27th Batch First PB Mas
27th Batch First PB Mas
27th Batch First PB Mas
1. One of the factors that contributed to the emergence and growth of management consultancy is:
a. The development of techniques for the solution of management problems, and the businessmen’s awareness of their usefulness.
b. The development of techniques for the solution of management problems, and the businessmen’s awareness of how to use them.
c. The trend towards computerization.
d. The complexities in managing and conducting an MAS engagement.
2. The PICPA committee on MS classified the broad areas of MAS into two groups. What are these classifications?
(1) Areas which are normally related to the accounting and finance functions.
(2) Areas which are not normally related to the accounting and finance functions.
(3) Areas which are mathematical techniques like linear programming, queuing theory and simulation to solve complicated operational problems.
(4) Areas which involve financial, technical and marketing evaluation of proposed projects.
a. 1 and 2 c. 2 and 3
b. 3 and 4 d. 1 and 4
3. The Code of Ethics for Management Accountants includes a competence standard, which requires the financial manager/management
accountant to:
a. Report information, whether favorable or unfavorable.
b. Develop his/her professional proficiency on a continual basis.
c. Discuss ethical conflicts and possible course of action with an unbiased counselor.
d. Discuss with subordinates, their responsibilities regarding the disclosure of information about the firm.
4. Engagements should be adequately planned, supervised and controlled. Controlling involves the measurement of progress in attaining the
engagement plan and objectives. At significant engagement points, progress should be measured in terms of:
a. Time schedule, accomplishments, and quality of work.
b. Accomplishments, time schedule, and expenses incurred.
c. Quality of work, number of reports prepared and time schedule.
d. Accomplishments, number of personnel who played a role in the engagement, and attendance of the participants in the engagement.
7. Tomy has just been appointed chairperson of the Accountancy Department of ARTS College. In reviewing the department’s cost records,
Tomy has found the following total cost associated with MAS Part 2 subject over the last several terms:
Semester/Term Number of subjects offered Total cost
AY2004, First Semester 4 10,000
AY2004, Second Semester 6 14,000
AY2004, Summer 2 7,000
AY2005, First Semester 5 13,000
AY2005, Second Semester 3 9,500
Tomy knows that there are some variable costs, such as amounts paid to student assistants, associated with the course. He would like to have
variable and fixed cost components separated for planning purposes.
Using the least-squares method, what is the variable cost per section of MAS?
a. 1,750 c. 1,200
b. 1,500 d. 900
For the coming period, the company is planning to use 5,000 direct labor hours, and its total budgeted factory overhead amounts to P 90,000
broken down as follows:
Activity Cost Driver Budgeted Activity Budgeted Cost
1. Setup costs Number of setups 40 20,000
2. Production monitoring Number of batches 20 40,000
3. Quality control Number of inspections 1,000 30,000
Total overhead cost 90,000
========
Projected data for one of the company’s products, Product X, for the coming period are as follows:
Production and sales 1,000 units
Direct labor hours 2,000 hours
Units per batch 500
Number of setups 4
Number of inspections 200
Direct materials cost P10 per unit
Direct labor rate P 20 per hour
8. If the company will use the traditional full cost system, the cost per unit of product X for the coming period will be:
a. 36 c. 86
b. 50 d. 68
9. If the company will use the ABC system, the cost per unit of product X for the coming year will be:
a. 62 c. 86
b. 50 d. 12
10. Two companies are expected to have annual sales of 1 million decks of playing cards next year. Estimates for next year are presented
below:
Company 1 Company 2
Selling price per deck 3.00 3.00
Cost of paper per deck .62 .65
Printing ink per deck .13 .15
Labor per deck .75 1.25
Variable overhead per deck .30 .35
Fixed costs P 960,000 P 252,000
Given these data, which of the following responses is correct?
