion costs during the month totaled: a. $59,000 A. $80,000 B. $53,000 C. $139,000 (Garrison 12th edition) 41. Management accounting includes the following processes, except: A. measurement. B. interpretation. C. communication. D. delegation. (ROQUE, 2016)
42. 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. (ROQUE)
43. Under which ethical standard of conduct does the managerial accountant have the responsibility to refrain from either actively or passively subverting the attainment of an organization's legitimate and ethical objectives? A. integrity B. objectivity C. competence D. confidentiality (Bobadilla, 2012)
44. Which of the following involves decision making? A. B. C. D.
Controlling Planning Directing All of the above (Roque, 2016)
45. Management accounting involves the following except: A. Determine cost behavior B. Assist in developing company’s prices for external transactions only C. Assist in profit planning D. None of the above (ROQUE, 2016)
46. Fixed cost that would be considered a direct cost is A salary of the sales manager when the cost object is the sales department. B salary of the controller when the cost object is a unit of product. C. fees of the Board of Directors when the cost object is the Production Department. D. the rental cost of the finished goods warehouse when the cost object is the Accounting Department. (ROQUE)
47. Utility costs at Service, Inc. are a mixture of fixed and variable components. Records indicate that utility costs are an average of $0.40 per hour at an activity level of 9,000 machine hours and $0.25 per hour at an activity level of 18,000 machine hours. Assuming that this activity is within the relevant range, what is the expected total utility cost if the company works 13,000 machine hours? A. $4,225 B. $5,200 C. $4,000 D. $3,250 (PRIA Handout) 48. Overhead applied was 130,000 while actual overhead was 126,000. Which of the following is true? A. B. C. D.
Direct Labor activity was overestimated Overhead was underapplied by 4000 Overhead was overapplied by 4000 The difference is reported as a loss (DE LEON, 2016)
49. City cruiser accepted a special order of 100 bikes for 558 each. Their normal selling price is 698. While their product cost is 564 consisting of Direct Materials - 372, Direct Labor - 90, Manufacturing Overhead - 102, Fixed portion of Overhead - 90 per unit. In accepting the special order, it would require additional P34 direct cost and P2,400 fixed overhead cost. Assuming this order would have no effect on other sales. What would be the incremental overhead costs in accepting the special order? A. B. C. D.
2,400 2,502 3,600 5,800
50. Craft Manufactures order using job order cost system. For the month just e nded, it registered the following data, Beginning work in process (5 partially completed jobs) - 300,000 Orders completed (18) - 2,400,000 Orders Shipped (14) - 2,000,000
Materials requisitioned for the month - 1,700,000 Direct Labor Cost - 800,000 Factory Overhead Rate - 150% of Direct Labor Cost
The ending work in process inventory was A. 1,400,000 B. 500,000 C. 1,600,000 D. 700,000 51. Which of the following is not an objective of management accounting? A. maximization of profit and minimization of costs. B. measuring the performance of managers of subunits. C. providing information for planning and decision making. D. providing assistance in directing and controlling operations. (Roque, 2016) 52. Which of the following statements about management or financial accounting is false? A. B. C. D.
Management accounting should be flexible. Financial accounting must follow GAAP. Management accounting is not subject to mandatory reporting standards. Both management and financial accounting are subject to mandatory recordkeeping requirements. (Roque, 2016)
53. The type of accounting which deal with how accounting and other financial data can be used for decision-making in controlling, monitoring, and directing business activity is called A. B. C. D.
management accounting responsibility accounting financial accounting general accounting (Roque, 2016)
54. Which of the following statements is false? A. Cost accounting is a tool of both financial and managerial accounting.
B. Managerial accounting draws heavily on economics, statistics, operations research, and other disciplines as necessary in providing accounting and financial information. C. In management accounting, emphasis is given to identifying or matching cost 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 pa rties outside the business entity. (Roque, 2016) 55. Management accounting differs from financial accounting in that financial accounting is. A. B. C. D.
involved more heavily in decision analysis future oriented concerned primarily with external financial reporting concerned with qualitative information. (Roque, 2016)
56. The following information is available for Ana manufacturing Company when it produced 2,100 units in the month of February: Standard Material: 2 pounds per unit @ 4.00 per pound Labor: 3 hours per unit Variable overhead: P15 per hour Actual Material: 4,500 pounds purchased @ P17,100 Labor: 6,400 direct labor hours What is the materials purchase price variance? A. B. C. D.
P900 favorable P900 unfavorable P840 favorable P840 unfavorable (ReSA 1st Preboard, 2014)
57. Based on the information in the previous number, how did the company factory workers perform in February? A. B. C. D.
P100 efficient P100 inefficient 100 hours efficient 100 hours inefficient (ReSA 1st Preboard, 2014)
58. Spleen Company with P210,000 of fixed cost has the following data:
Unit sales price Unit variable costs
Product X P10 P8
Product Y P5 P4
Assume that 3 units of X are sold for each unit of Y. How much is the contribution margin of product X at its breakeven point? A. P900,000 B. P180,000 C. P120,000 D. P90,000 (ReSA 1st Preboard, 2014) 59. Variable costing treats A. B. C. D.
All variable expenses as product costs All variable expenses as period costs All fixed expenses as product costs All fixed expenses as period costs (ReSA 1st Preboard, 2014)
60. Standard cost variances are not closed to A. B. C. D.
Direct material inventory Work-in-process inventory Finished goods inventory Cost of goods sold (ReSA 1st Preboard, 2014)
61. Which of the following is not an objective of management accounting? A. Maximization of profit and minimization of costs. B. Measuring the performance of managers of subunits. C. Providing information for planning and decision making. D. Providing assistance in directing and controlling operations. (Roque, 2016) 62. Which of the following statements about management or financial accounting is false? A. Management accounting should be flexible. B. Financial accounting must follow GAAP. C. Management accounting is not subject to regulatory reporting standards. D. Both management and financial accounting are subject to mandatory record-keeping requirements. (Roque, 2016) 63. In comparing management and financial accounting, which of the following more accurately describes management accounting information? A. Comparable, verifiable, monetary B. Budgeted, informative, adaptable C. Required, estimated, internal D. Historical, precise, useful (Roque, 2016) 64. The treasury function includes A. Preparation of tax returns B. Cash custody and banking C. Reporting to government D. Financial reporting (Roque, 2016) 65. Integrity is an ethical requirement for all management accountants. One aspect of integrity requires A. Maintenance of an appropriate level of professional competence. B. Performance of professional duties in accordance with applicable laws. C. Refraining from improper use of confidential information. D. Avoidance of actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict. (Roque, 2016) 66. Which of the following statements about cost behavior is correct?
