MAS.

01 Overview of Management Advisory Services

Question 1
 A company has a bottleneck operation that slows production. Which of the following tools or
approaches could the firm use to determine the most cost-effective ways to eliminate this
problem?
Response: Theory of constraints
Correct answer: Theory of constraints
Score: 1 out of 1 Yes

Question 2
 Samantha Galloway is a managerial accountant in the accounting department of Mustang
Industries, Inc. Samantha has just discovered evidence that some of the corporation's marketing
managers have been wrongfully inflating their expense reports in order to obtain higher
reimbursements from the firm. According to the Institute of Management Accountants' Standards
of Ethical Conduct, what should Samantha do upon discovering this evidence?
Response: notify the controller
Correct answer: notify the controller
Score: 1 out of 1 Yes

Question 3
 The reports are generally delayed and historical.
Response: Financial Accounting
Correct answer: Financial Accounting
Score: 1 out of 1 Yes

Question 4
 Contribution approach income statement.
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 5
 The objectives of JIT include all of the following except
Response: Zero preventive maintenance
Correct answer: Zero preventive maintenance
Score: 1 out of 1 Yes
Question 6
 A conventional manufacturer is more likely than a just-in-time manufacturer to
Response: hold large inventories to serve as buffers
Correct answer: hold large inventories to serve as buffers
Score: 1 out of 1 Yes

Question 7
 Which of the following managerial functions involves a detailed financial and operational
description of anticipated operations?
Response: Planning
Correct answer: Planning
Score: 1 out of 1 Yes

Question 8
 The unit of measurement used in management accounting is
Response: any measurement unit that is useful in a particular situation
Correct answer: any measurement unit that is useful in a particular situation
Score: 1 out of 1 Yes

Question 9
 Benchmarking allows managers to
Response: compare certain internal processes, services and activities to those of other companies
in order to identify strengths and weaknesses
Correct answer: compare certain internal processes, services and activities to those of other
companies in order to identify strengths and weaknesses
Score: 1 out of 1 Yes

Question 10
 Assists in measuring the performance of managers and subunits.
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 11
 Reliance on the criterion of usefulness rather than formal guidelines or restrictions for gathering
and reporting information.
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 12
 The audience tends to be stockholders, creditors, and tax authorities.
Response: Financial Accounting
Correct answer: Financial Accounting
Score: 1 out of 1 Yes

Question 13
 After careful planning, Jammu Manufacturing Corporation has decided to switch to a just-in-
time inventory system. At the beginning of this switch, Jammu has 30 units of product in
inventory. Jammu has 2,000 labor hours available in the first month of this switch. These hours
could produce 500 units of product. Customer demand for this first month is 400 units. If just-in-
time principles are correctly followed, how many units should Jammu plan to produce in the first
month of the switch?
Response: 370
Correct answer: 370
Score: 1 out of 1 Yes

Question 14
 The scope tends to be highly aggregated.
Response: Financial Accounting
Correct answer: Financial Accounting
Score: 1 out of 1 Yes

Question 15
 A just-in-time manufacturer is more likely than a conventional manufacturer to
Response: receive more frequent deliveries of materials
Correct answer: receive more frequent deliveries of materials
Score: 1 out of 1 Yes

Question 16
 Focuses on estimating future revenues, costs, and other measures to forecast activities and their
results
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 17
 A managerial accountant who prepares clear reports and recommendations after analyzing
relevant facts is exercising which of the following standards?
Response: Competence
Correct answer: Competence
Score: 1 out of 1 Yes

Question 18
 Assisting in directing and controlling operations.
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 19
 It provides reasonable and timely estimates.
Response: Managerial Accounting
Correct answer: Managerial Accounting
Score: 1 out of 1 Yes

Question 20
 The report is verifiable and reliable.
Response: Financial Accounting
Correct answer: Financial Accounting
Score: 1 out of 1

MAS.02 Costs Behavior, Determination and Prediction

Question 1
 Norman Company pays a sales commission of 5% on each unit sold. If a graph is prepared, with
the vertical axis representing per-unit cost and the horizontal axis representing units sold, how
would a line that depicts sales commissions be drawn?
Response: As a horizontal line
Correct answer: As a horizontal line
Score: 1 out of 1 Yes
Question 2
 Stella, Inc. must perform maintenance on its production machinery after every 10,000 units
produced. Production varies between 12,000 and 30,000 units a year. The cost of this
maintenance would be classified as a
Response: step cost
Correct answer: step cost
Score: 1 out of 1 Yes