BEP in units for Co. 1 BEP in units for Co. 2 Volume in units at which
Profits of Co. 1 & Co. 2 are equal
a. 800,000 420,000 1,180,000
b. 800,000 420,000 1,000,000
c. 533,334 105,000 1,000,000
d. 533,334 105,000 1,180,000
12. What is the breakeven point in units if only standard carriers are sold?
a. 100,000 c. 250,000
b. 200,000 d. 150,000
13. What is the breakeven point in units if only deluxe carriers are sold?
a. 100,000 c. 150,000
b. 120,000 d. 80,000
14. Suppose 200,000 units are sold but only 20,000 of them are deluxe. What is the operating income?
a. 200,000 c. 100,000
b. 240,000 d. 120,000
15. Suppose 200,000 units are sold but only 20,000 of them are deluxe. What is the breakeven point in units?
a. 133,368 units of Standard; 11,821 units of Deluxe.
b. 130,000 units of Standard; 12,000 units of Deluxe.
c. 163,638 units of Standard; 18,182 units of Deluxe.
d. 138,386 units of Standard; 12,812 units of Deluxe.
FIRST PRE-BOARD EXAMINATION page 03
At the time the guarantee was required, you had 205 confirmed people attending the dinner, including all non-reviewee special guests who will be
seated on the head table, but not including servers. You guarantee 224 people plus the servers. The servers will eat in an adjoining room, which is
furnished free of charge.
16. What is the estimated total cost of the After-Board Dinner and Dance for the number of people guaranteed?
a. 56,260 c. 56,160
b. 51,100 d. 56,735
17. How much should each ticket be sold to recover the total costs, assuming that all seats will be taken and that the non-reviewee
special guests and servers will be given complimentary tickets?
a. 250 c. 300
b. 270 d. 206.25
18. What selling price should be charged for each ticket if the group wants to earn a profit of P 19,760 that will be donated to the school
for the acquisition and installation of a high-end review equipment, considering the same assumption as in item 17?
a. 345 c. 301.25
b. 395 d. 365
20. Under absorption costing for the month ended May 31, 2009, the company would report a:
a. 30,000 loss c. 30,000 profit
b. 0 profit d. 60,000 profit
21. Crystal’s total costs at the break even point would be:
a. 900,000 c. 495,000
b. 825,000 d. 412,500
On your way to work this morning, the papers were laying on the seat of your new, red convertible. As you were crossing a bridge on the highway, a
sudden gust of wind caught the papers and blew them over the edge of the bridge and into the stream below. You managed to retrieve only one
page, which contains the following information:
FIRST PRE-BOARD EXAMINATION page 04
@ Figure obliterated
You recall that manufacturing overhead cost is applied to production on the basis of direct labor hours and that all of the materials purchased
during the period were used in production. Since the company uses JIT to control work flows, work in process inventories are insignificant and can
be ignored.
It is now 8:30 AM. The executive committee meeting starts in just one hour, you realize that to avoid looking like a bungling fool you must somehow
generate the necessary “backup” data for the variances before the meeting begins. Without backup data it will be impossible to lead the discussion
or answer any questions.
22. How many pounds of direct materials were purchased and used in the production of 22,500 units?
a. 138,000 lbs. c. 135,000 lbs.
b. 132,000 lbs. d. 137,300 lbs.
24. How many actual direct labor hours were worked during the period?
a. 18,000 c. 19,400
b. 16,600 d. 18,970
25. How much actual variable manufacturing overhead cost was incurred during the period?
a. 55,300 c. 56,900
b. 58,200 d. 59,500
26. What is the total fixed manufacturing overhead cost in the company’s flexible budget?
a. 112,500 c. 139,500
b. 140,000 d. 125,500
28. The cost accounting department of Century Company prepared the following cost analysis report on direct labor costs for the jobs
completed during the previous months:
Payroll costs: P 37,450
Actual hours at labor union contract rate: P 35,175
Standard hours at labor union contract rate: P 36,430
The labor spending variance is:
a. 2,275 favorable c. 1,255 favorable
b. 2,275 unfavorable d. 1,255 unfavorable
29. A per unit transfer price from the Video Cards Division to the Entertainment Division at full cost, P 9.15 would:
a. Allow evaluation of both divisions on a competiive basis.
b. Satisfy the Video Cards Division’s profit desire by allowing recovery of opportunity cost.
c. Provide no profit incentive for the Video Cards Division to control or reduce cost.
d. Encourage the Entertainment Division to purchase video cards from an outside source.