A. Within the relevant range, total variable costs may vary directly with activity, while total fixed costs remain unchanged for a given period despite fluctuations in activity. B. Within the relevant range, variable cost per unit varies directly with activity, while fixed cost per unit remains unchanged for a given period despite fluctuations in activity. C. Within the relevant range, fixed cost per unit varies directly with activity, while variable cost per unit remains unchanged for a given period despite fluctuations in activity. D. Within the relevant range, total variable costs may vary inversely with activity, while total fixed costs remain unchanged for a given period despite fluctuations in activity. (Roque, 2016) 67. Managerial accounting places considerable weight on: A. generally accepted accounting principles. B. the financial history of the entity. C. ensuring that all transactions are properly recorded. D. detailed segment reports about departments, products, and customers. (Garrison, 2008) 68. The plans of management are often expressed formally in: A. financial statements. B. performance reports. C. budgets. D. ledgers. (Garrison, 2008) 69. The cost of the cushions that are used to manufacture sofas is best described as a: A. manufacturing overhead cost. B. period cost. C. variable cost. D. conversion cost. (Garrison, 2008) 70. A security guard's wages at a factory would be an example of: Indirect labor Fixed manufacturing overhead A. No No B. Yes Yes C. Yes No D. No Yes (Garrison, 2008)
71. One certification available to management accountants is the Certificate of Management Accounting (CMA). In the Philippines, the Philippine Association of Management Accountants (PAMA) conducts the CMA Program, which has the following objectives, except: A. To establish Management Accounting as a recognized profession in the field of business. B. To encourage stricter and high quality educational standards in Management Accounting. C. To provide objective means for measuring the Management Accountant’s knowledge and competence. D. To supervise or coordinate the Management Accountant’s preparation of reports to government agencies. (Roque, 2016) 72. As volume increases, A. total fixed costs remain constant and per-unit fixed costs increase. B. total fixed costs remain constant and per-unit fixed costs decrease. C. total fixed costs remain constant and per-unit fixed costs remain constant. D. total fixed costs increase and per-unit fixed costs increase. (Bobadilla, 2014) 73. Which of the following best describes a fixed cost? A. It may change in total when such change is unrelated to changes in production. B. It may change in total when such change is related to changes in production. C. It is constant per unit of change in production. D. It may change in total when such change depends on production within the relevant range. (Bobadilla, 2014) 74. If activity increases, which of the following statements about cost behavio r is true? A. Fixed cost per unit will increase. B. Variable cost per unit will increase. C. Fixed cost per unit will decrease. D. Variable cost per unit will decrease. (Bobadilla, 2014) 75. An increase in the activity level within the relevant range results in: A. an increase in fixed cost per unit. B. a proportionate increase in total fixed costs. C. an unchanged fixed cost per unit. D. a decrease in fixed cost per unit.
(Bobadilla, 2014) 76. Total production costs for Jordan, Inc. are budgeted at P2,300,000 and P2,800,000 for 50,000 and 60,000 units of budgeted output, respectively. Because of the need for additional facilities, budgeted fixed costs for 60,000 units are 25 percent more than budgeted fixed costs for 50,000 units. How much is Jordan’s budgeted variable cost p er unit of output? A. P 7.50 B. P30.00 C. P16.00 D. P62.50 (Bobadilla, 2014) 77. During the month of June, Behold Corporation produced 12,000 units and sold them for P20 per unit. Total fixed costs for the period were P154,000, and the operating profit was P26,000. Based on the foregoing information, the variable cost per unit for the month of June was A. P4.50 B. P5.00 C. P6.00 D. P7.17 (Bobadilla, 2014) 78. Data to be used in applying the high-low method shows the highest cost of P69,000 and the lowest cost of P52,000. The data shows P148,000 as the highest level of sales and P97,000 as the lowest level. What is the variable cost per peso sales? A. P0.33. B. P0.47. C. P0.54. D. P3.00 (Bobadilla, 2014) 79. At a sales level of P300,000, Java Company's gross margin is P15,000 less than its contribution margin, its net income is P50,000, and its selling and administrative expenses total P120,000. At this sales level, its contribution margin would be: A. P250,000. B. P155,000. C. P170,000. D. P185,000. (Bobadilla, 2014)
80. TransEx Company operates a fleet of delivery trucks in Luzon. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is P11.40 per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to P13.40 per kilometer. Assuming that in a given year, a truck were driven 80,000 kilometers, what total cost would you expect to be incurred? A. P1,012,000 B. P1,407,000 C. P1,225,143 D. P1,072,000 (Bobadilla, 2014) 81. The engineering method of estimating costs: A. Can be used to estimate costs for totally new activities B. Can detail each step required to perform an operation C. Sometimes can be quite expensive to use D. All of the given choices are true (Bobadilla, 2015) 82. Operating leverage measures how sensitive the profit is to a change in A. Fixed costs B. Sales Volume
C. sales price per unit D. in tax rates (Bobadilla, 2015)
83. If a company is operating at a loss A. Fixed costs are greater than sales B. Selling price is lower than the variable costs per unit C. Selling price is less than the average total cost per unit. D. Fixed cost per unit is greater than variable cost per unit. (Bobadilla, 2015) 84. Which of the following would not affect the breakeven point? A. Number of units sold B. Variable cost per unit C. Total fixed costs D. Sales price per unit (Bobadilla, 2015)
85. As fixed cost for a firm rises, all other things held constant, the breakeven point will A. Be unchanged B. Not be affected by fixed costs C. Increase D. Decrease (Bobadilla, 2015) 86. Federer Company plans to sell 400,000 laundry hangers. The fixed costs are P60 0, 000 and the variable cost is 60% of the selling price. If the company wants to realize a profit of P120, 000, the selling price of each laundry hanger must be A. B. C. D.