Question 3
 When a mixed cost is graphed the slope of the line equals
Response: the variable cost per unit of the activity driver
Correct answer: the variable cost per unit of the activity driver
Score: 1 out of 1 Yes

Question 4
 The management of Casablanca Manufacturing Corporation believes that machine-hours is an
appropriate measure of activity for overhead cost Shown below are machine-hours and total
overhead costs for the past six months:
Machine- Overhead
Hours Cost
Jan 150,000 P339,000
Feb 140,000 P328,000
Mar 160,000 P350,000
Apr 130,000 P319,500
May 170,000 P362,500
Jun 200,000 P400,000

Assume that the relevant range includes all of the activity levels mentioned in this problem.
What is Casablanca's dependent variable? The
Response: total overhead cost
Correct answer: total overhead cost
Score: 1 out of 1 Yes

Question 5
 Variable costs within the relevant range
Response: all of the responses are correct
Correct answer: all of the responses are correct
Score: 1 out of 1 Yes
Question 6
 The management of Casablanca Manufacturing Corporation believes that machine-hours is an
appropriate measure of activity for overhead cost Shown below are machine-hours and total
overhead costs for the past six months:
Machine- Overhead
Hours Cost
Jan 150,000 P339,000
Feb 140,000 P328,000
Mar 160,000 P350,000
Apr 130,000 P319,500
May 170,000 P362,500
Jun 200,000 P400,000

Assume that the relevant range includes all of the activity levels mentioned in this problem.
What is Casablanca's independent variable?
Response: the machine hours
Correct answer: the machine hours
Score: 1 out of 1 Yes

Question 7
 The method of least squares
Response: uses the results of regression analysis to construct a cost formula
Correct answer: uses the results of regression analysis to construct a cost formula
Score: 1 out of 1 Yes

Question 8
 The management of Casablanca Manufacturing Corporation believes that machine-hours is an
appropriate measure of activity for overhead cost Shown below are machine-hours and total
overhead costs for the past six months:
Machine- Overhead
Hours Cost
Jan 150,000 P339,000
Feb 140,000 P328,000
Mar 160,000 P350,000
Apr 130,000 P319,500
May 170,000 P362,500
Jun 200,000 P400,000

Assume that the relevant range includes all of the activity levels mentioned in this problem.
If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total
overhead cost be using the high-low method?
Response: P382,750
Correct answer: P382,750
Score: 1 out of 1 Yes

Question 9
 The following data pertains to activity and costs for two months:
June July
Activity level in units 10,000 20,000
Variable costs P20,000 P?
Fixed costs 15,000 ?
Mixed costs 10,000 ?
Total costs P45,000 P70,000
Assuming that these activity levels are within the relevant range, the mixed costs for July were:
Response: P15,000
Correct answer: P15,000
Score: 1 out of 1 Yes

Question 10
 If sales revenue doubles, fixed costs will
Response: decrease on a per unit basis
Correct answer: decrease on a per unit basis
Score: 1 out of 1 Yes

Question 11
 At an activity level of 10,000 units, variable costs totaled P35,000 and fixed costs totaled
P20,800. If 16,000 units are produced and this activity is within the relevant range, then:
Response: total unit cost would equal P4.80
Correct answer: total unit cost would equal P4.80
Score: 1 out of 1 Yes

Question 12
 A mixed cost function has a constant component of P20,000. If the total cost is P60,000 and the
independent variable has the value 200, what is the value of the slope coefficient?
Response: P200
Correct answer: P200
Score: 1 out of 1 Yes

Question 13
 In preparing the annual profit plan for the coming year, Wilkens Company wants to determine
the cost behavior pattern of the maintenance costs. Wilkens has decided to use linear regression
by employing the equation y =a + bx for maintenance costs. Based on the prior year's data
regarding maintenance hours and costs, the result of the regression analysis are given below.
Average cost per hour P9.00
A 684.65
B 7.2884
Standard error of a 49.515
Standard error of b .12126
Standard error of the estimate 34.469
R2 .99724
Based upon the data derived from the regression analysis, 420 maintenance hours in a month
would mean the maintenance costs (rounded to the nearest peso) would be budgeted at
Response: P3,746
Correct answer: P3,746
Score: 1 out of 1 Yes