30. Assume that the Entertainment Division is able to purchase a large quantity of video cards from an outside source at P 8.70 per unit. The
Video Cards Division, having excess capacity, agrees to lower its transfer price to P 8.70 per unit. The action would:
a. Optimize the profit goals of the Entertainment Division while subverting the profit goals of Cyber Inc.
b. Allow evaluation of both divisions on the same basis.
c. Subvert the profit goals of the Video Cards Division while optimizing the profit goals of the Entertainment Division.
d. Optimize the overall profit goals of Cyber Inc.
31. Assume that the Plastic Division has excess capacity and it has negotiated a transfer price of P 5.60 per plastic component with the
Entertainment Division. This price will:
a. Cause the Plastic Division to reduce the number of commercial plastic components it manufactures.
b. Motivate both divisions as estimated profits are shared.
c. Encourage the Entertainment Division to seek an outside source for plastic components.
d. Demotivate the Plastic Division causing mediocre performance.
38. For 200A, the Applications Department’s total cost to process the 120,000 applications assuming standard performance should be:
a. 13,000,000 c. 10,500,000
b. 10,900,000 d. 8,400,000
40. GHI, Inc. manufactures 100,000 units of part XXX annually, which it uses in one of its products The controller has collected the following
cost data related to the part:
Materials 40,000
Direct labor 90,000
Variable overhead 80,000
Fixed overhead 180,000
-------------------
Total costs 390,000
==========
JKL Company offers to supply a functionally equivalent part for P 3.10 per unit. If GHI accepts the offer, it will be able to rent some of the
facilities it devotes to making the part to another company for P 20,000 annually and will also be able to reduce its fixed overhead costs by
about P 50,000.
At what annual unit volume will GHI earn the same income making the part as it would to buy it?
a. 70,000 units. c. 90,000 units.
b. 80,000 units. d. 100,000 units.
41. How much peso contribution would the sale to Kate add to Camay’s before tax profit?
a. 53,848 c. 55,900
b. 55,948 d. 9,300
42. How much peso contribution would the alternative of converting the special machinery to standard model add to Camay’s before tax
profit?
a. 52,200 c. 52,825
b. 54,475 d. 7,650
FIRST PRE-BOARD EXAMINATION page 07
43. If Kate makes Camay a counteroffer, what is the lowest price Camay should accept for the reworked machinery from Kate?
a. 10,400 c. 10,722
b. 12,500 d. 12,887
44. How much would the alternative of selling unmodified machinery to the potential buyer contribute to Camay’s before tax profit?
a. 50,440 c. 49,920
b. 1,740 d. 49,400
45. Bonus Co. uses 10,000 units of a part in its production process. The costs to make a part are: direct material, P 12; direct labor, P 25; variable
overhead, P 13 and applied fixed overhead, P 30. Bonus Co. has received a quote of P 55 from a potential supplier for this part. If Bonus Co.
buys the part, 70% of the applied fixed overhead would continue. Bonus Co. would be better off by:
a. 50,000 to manufacture the part. c. 40,000 to buy the part.
b. 160,000 to manufacture the part. d. 150,000 to buy the part.
46. A selling division produces components for a buying division that is considering accepting a special order for the products it
produces. The selling division has excess capacity. The minimum price the selling division would be willing to accept is:
a. The selling division’s variable costs.
b. The buying division’s outside purchase price.
c. The price that would allow the buying division to cover its incremental cost of the special order.
d. The price that would allow the selling division to maintain its current ROI.