P2.5 P3.75 P4.50 P5.00 (Bobadilla, 2015)
87. During the month of June, Armani Corporation produced 12,000 units and sold them for P20 per unit. Total fixed costs for the period were P154, 000, and the operating profit was P26, 000. The variable cost per unit for June was A. B. C. D.
P2.5 P3.75 P4.50 P5.00
(Bobadilla, 2015) 88. The unit contribution margin of Product A is P20 and of Product B is P16. If sis units of Product A and eight units of Product B can be produced per machine hour, the contribution margin of the products per machine hour is A. Product A, P160; Product B, P96 B. Product A, P120; Product B, P128 C. Product A, P3.33; Product B, P2.00 D. Product A, P32.00; Product B, P30.00 (Bobadilla, 2015) 89. Sams Company wants to develop a single predetermined overhead rate. The company’s expected annual fixed overhead is 340,000 and its variable overhead cost per machine hour is
P2. The company’s relevant range is from 200,000 to 600,000 ma chine hours. Sams Company expects to operate at 850,000. The predetermined overhead rate per machine hour should be
A. P2.4 B. 2.57 C. 2.8 D. 2.85 (Bobadilla, 2015) 90. Cultured Company is a manufacturer of its only one product line. It had sales of P400,000 for 2010 with a contribution margin ratio of 20 percent. Its margin of safety ratio was 10 percent. What are the company’s fixed costs? A. P72, 000 B. P288,000 C. P80,000 D. P320,000 91. Modern management accounting can be characterized by its A. flexibility B. standardization C. complexity D. precision (AACSB) 92. Which of the following is not a valid method for determining product cost? A. arbitrary assignment B. direct measurement C. systematic allocation D. cost-benefit measurement (AACSB)
93. If a distinction is made between cost accounting and managerial accounting, managerial accounting is more oriented toward A.
valuation of inventory.
B.
analysis of variances including spoilage.
C.
financial reporting to third parties.
D.
the planning and controlling aspects of the management process. (Bobadilla)
94. It may be considered as the master plan for the engagement which serves as a framework for controlling its progress. It can be used as a planning tool that documents how the engagement will be carried out, organizes the engagement into scheduled and logical sequences, and indicates the various tasks necessary to achieve the objectives of the engagement.
A.
Engagement work program
B.
Master Budget
C.
Engagement blueprint
D.
Engagement plan (Roque, 2016)
95. Which of the following relate(s) to management advisory services by CPAs? A.
Cost analysis of major investment decisions
B.
Design and/or installation of accounting systems
C.
Financial Analysis for project feasibility studies
D.
All of the above (Roque, 2016)
96. Management services of CPAs cover all the following, except A.
Audit, tax, and legal services
B.
Organizational Development
C.
Systems design, development, and implementation
D.
Project feasibility studies and planning (Roque, 2016)
97. Which function is most directly related to management by obje ctives? A. Planning. B. Control. C. Decision making. D. Reporting. (Garisson) 98. Which consideration influences the frequency of an internal report? A. The wishes of the managers receiving the report.
B. The frequency with which decisions are made that require the information in the report. C. The cost of preparing the report. D. All of the above. (Garisson) 99. A conventional manufacturer is more likely than a just-in-time manufacturer to A. have a short production cycle. B. produce goods in small batches. C. hold large inventories to serve as buffers. D. none of the above. (Garisson) 100.
The professional certification most relevant for managerial accountants is the A. CMA. B. CPA. C. CSA. D. MAS. (Garisson)
101.
Planning and control are A. different names for the same thing. B. the basic functions of management. C. described equally well by the terms "decision making" and "performance evaluation." D. exemplified by, respectively, financial statements and budgeting. (Garisson)
102.
In contrast to a balance sheet, an income statement A. is for a period of time, a balance sheet is at a point in time. B. gives information about cash and a balance sheet does not. C. is prepared after the statement of retained earnings. D. has two columns, while a balance sheet has more than two. (Garisson)
103.
One characteristic of the conventional manufacturing environment is A. flexible manufacturing systems. B. manufacturing cells. C. a just-in-case philosophy. D. a high degree of quality control.
(Garisson) 104.
The controller of a company or other organization is A. a staff manager. B. an operating manager. C. an accountant, not a manager. D. a natural manager. (Garisson)
105.
Which item is NOT an IMA Standard for Ethical Conduct? A. Integrity. B. Competence. C. Loyalty. D. Objectivity. (Garisson)
106.
Which statement about the degree of detail in a report is true? A. It depends on the level of the manager receiving the report. B. It may depend on the frequency of the report. C. It depends on the type of manager receiving the report. D. All of the above. (Garisson)
107.
Managerial Accounting places considerable weight on: A. Generally Accepted Accounting Principles B. The financial history of the entity C. Ensuring that all transactions are properly recorded D. Detailed segment reports about departments, products and costumers. (Garisson)
108.