Question 14
 The following production and average cost data per unit for two levels of monthly production
volume have been supplied by a company that produces a single product:
Production volume 2,000 units 4,000 units
Direct materials P88.40 P88.40
Direct labor P20.60 P20.60
Manufacturing OH P86.90 P55.30
The best estimate of the total monthly fixed manufacturing cost is:
Response: P126,400
Correct answer: P126,400
Score: 1 out of 1 Yes

Question 15
 A fixed cost within the relevant range
Response: does not change in total as output changes
Correct answer: does not change in total as output changes
Score: 1 out of 1 

MAS.03 Costs Volume Profit (CVP) Analysis

Question 1
 Love Corp. is operationally, a highly leveraged company, that is, it has high fixed costs and low
variable costs. As such, small changes in sales volume result in
Response: Large changes in net income
Correct answer: Large changes in net income
Score: 1 out of 1 Yes

Question 2
 Sta. Ana Appliance Company presents its budgeted data for the year. It is estimated that the
company will sell 240 refrigerators during the year. The estimated costs of these sales are as
follows:
Amount Per Unit
Direct labor P40,800 P 170
Materials 240,000 1,000
Fixed overhead 98,400 410
Administrative Expenses 100,800 420
P480,000 P2,000
Selling expenses are expected to be 20% of sales. Profit before tax is to amount to P500 per unit.
The company’s break-even point in units assuming that overhead and administrative expenses
are fixed but that other expenses are fully variable is equal to
Response: 150 units
Correct answer: 150 units
Score: 1 out of 1 Yes

Question 3
 Consider the equation X = Sales - [(CM/Sales) x (Sales)]. What is X?
Response: Variable costs
Correct answer: Variable costs
Score: 1 out of 1 Yes

Question 4
 Regal, Inc. sells product Rainbow for P5 per unit. The fixed costs are P210,000 and the variable
costs are 60% of the selling price. What would be the amount of sales if Regal is to realize a
profit of 10% of sales?
Response: P700,000
Correct answer: P700,000
Score: 1 out of 1 Yes

Question 5
 8. Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and
cost structure follow:
Selling price per unit P35
Manufacturing cost P4,000 per month plus P17 per unit
Administrative expense P2,500 per month plus P2.50 per unit
Sales commissions 15% of sales
Advertising expense P2,000 per month
If Buffo plans to produce sell 3,000 units next month, the expected contribution margin would
be:
Response: P30,750
Correct answer: P30,750
Score: 1 out of 1 Yes

Question 6
 The following information is taken from Wampler Co.'s contribution income statement:
Sales - P200,000
Contribution margin - P120,000
Fixed costs - P90,000
Income taxes - P12,000
What was Wampler's margin of safety?
Response: P50,000
Correct answer: P50,000
Score: 1 out of 1 Yes

Question 7
 Tropical Stuff Toys manufactures and sells dolls. The following information relates to the
operating results for the last quarter:
Stuff toys sold 19,375
Break-even point in number of toys 15,500
Break-even point in peso sales P65,875
Total fixed costs P47,275
What was Tropical Stuff Toys variable cost per doll?
Response: P1.20
Correct answer: P1.20
Score: 1 out of 1 Yes

Question 8
 If the sales mix shifts toward higher contribution margin products, the break-even point
Response: decreases
Correct answer: decreases
Score: 1 out of 1 Yes

Question 9
11. Phil. Frames Inc. has the following revenue and cost budgets for the two products it sells
 Plastic Glass
Frames Frames

Sales price P50.00 P75.00

Direct materials (10.00) (15.00)

Direct labor (15.00) (25.00)

Fixed overhead (15.00) (20.00)

Net income per unit P10.00 P15.00

Budgeted unit sales 100,000 300,000

 
The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is
budgeted at P4,875,000. Assume that the company plans to maintain the proportional mix. In
numerical calculations, the company rounds to the nearest centavo and unit. The total number of
units the company needs to produce and sell to breakeven is
Response: 150,000 units
Correct answer: 150,000 units
Score: 1 out of 1 Yes