48. Which of the following statements about activity-based costing is not true?
a. Activity-based costing is useful for allocating marketing and distribution costs.
b. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures
only one product rather than multiple products.
c. Activity-based costing seeks to distinguish batch level product-sustaining and facility-sustaining costs, especially when they
are not proportionate to one another.
d. Activity-based costing differs from traditional costing systems in that products are not cross-subsidized.
49. Which of the following statements about a make or buy decision analysis is not correct?
a. Available resources should be used as efficiently as possible before outsourcing.
b. The analysis should involve available costs only.
c. If the total relevant cost of production is less than the cost to buy the item, it should be produced in house.
d. The decision depends on whether the company is operating at or below the normal capacity.
Jonas received an invitation from Ompong Corporation to submit a bid for a made to order item. Jonas used the pricing formula to compute the bid
price. The company’s cost accountant estimated that Ompong’s order would use half of the idle capacity and that prime costs to be incurred for the
order are as follows:
Materials 1,500
Labor 10,000
The capacity utilization and the relationships shown in the operating results last year, as well as those in the pricing formula are expected to
continue during the next period.
50. What was the bid price submitted by Jonas to Ompong?
a. 21,875 c. 19,688
b. 24,062 d. 24,306
51. Assume that upon receipt of Jonas’ proposal (the bid price in item 52), Ompong made a counter-offer that is 10% lower than the bid
price. Should Jonas accept the order of such lower price?
a. Yes, net income will increase by 2,625.
b. Yes, net income will increase by 3,112.50.
c. No, overall net income will decrease by 2,431.
d. No, net income will decrease by 1,458.60.
52. What is the lowest price Jonas can quote on the Ompong’s order without reducing its net income after taxes?
a. 14,500 c. 24,167
b. 16,111 d. 26,852
The accountant’s study revealed that included in the total expenses is P 18,000,000 of corporate overhead allocated to the townhouses based on
rental income. The company will continue to incur this corporate overhead regardless of whether any of the townhouses is sold.
54. If the appropriate townhouses were sold, the company’s total income would increase (decrease) by:
a. (4,301.80) c. 4,500
b. 4,301.80 d. 11,355
55. In data processing, coding assigns a unique identification number or key to each data record. Which of the following statements is
(are) true about coding?
1. A primary key, such as a customer number in an accounts receivable file, is the main code used to store and locate records within a file.
2. Codes, other than the primary keys, can be used to sort records and create temporary files.
3. Secondary keys are used to sort records based on an attribute other than the primary key, such as the current balance or credit limit for
an accounts receivable file.
a. All the statements are true. c. Only one statement is true.
b. Only two statements are true. d. None of the statements is true.
56. The financial accounting database has several critical relationships that must be properly maintained if the system is to function in an
orderly manner. Which of the following statements about the financial accounting database is false?
a. Transaction records include cross-references among general ledger files, subsidiary account numbers, and source
document numbers.
b. Cash disbursement journals are complete records of each transaction that reduces cash.
c. The general ledger is a master file in which a record is maintained for each and every account in the organization’s
accounting system.
d. Subsidiary ledgers are master files containing accounting records by specific account categories.
57. Separation of duties is a general control that is vital in a computerized environment. In the organization of the information systems
function, the most important separation of duties is that:
a. Programmers should not have access to data processing operations.
b. The data librarian should not be allowed to assist in data processing operations.
c. The company should have different programming personnel for different types of programs.
d. Programmers should not be allowed to design, write, test, and document specific programs required by the system
developed by the systems analysts.
FIRST PRE-BOARD EXAMINATION page 09
59. Using the variable cost as determined in the preceding item, the total fixed operating costs per month are:
a. 240,000 c. 290,000
b. 270,000 d. 300,000
60. 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. 310,000 c. 340,875
b. 315,500 d. 375,500
61. For the past 12 years, the JLO Company has produced the small electronic motors that fit into its main product line of dental drilling equipment.
As materials costs have steadily increased, the controller of the JLO Company is reviewing the decision to continue to make the small motors and
has identified the following facts:
(1) The equipment which is used to manufacture the electric motors has a book value of P 1,500,000.