The plans of the management are often expressed formally in: A. Financial statements B. Performance reports C. Budgets D. Ledgers (Garisson)
109. The phase of accounting concerned with providing information to managers for use in planning and controlling operations and in decision making is called:
A. B. C. D.
Throughput time Managerial accounting Financial accounting Controlling (Garisson)
110. A _____ position in an organization is directly related to the achievement of the organization’s basic objectives. A. Line B. Management C. Staff D. None of the above (Garisson) ITEMS 111 AND 112 ARE BASED ON THE FOLLOWING: Castelo, Villasin and Barrera is a large, local accounting firm located in Cebu. Belle Castelo, one of the Firm’s founders, appreciates the success her firm has enjoyed and wants to give something back to her community. She believes that an inexpensive accounting services clinic could provide basic accounting services for small businesses located in the province. She wants to price the services at cost.Since the clinic is brand new, it has no experience to go on. Belle decided to operate the clinic for two months before determining how much to charge per hour on an ongoing basis. As a temporary measure, the clinic adopted an hourly charge of P50, half the amount charged by Castelo, Villasin and Barrera for professional services. The accounting services clinic opened on January 1. During January, the clinic had 120 hours of professional service. During February, the activity was 150 hours. Costs for these two levels of activity usage are as follows:
Professional Hours Salaries: Senior Accountant Office Assistant Internet and software subscriptions Consulting by senior partner Depreciation (equipment) Supplies Administration Rent (offices) Utilities 111.
120 Hours
150 Hours
P 2,500 1,200 700 1,200 2,400 905 500 2,000 332
P 2,500 1,200 850 1,200 2,400 1,100 500 2,000 365
The clinic’s monthly fixed costs amount to: A. P8,600 C. P425
B. P9,025
D. 12,189 (CPAR)
112. Apple Baby, the chief paraprofessional of the clinic, has estimated that the clinic will average 140 professional hours per month. If the clinic is to be operated as a nonprofit organization, how much will it need to charge per professional hour? A. P97.81 B. P87.06
C. P82.77 D. P22.60 (CPAR)
113. HSR Computer System designs and develops specialized software for companies and use a normal costing system. The following data are available for the current year:
Budgeted Overhead P600,000
Actual Units produced 100,000
Machine hours 24,000
Overhead P603,500
Direct labor hours 75,000
Prime costs P900,000
Machine hours 25,050 Direct labor hours 75,700 Overhead is applied on the basis of direct labor hours. What is the unit cost for the year? A. P15.03 B. P15.06
C. P15.09 D. P15.00
(CPAR) 114. Balat Leather Works, which manufactures saddles and other leather goods, has three departments. The Assembly Department manufactures various leather products, such as belts, purses, and saddle bags, using automated production process. The Saddle Department produces handmade saddles and uses very little machinery. The Tanning Department produces leather. The tanning process requires little in the way of labor or machinery, but it does require space and process time. Due to the different production processes in the three departments, the company uses three different cost drivers for the application of manufacturing. The cost drivers and overhead rates are as follows:
Cost Driver Predetermined Overhead Rate Tanning Department Square-feet of leather P3 per square-foot Assembly Department Machine time P9 per machine hour Saddle Department Direct-labor time P4 per direct labor hour The company’s deluxe saddle and accessory set consists of handmade saddle, two saddlebags, a belt, and a vest, all coordinated to match. The entire set uses 100 square-feet of leather from the Tanning Department, 3 machine hours in the Assembly Department, and 40 direct-labor hours in the Saddle Department. The company is processing Job No. 20 consisting of 20 deluxe saddle and accessory sets.
How much is the applied manufacturing overhead in Assembly Department for Job No. 20? A. P3,200 C. P6,000 B. P540 D. P3,000 (CPAR) 115. If activity-based costing is implemented in an organization without any other chan ges being affected, total overhead costs will A. be reduced because of the elimination of non-value-added activities. B. be reduced because organizational costs will not be assigned to products or services. C. be increased because of the need for additional people to gather information on cost D. drivers and cost pools. E. remain constant and simply be spread over products differently. (CPAR) 116. Harry Manufacturing incurs annual fixed costs of P250,000 in producing and selling a single product. Estimated unit sales are 125,000. An after-tax income of P75,000 is desired by management. The company projects its income tax rate at 40 percent. What is the maximum amount that Harry can expend for variable costs per unit and still meet its profit objective if the sales price per unit is estimated at P6?
B. P3.59
A. P3.37 C. P3.00 D. P3.70 (CPAR)
117. For its most recent fiscal year, a firm reported that its contribution margin was equal 40 percent of sales and that its net income amounted to 10 percent of sales. If its fixed costs for the year were P60,000, how much was the margin of safety? A. P150,000 B. P200,000
C. P600,000 D. 50,000 (CPAR)
118. Sam Company manufactures a single product. In the prior year, the company had sales of P90,000, variable costs of P50,000, and fixed costs of P30,000. Sam expects its cost structure and sales price per unit to remain the same in the current year, however total sales are expected to increase by 20 percent. If the current year projections are realized, net income should ex ceed the prior year’s net income by: A. 100 percent B. 80 percent
C. 20 percent D. 50 percent (CPAR)
119.
A just-in-time manufacturer is more likely than a conventional manufacturer to A. Receive more frequent deliveries of materials. B. Spend less money on advertising. C. Need workers with fewer skills. D. All of the above. (Garrison)
120.
A characteristic of the just-in-time manufacturing environment is A. B. C. D.
Frequent deliveries of materials. Manufacturing cells. Little or no inventory of finished product. All of the above. (Garisson)
121. Which one of the following costs would decrease if production levels were increased within the relevant range? A. B. C. D.
Total Fixed Costs Variable Costs per unit Total Variable Costs Fixed Costs per unit (CRC-ACE Pre-Board Oct 2017)
122. Which of the following statements is true? A. The total variable cost varies with a measure of activity. B. A variable cost is an unavoidable cost. C. A variable cost is not relevant for decision making. D. A variable cost becomes fixed in the long run. (CRC-ACE Pre-Board Oct 2017) 123. Which of the following statements relating to management information are true? 1. It is produced for parties external to the organization. 2. There is usually a legal requirement for the information to be produced. 3. No strict rules govern the way in which the information is presented. 4. It may be presented in monetary or non monetary terms. A. B. C. D.