Question 10
 Which of the following equation(s) is(are) true?
Response: All of the equations are true
Correct answer: All of the equations are true
Score: 1 out of 1 Yes

Question 11
 Dandy Corporation manufactures skateboards and is in the process of preparing next year's
budget. The pro-forma income statement for the current year is presented below.
Sales P1,500,000
Cost of sales
Direct materials P250,000
Direct labor 150,000
Variable OH 75,000
Fixed OH 100,000 575,000
Gross profit 925,000
Selling and G&A
Variable 200,000
Fixed 250,000 450,000
Operating income P475,000
For the coming year, the management of Dandy Corporation anticipates a 10 percent increase in
sales, a 12% increase in variable costs, and a P45,000 increase in fixed expenses. The breakeven
point for next year is:
Response: P729,051
Correct answer: P729,051
Score: 1 out of 1 Yes

Question 12
The following data have been provided by a retailer that sells a single product.

This Year Last Year

Units sold 200,000 150,000

Sales revenue P1,000,000 P750,000

Less: cost of goods sold 700,000 525,000

Gross margin P300,000 225,000

Less: Operating expenses 222,000 210,000

Net Income P78,000 P15,000

 
What is the best estimate of the company's contribution margin for this year?
Response: P252,000
Correct answer: P252,000
Score: 1 out of 1 Yes

Question 13
 Last year, Black Company had sales of P640,000, a contribution margin of P160,000, and a net
loss of P40,000. Based on this information, the break-even point was
Response: P800,000
Correct answer: P800,000
Score: 1 out of 1 Yes
Question 14
 If the profit margin before tax is 8%, contribution margin of 20%, and a margin of safety of
P80,000. What is Cott's fixed cost?
Response: P24,000
Correct answer: P24,000
Score: 1 out of 1 Yes

Question 15
 Which of the following actions is most likely to mitigate the risk of loss due to high operating
leverage?
Response: Reducing the salary and increasing the commission rate paid to the sales staff
Correct answer: Reducing the salary and increasing the commission rate paid to the sales staff
Score: 1 out of 1

MAS.04 Standard Costing and Variance Analysis

Question 1
 The standard cost of one unit of product includes 2 hours of direct labor at P15.00 per hour. The
company's labor rate variance was P275, favorable. The efficiency variance was P105,
unfavorable. Three-hundred and eighty units were produced. What were the actual labor hours?
Response: 767
Correct answer: 767
Score: 1 out of 1 Yes

Question 2
Dickey Company had total underapplied overhead of P15,000. Additional data:

        Variable:

Applied based on standard DLH allowed    P42,000

Budged based on standard DLH 38,000

        Fixed:

Applied based on standard DLH allowed    30,000

Budgeted based on standard DLH     27,000

What is the actual total overhead?

Response: P87,000
Correct answer: P87,000
Score: 1 out of 1 Yes

Question 3
 A major advantage of using standard costs is that
Response: they provide information for control purposes
Correct answer: they provide information for control purposes
Score: 1 out of 1 Yes

Question 4
 An actual cost system differs from a normal cost system in that an actual cost system
Response: assigns overhead at the end of the manufacturing process
Correct answer: assigns overhead at the end of the manufacturing process
Score: 1 out of 1 Yes

Question 5
 The fixed factory O/H application rate is a function of a predetermined activity level. If standard
hours allowed for good output equal this predetermined activity level for a given period, the
volume variance will be
Response: zero
Correct answer: zero
Score: 1 out of 1 Yes

Question 6
Information on Barber Company’s direct labor costs for the month of January is as follows:

Actual direct labor hours 34,500

Standard direct labor hours 35,000

Total direct labor payroll P241,500

Direct labor efficiency variance – favorable P3,200

What is Barber’s direct labor rate variance?

Response: P20,700U
Correct answer: P20,700U
Score: 1 out of 1 Yes
Question 7
Information on Kennedy Company’s direct material costs is as follows:

Standard unit price P3.60

Actual quantity purchased 1,600

Standard quantity allowed for actual production 1,450

Materials purchase price variance – favorable P240

What was the actual purchase price per unit, rounded to the nearest centavos?