(2) The space being occupied now by the electric motor manufacturing department could be used to eliminate the need for storage space which is
presently being rented.
(3) Comparable units can be purchased from an outside supplier for P 597.50
(4) Four of the people who work in the electric motor manufacturing department would be terminated and given eight weeks of separation pay.
(5) A P 750,000 unsecured note is still outstanding on the equipment that is being used in the manufacturing process.
Which of the items above are relevant to the decision that the controller has to make?
a. 1, 2, 4 and 5 c. 1, 3, 4 and 5
b. 1, 3 and 4 d. 2, 3 and 4
62. Dar Co. is considering disposing an equipment that costs P 50,000 and has P 40,000 of accumulated depreciation to date. Dar can sell the
equipment through a broker for P 25,000 less 5% commission. Alternatively, Mint Co. has offered to lease the equipment for five years for a total of
P 48,750. Dar will incur repair, insurance and property tax expense estimated at P 10,000. At lease-end, the equipment is expected to have no
residual value. The net differential income from the lease alternative is:
a. 15,000 c. 25,000
b. 5,000 d. 12,500
Marcus has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several military bases. The bid
must be started at full cost per unit plus a return on full cost of no more than 9 percent after income taxes. Full cost has been defined as including
all variable costs of manufacturing the product, a reasonable amount of fixed overhead, and reasonable incremental administrative costs associated
with the manufacture and sale of the product. The contractor has indicated that bids in excess of P 25 per blankets are not likely to be considered.
In order to prepare the bid for the 800,000 blankets, Andoy Lighter , cost accountant, has gathered the following information about the cost
associated with the production of the blankets.
Direct material 1.50 per pound of fibers
Direct labor 7.00 per hour
Direct machine costs* 10.00 per blanket
Variable overhead 3.00 per direct labor hour
Fixed overhead 8.00 per direct labor hour
Incremental administrative costs 2,500 per 1,000 blankets
Special fee** .50 per blanket
Material usage 6 pounds per blanket
Production rate 4 blankets per DLH
Effective tax rate 40%
63. The minimum price per blanket that Marcus could bid without reducing the company’s net income is:
a. 24.00 c. 50.25
b. 21.50 d. 40.25
64. Using the full cost criteria and the maximum allowable return specified, Marcus’ bid price per blanket would be:
a. 24.00 c. 26.00
b. 29.90 d. 27.90
End of each month:Leather bags - 40% of the following month’s budgeted sales
Zipper - 60% of the following month’s production requirement
65. What is the budgeted production of leather bags for the first quarter?
a. 3,760 c. 4,400
b. 3,040 d. 3,400
66. What is the budgeted purchases of zipper for February?
a. 2,844 c. 4,356
b. 1,956 d. 3,600
67. What is the total budgeted zipper and labor costs for the month of March?
a. 55,080 c. 122,472
b. 29,160 d. 119,880
68. Assume that on the average, a full-time factory worker works 188 hours per month and no overtime is allowed, how many full time equivalent
factory workers are needed to produce the budgeted output of leather bags in January?
a. 5 c. 100.00
b. 25 d. 23.94
70. The projected balance in accounts payable on December 31, 2008 is:
a. 161,280 c. 416,000
b. 166,400 d. 201,600
71. The projected gross profit for the month ending December 31, 2008 is:
a. 416,000 c. 536,000
b. 104,000 d. 0
78. How much would it cost Verba to produce the tubes per box?
a. 60 c. 90
b. 85 d. 120
79. How much cost would Verba incur by making 125,000 boxes, assuming that additional equipment, at an annual rental of P 1,000,000, must be
acquired to produce this volume?
a. 10,625,000 c. 11,250,000
b. 11,625,000 d. 12,500,000
80. Referring to the previous question, what is the impact on its profit if Verba were to buy 125,000 boxes?
a. Increase profit by P 1,000,000 c. Increase profit by P 375,000
b. Increase profit by P 1,250,000 d. Decrease profit by P 625,000
. - end of examination -