1 and 2 2 and 4 3 and 4 1 and 3 (CRC-ACE Pre-Board Oct 2017)
124. Which of the following words does not describe a main focus of management accounting? A. Planning B. Control C. External D. Decision-making (CRC-ACE Pre-Board Oct 2017) 125. Which one of the following costs would not be classified as a production overhead cost in a food processing company? A. The cost of renting the factory building B. The salary of the factory manager C. The depreciation of equipment located in the materials store D. The cost of ingredients (CRC-ACE Pre-Board Oct 2017)
Items 126 and 127 are based on the following information: Following information pertains to X Company’s two products:
Break-even point – units Selling Price
Digicam 360 ₱ 4,500
Videocam 240 ₱ 14,250
Variable costs
2,250
5,000
126. What is the weighted-average contribution margin? A. ₱ 11.500 B. ₱ 5,050 C. ₱ 19.17 D. ₱ 25,250 (Roque, 2016) 127. How much is total fixed costs? A. ₱ 3,030,000 B. ₱ 5,040,000 C. ₱ 2.010,000 D. ₱ 5,050 (Roque, 2016) Items 128 to 130 are based on the following information:
During July, a company’s direct material costs for the production o f product x were as follows: Standard unit price ₱ 12.50 Standard quantity allowed for actual production 6,300 units
Actual unit purchase price Quantity purchased and used for actual production
₱ 13 6,900 units
128. The total materials cost variance is A. ₱ 88,700 unfavorable B. ₱ 78,750 favorable C. ₱ 10,950 favorable D. ₱ 10,950 unfavorable (Roque, 2016) 129. The materials efficiency variance is A. ₱ 10,950 unfavorable B. ₱ 7,500 unfavorable C. ₱ 3,450 unfavorable D. ₱ 7,500 favorable (Roque, 2016) 130. The materials spending variance is A. ₱ 3,450 unfavorable
B. ₱ 3,450 favorable C. ₱ 7,500 unfavorable D. ₱ 10,950 unfavorable (Roque, 2016)
131. Which of the following would NOT be a period cost for a manufacturing firm? A.
Selling expenses
B.
Salary paid to the CEO of the company
C.
Repairs to the Receptionist's computer
D.
Utilities in manufacturing plant (MAS Reviewer; Bobadilla, 2013)
132. What kind of costs can be conveniently and economically traced to a cost object or pool? A.
Indirect Costs.
B.
Direct Costs.
C.
Relevant Costs.
D.
Overhead Costs. (MAS Reviewer; Bobadilla, 2013)
133. Direct product expenses A.
are incurred for the benefit of the business as a whole
B.
cannot be identified readily with a given product
C.
can be assigned to product only by a process of allocation
D.
would not be incurred if the product did not exist (MAS Reviewer; Bobadilla, 2013)
134. Product costing system design or selection: A.
requires an understanding of the nature of the business
B.
should provide useful cost information for strategic and operational
decision needs C.
should be cost effective in design and selection
D.
all the above answers are correct (MAS Reviewer; Bobadilla, 2013)
135. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
A.
cost driver.
B.
overhead rate.
C.
cost pool.
D.
product activity. (MAS Reviewer; Bobadilla, 2013)
136. Direct materials and direct labor costs total P120,000, conversion costs total P10 0,000, and factory overhead costs total P400 per machine hour. If 150 machine hours were used for Job #201, what is the total manufacturing cost for Job #201? A.
120,000
B.
160,000
C.
180,000
D.
280,000 (MAS Reviewer; Bobadilla, 2013)
Use the following information that pertains to beta manufacturing company to answer ques tions 137-139:
Beginning direct materials inventory
P 20,000
Beginning WIP inventory
20,000
Beginning finished goods inventory
40,000
Ending direct materials inventory
10,000
Ending WIP inventory Ending finished goods inventory
100,000 50,000
Purchases
140,000
Direct labor
160,000
Factory overhead
200,000
137. What is the amount of direct materials used during the period? A. P140,000 B. P 60,000 C. P130,000 D. P150,000
(MAS Reviewer; Bobadilla, 2013)
138. What is the amount of cost of goods manufactured during the period? A. P430,000 B. P470,000 C. P420,000 D. P510,000 (MAS Reviewer; Bobadilla, 2013) 139. What is the amount of cost of goods sold during the period? A. P430,000 B. P420,000 C. P470,000 D. P510,000 (MAS Reviewer; Bobadilla, 2013) 140.
Machine hours used to set the predetermined overhead rate were 25,000, actual hours
were 24,000, and overhead applied was P60,000. Budgeted overhead for the year was A.
P57,600.
B.
P59,000.
C.
P60,000.
D.
P62,500. (MAS Reviewer; Bobadilla, 2013)
141.
Analytical reports are based on the ______ comparison of results. A. Horizontal B. Vertical C. Symmetrical D. None of the above
142.
The objective of wealth maximization takes into account A. Amount of returns expected B. Timing of anticipated returns
C Risk associated with uncertainty of returns D. All of the above
143.
Finance Function comprises A. Safe custody of funds only B. Expenditure of funds only C. Procurement of finance only D. Procurement & effective use of funds
144. __________ conveys detailed summary pertaining to various activities of the organization. A. Master summary control report B. Subsidiary summary control report C. Interim summary control report D. All of the above
145. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________. A. Operating activities, financing activities B. Financing activities, investing activities C. Investing activities, operating activities D. None of the above
146. In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from _______. A. Operating activities, financing activities B. Financing activities, investing activities C. Investing activities, operating activities D. of the above
147.
Which of the following are treated as long term investments?
A. Non-current investments B. Trade Investments C. Sinking fund investments D. All of the above
148.
Which of the following are applications of funds? A. Payment of dividend on share capital B Payment of tax C. Increase in working capital D. All of the above
149.
Financial management process deals with?
A. Investments B. Financing decisions C. Both a and b D. None of the above
150.
The only feasible purpose of financial management is
A. Wealth Maximization B. Maximization C. Profit Maximization D. maximization 151. In comparing management accounting with financial accounting, which of the following statements is true? A. Both require adherence to GAAP. B. Both depend on the double-entry system of accounting. C. Both use historical costs as their primary unit of measurement. D. Financial accounting reports are more objective, whereas management accounting reports are more subjective. (PRTC May 2017 Preboards) 152.
The main focus of managerial accounting is: A. decision making. B. documenting cash flows.
C. D.
the preparation of budgets. the preparation of financial statements. (PRTC May 2017 Preboards)
153. For every unit that a company produces and sells above the breakeven point, its profitability is improved (ignoring taxes) by the unit’s A. variable cost. B. gross margin. C. contribution margin. D. selling price minus fixed cost per unit. (PRTC May 2017 Preboards) 154. A technique that is useful in exploring what would happen if a key decision prediction or assumption proved wrong is termed: A. linear programming B. project analysis C. sensitivity analysis D. uncertainty analysis (PRTC May 2017 Preboards) 155.
A company would be reducing its discretionary costs if it A. Fired a production supervisor. B. closed its research and development department. C. successfully negotiate a reduction in its factory rent. D. reduced its direct labor costs by hiring temporary workers. (PRTC May 2017 Preboards)
156.
Operating leverage refers to the relative proportion of: A. total costs to sales B. fixed costs to variable costs C. variable costs to contribution margin D. sales price per unit to variable costs per unit (PRTC May 2017 Preboards)
157. Grant Company has fixed costs of P600,000 and variable costs are 40% of sales. What are the required sales if Grant Company desires net income of P60,000? A. P1,000,000 B. P1,100,000 C. P1,500,000 D. P1,650,000
(PRTC May 2017 Preboards) 158.
Which of the following is true of a company that uses absorption costing? A. Variable selling expenses are included in product costs. B. Net operating income fluctuates directly with changes in sales volume. C. Fixed production and fixed selling costs are considered to be product costs. D. Unit product costs can change as a result of changes in the number of units manufactured. (PRTC May 2017 Preboards)
159. In multi-product situations, when sales mix shifts towards the product with the highest contribution margin then A. breakeven quantity will increase. B. operating income will increase. C. total contribution margin will decrease. D. total revenues will decrease. (PRTC May 2017 Preboards) 160.
If variable selling expenses increase, then gross margin (assuming all else constant) must: A. Decrease B. Increase C. Stay the same D. Need more information (PRTC May 2017 Preboards)
161.
Fixed costs expressed on a per unit basis: A. B. C. D.
Will increase with increases in activity. Will decrease with increases in activity. Are not affected by activity. Should be ignored in making decisions since they cannot change. (Garrison, 12th Ed.)
162. 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. (Garrison, 12th Ed.) 163.
Which of the following statements about process costing system is incorrect? A. In a process costing system, each processing department has a work in process account. B. In a process costing system, equivalent units are separately computed for materials and for conversion costs. C. In a process costing system, overhead can be under- or overapplied just as in joborder costing. D. In a process costing system, materials costs are traced to units of products. (Garrison, 12th Ed.)
164. Which of the following would probably be the most accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra? A. Machine-hours B. Direct labor-hours C. Inspection time D. Number of inspections (Garrison, 12th Ed.) 165. The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): A. period cost. B. direct material cost. C. indirect material cost. D. none of the above. (Garrison, 12th Ed.) 166.
Last month a manufacturing company had the following operating results: Beginning finished goods inventory ............ $74,000 Ending finished goods inventory ................. $50,000 Sales ............................................................. $438,000 Gross margin ................................................ $63,000 What was the cost of goods manufactured for the month? A. $375,000 B. $414,000 C. $399,000 D. $351,000 (Garrison, 12th Ed.)
167.
Inventoriable costs are expensed on the income statement A. When direct materials for the product are purchased. B. After the products are manufactured. C. When the products are sold. D. Not at any particular time, it varies. (Cabrera, 2014)
168. All of the cost categories listed below are usually found in a company’s accounting records, except for: A. Sunk costs B. Inventoriable costs C. Opportunity costs D. Marketing costs (Cabrera, 2014) 169.
The units that failed inspection during the current month would be classified as A. Abnormal spoilage. B. Normal scrap. C. Normal reworked units. D. Normal waste. (Cabrera, 2014)
170. A job-order costing system is less likely to distort job costs if it assigns overhead costs to individual jobs based on A. Direct labor hours. B. Machine hours. C. Direct material cost. D. The consumption of different cost drivers. (Cabrera, 2014) 171. The two dimensions of managerial accounting are: A. a decision-facilitating dimension and a decision-influencing dimension. B. a decision-facilitating dimension and a financial-influencing dimension. C. a decision-influencing dimension and a cost-minimizing dimension. D. a cost-minimizing dimension and a profit-maximizing dimension. E. a decision-influencing dimension and a profit-maximizing dimension. (Hilton, 2014) 172. Which of the following statements represents a similarity between financial and managerial accounting? A. Both are useful in providing information for external users.
B. Both are governed by GAAP. C. Both draw upon data from an organization’s accounting system. D. Both rely heavily on published financial statements. E. Both are solely concerned with historical transactions. (Hilton, 2014) 173. Managerial accounting: A. focuses only on historical data. B. focuses primarily on the needs of personnel within the organization. C. provides information for parties external to the organization. D. focuses on financial statements and other financial reports. (Hilton, 2014) 174. The costs that follow all have applicability for a manufacturing enterprise. Which of the choices listed correctly denotes the costs’ applicability for a service provider?
A B C D
Period Cost Applicable Not Applicable Not Applicable Applicable
Uncontrollable cost Not Applicable Not applicable Applicable Applicable
Opportunity Cost Applicable Applicable Applicable Applicable (Hilton, 2014)
In the Omara Manufacturing Company, at an activity level of 80,0 00 machine hours, total overhead costs were P223,000. Of this amount, utilities were P48,000 (all variable) and depreciation was P60,000 (all fixed). The balance of the overhead cost consisted of maintenance cost (mixed). At 100,000 machine hours, maintenance costs were P130,000.
Assume that all of the activity levels mentioned in this problem are within the relevant range. 175. The variable cost for maintenance per machine hour is: A. P1.30 C. P0.75 B. P1.44 D. P1.35 (Bobadilla, 2014)
176. The total fixed overhead cost for Omara is: A. P115,000 B. P130,000
C. P 60,000 D. P 55,000 (Bobadilla, 2014)
177. If 110,000 machine hours of activity are projected for the next period, total expected overhead cost would be: (Bobadilla, 2014) A. P256,000. B. P263,500. C. P306,625. D. P242,500. For number 178-179 refer to the problem below:
St John Hospital contains 450 beds. The average occupancy rate is 80 percent per month. In other words, on average, 80 percent of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are P32 per occupied bed per day, assuming a 30daymonth. This P32 figure contains both variable and fixed cost components. During the month of June, the hospital’s occupancy rate was onl y 60 percent. A total of P326,700 in operating cost was incurred during that month.
178. Using the high-low method, the amount of variable cost per occupied bed per cay is A. P 7.00 B. P 9.00 C. P12.00 D. P15.00 0
179. Using the variable cost as determined in number 36, the total fixed operating costs per month are: A. P240,000 B. P270,000 C. P290,000 D. P300,000 180. Assuming an occupancy rate of 75 percent in a particular month, what amount of total operating costs would you expect the hospital to incur? A. B. C. D. 181.
P310,000 P315,500 P340,875 P375,500
In a job-costing system, issuing indirect materials to production increases which account? A. Materials control. B.
Work in process control.
C.
Manufacturing overhead control.
D. Manufacturing overhead allocated. (Wiley, 2011) 182.
Management accountants would not A. assist in budget planning. B. prepare reports primarily for external users. C.
determine cost behavior.
D. be concerned with the impact of cost and volume on profits. (Bobadilla, 2014) 183.
Management accounting is similar to financial accounting in that both: A. are governed by financial reporting framework. B.
deal with economic events.
C.
concentrate on historical data.
D. classify reported information in the same manner. (Bobadilla, 2014) 184.
Which of the following is not an objective of management accounting?
A. Maximization of profit and minimization of costs. B.
Measuring the performance of managers of subunits.
C.
Providing information for planning and decision making.
D. Providing assistance in directing and controlling operations. (Roque, 2016) 185.
Compared to financial accounting, managerial accounting places more emphasis on: A. The flexibility of information B.
The precision of information
C.
The timeliness of information
D. Both A and C (Garrison, 12th edition)
186.
During the month of June, Armani Corporation produced 12,000 units and sold them for
P20 per unit. Total fixed costs for the period were P154,000, and the operating profit was P26,000. The variable cost per unit for June was A. P4.50 B.
P5.00
C.
P6.00
D. P7.17 (Bobadilla, 2011) 187.
Federer Company plans to sell 400,000 laundry hangers. The fixed costs are P600,000,
and the variable cost is 60% of the selling price. If the company wants to realize a profit of P120,000, the selling price of each laundry hanger must be A. P2.50 B.
P3.75
C.
P4.50
D. P5.00 (Bobadilla, 2011) 188.
The unit contribution of Product A is P20 and of Product B is P16. If six units of Product
A and eight units of Product B can be produced per machine hour, the contribution margin of the products per machine hour is
A. Product A, P160; Product B, P96 B.
Product A, P120; Product B, P128
C.
Product A, P3.33; Product B, P2.00
D. Product A, P32.00; Product B, P30.00 (Bobadilla, 2011) 189.
Santos Company is planning its advertising campaign for next year and has prepared the
following budget data based on a zero advertising expenditure: Normal plant capacity
200,000 units
Sales
150,000 units
Selling price
P25 per unit
Variable manufacturing costs
P15 per unit
Fixed manufacturing costs
P800,000
Fixed selling costs
P700,000
An advertising agency claims that an aggressive advertising campaign would enable Santos to increase its unit sales by 20%. What is the maximum amount that Santos Company can pay for advertising and have an operating profit of P200,000 next year? A. P100,000 B. P200,000 C. P300,000 D. P550,000 (Bobadilla, 2011) 190.
Mercado, Inc. had the following economic data for 2011: Net sales Contribution margin Margin of safety
P400,000 160,000 40,000
What is Mercado’s breakeven point in 2011?
A. P360,000 B. P288,000 C. P320,000 D. P80,000 (Bobadilla, 2011)
201.
Provisions in this section of Ethical Standards for Management Accountants forbid
management accountants to act on, or even appear to act on, confidential information they acquire in doing their work, except when authorized or when legally obligated to do so. A. Competence B. Confidentiality C. Integrity D. Objectivity (Roque, 2016) 202.
Financial and managerial accounting differ in a number of ways. In contrast to financial
accounting, managerial accounting A. Focuses on providing data for external users. B. Emphasizes relevance and flexibility rather than precision. C. Is mandatory D. Is governed by Generally Accepted Accounting Principles. (Roque, 2016) 203.
Which of the following is/are false? A. Managerial accounting is concerned with providing information to stockholders as it is with providing information to managers. B. Managerial accounting focuses more on the segments of an organization rather than on the organization as a whole. C. Managerial accounting need not follow the Generally Accepted Accounting Principles (GAAP). D. Managerial accounting is not mandatory, ie., not required by any external law or regulation.
(Roque, 2016) 204.
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. (Roque, 2016)
205.
Management accounting includes the following processes, except A. Measurement. B. Communication. C. Interpretation. D. Delegation. (Roque, 2016)
206.
It refers to anything (a product, product line, a business segment) for which cost is
computed. A. Cost object B. Cost driver C. Cost control D. Cost variance (Roque, 2016) 207.
Sunk costs A. Are relevant costs. B. Can be changed by a decision made now or to be made in the future.
C. Are irrelevant for decision-making processes. D. Are decreases in costs from one alternative to another. (Roque, 2016) 208.
In cost accounting, the term relevant range refers to the range over which A. Relevant costs are incurred. B. Production should be confined. C. Total fixed costs fluctuate. D. Cost relationships are valid. (Roque, 2016)
ITEMS 209 TO 210 BASED ON THE FOLLOWING INFORMATION:
Data about Annabelle Company’s production and inventories for the month of June are as
follows: Purchases – direct materials
P 143,440
Freight in
P 5,000
Purchase returns and allowances
P 2,440
Direct labor
P 175,000
Actual factory overhead
P 120,000
Inventories: Finished goods
June 1 P 68,000
June 30 P 56,000
Work in process
110,000
135,000
Direct materials
52,000
44,000
Annabelle Company applies factory overhead to production at 80% of direct labor cost. Over- or underapplied overhead is closed to cost of goods sold at year-end. The company’s accounting period is on the calendar year basis. 209.
Annabelle Company’s conversion cost for June was
A. P 315,000 B. P 295,000 C. P 329,000 D. P 444,000 (Roque, 2016) 210.
The amount of over/underapplied overhead factory for the month of June was A. P 140,000 overapplied. B. P 120,000 underapplied. C. P 20,000 overapplied. D. P 20,000 underapplied. (Roque, 2016)
211. Cost and management accounting A. Require an entirely separate group of accounts than financial accounting uses. B. Focus solely on determining how much it costs to manufacture a product or provide a service. C. Provide product/service cost information as well as information for internal decision making. D. Are required for business recordkeeping as are financial and tax accounting. (CPAR PREBOARD, 2017)
212.
Which of the following statements is true?
A. Inventoriable costs are reported as an asset when incurred and expensed on the income statement when the product is sold. B. Costs of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period. C. A cost object is always either a product or a service. D. Costs are accounted for in two basic stages: assignment followed b y accumulation.
(CPAR PREBOARD, 2017)
213. Which of the following statements represents a similarity between financial and managerial accounting? A. Both are useful in providing information for external users. B. Both are governed by GAAP. C. Both draw upon data from an organization’s accounting system. D. Both are solely concerned with historical transactions. (CPAR PREBOARD, 2017)
214. A. B. C. D.
The term “management by exception” is best defined as: Choosing exceptional managers. Controlling costs so that non-zero variances are treated as “exceptional”. Investigating unfavorable variances. Devoting management time to investigate significant variances. (CPAR PREBOARD, 2017)
215. A. B. C.
Which of the following statements regarding costs and decision making is c orrect? Fixed costs must be considered only on a per-unit basis. Per-unit fixed cost amounts are valid only for make-or-buy decisions. Per-unit fixed costs can be misleading because such amounts appear to behave as variable costs when, in actuality, the amounts are related to fixed expenditures.
D. Opportunity costs should be ignored when evaluating decision alternatives. (CPAR PREBOARD, 2017)
216.
Apple, Inc., reported the following results from the sale of 24,000 units of Product A: Sales P528,000 Variable manufacturing costs
288,000
Fixed manufacturing costs
120,000
Variable selling costs
52,800
Fixed administrative costs
35,200
Jess Company has offered to purchase 3,000 Product A at P16 each. Apple has available capacity, and the president is in favor of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is opposed because the “full cost” of production is P17. Which of the following correctly notes the change in income if the special order is accepted? A. B. C. D.
P5400 increase P3000 decrease P18,000 decrease P12,000 increase (CPAR PREBOARD, 2017)
217. Gol Company applies overhead based on machine hours. At the beginning of 2017, the company estimated that manufacturing overhead would be P500,000, and machine hours would total 20,000. By 2017 year-end, actual overhead totaled P525,000, and actual machine hours were 25,000. On the basis of this information, the 2017 predetermined overhead rate was: A. P0.04 per machine hour B. P25 per machine hour C. P20 per machine hour D. P21 per machine hour (CPAR PREBOARD, 2017)
218. Javell is contemplating a job offer with an advertising agency where she will make P54,000 in her first year of employment. Alternatively, Javell can begin to work in her father’s business where she will earn an annual salary of P38,000. If Javell decides to work with her father, the opportunity cost would be: A. P0 B. P38,000 C. P54,000 D. 92,000 (CPAR PREBOARD, 2017)
219. Jesse Company had a P2,000 favorable volume variance, a P7,000 unfavorable variable overhead variance, and P3,000 total underapplied overhead. The fixed overhead budget variance was A. P1,000 favorable B. P8,000 favorable C. P2,000 favorable D. P8,000 unfavorable (CPAR PREBOARD, 2017)
220. 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 inverntory 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 (CPAR PREBOARD, 2017) 221.
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 (Cabrera 2014) 222. Which of the following types of information are used in management accounting?/ A. Financial information B. Nonfinancial information C. Information focused on the long term D. All of the above (Cabrera 2014) 223. Financial accounting provides a historical perspective, whereas management accounting emphasizes A. The future B. Past transactions C. A current perspective D. Reports to shareholders (Cabrera 2014)
224.
Variable costs A. B. C. D.
Are always indirect costs Increase in total when the actual level of activity increases Include most personnel costs and depreciation on machinery Can always be traced directly to the cost object (Cabrera 2014) 225. Which of the following is a variable cost in an insurance company? A. Rent B. President’s salary C. Sales commissions D. Property taxes (Cabrera 2014) For Nos. 226 – 229 The Awit Company manufactures several different products. Unit costs associated with product ABC are as follows: Direct Materials ----------------------------------------------------- P 60 Direct Manufacturing Labor ---------------------------------------- 10 Variable Manufacturing Overhead --------------------------------- 18 Fixed Manufacturing Overhead ------------------------------------- 32 Sales Commissions ---------------------------------------------------- 4 Administrative Salaries --------------------------------------------- 16 Total P 140 226.
227.
228.
229.
What are the variable costs per unit associated with Product ABC? A. P18 B. P22 C. P88 D. P92 What are the fixed costs per unit associated with Product ABC? A. P102 B. P48 C. P52 D. P32 What are the inventoriable costs per unit associated with P roduct ABC? A. P120 B. P140 C. P50 D. P88 What are the period costs per unit associated with Product ABC?