Response: P3.45
Correct answer: P3.45
Score: 1 out of 1 Yes

Question 8
 Standard cost
Response: can, if properly used, help motivate employees
Correct answer: can, if properly used, help motivate employees
Score: 1 out of 1 Yes

Question 9
For the month of August, M Company’s records disclosed the following data relating to direct labor:

Actual direct labor cost P10,000

Rate variance 1,000F

Efficiency variance  1,500U

Standard direct labor cost P9,500

For the month of August, M used 2,000 direct labor hours. The company’s standard direct labor rate
per hour is:

Response: P5.50
Correct answer: P5.50
Score: 1 out of 1 Yes

Question 10
Information on Overhead Company’s overhead costs is as follows:
 Standard applied overhead P80,000

Budgeted O/H based on standard DLH allowed  84,000

Budgeted O/H based on actual DLH 83,000

Actual overhead 86,000

What is the total overhead variance?

Response: P6,000 U
Correct answer: P6,000 U
Score: 1 out of 1 Yes

Question 11
 A standard costing system is most often used by a firm in conjunction with
Response: flexible budgets
Correct answer: flexible budgets
Score: 1 out of 1 Yes

Question 12
 Variances indicate
Response: that actual performance is not going according to plan
Correct answer: that actual performance is not going according to plan
Score: 1 out of 1 Yes

Question 13
 A company produces widgets with budgeted standard direct materials of 2 pounds per widget at
P5 per pound. Standard direct labor was budgeted at 0.5 hour per widget at P15 per hour. The
actual usage in the current year was 25,000 pounds and 3,000 hours to produce 10,000 widgets.
What was the direct labor usage variance?
Response: P30,000 F
Correct answer: P30,000 F
Score: 1 out of 1 Yes

Question 14
 Which department is typically responsible for a materials price variance?
Response: Purchasing
Correct answer: Purchasing
Score: 1 out of 1 Yes

Question 15
 The total overhead variance is
Response: the difference between actual overhead costs and applied overhead
Correct answer: the difference between actual overhead costs and applied overhead
Score: 1 out of 1

MAS.05 Variable and Absorption Costing

Question 1
Helton Company has the following information for the current year:

Beginning fixed manufacturing overhead in inventory P95,000

Fixed manufacturing overhead in production P375,000

Ending fixed manufacturing overhead in inventory 25,000

Beginning variable manufacturing overhead in inventory P10,000

Variable manufacturing overhead in production 50,000

Ending variable manufacturing overhead in inventory 15,000

What is the difference between operating incomes under absorption costing and variable costing?

Response: P70,000
Correct answer: P70,000
Score: 1 out of 1 Yes

Question 2
The following information was extracted from the first year of absorption-based accounting records of
Soconfused Co.

Total fixed costs incurred P100,000

Total variable costs incurred 50,000

Total period costs incurred    70,000

Total variable period costs incurred 30,000

Units produced 20,000

 Units sold 12,000

Unit sales Price P12

Based on variable costing, if Soconfused had sold 12,001 units instead of 12,000, its income before
taxes would have been

Response: P8.50 higher
Correct answer: P8.50 higher
Score: 1 out of 1 Yes

Question 3
The following information was extracted from the first year of absorption-based accounting records of
Soconfused Co.

Total fixed costs incurred P100,000

Total variable costs incurred 50,000

Total period costs incurred    70,000

Total variable period costs incurred 30,000

Units produced 20,000

Units sold 12,000

Unit sales Price P12

If Soconfused Co. had used variable costing in its first year of operations, how much income (loss)
before taxes would they have reported?

Response: P2,000
Correct answer: P2,000
Score: 1 out of 1 Yes

Question 4
The following information was extracted from the first year of absorption-based accounting records of
Soconfused Co.

Total fixed costs incurred P100,000

Total variable costs incurred 50,000

 Total period costs incurred    70,000

Total variable period costs incurred 30,000

Units produced 20,000

Units sold 12,000

Unit sales Price P12

What is Cost of Goods Sold for Soconfused Co.’s first year?

Response: P48,000
Correct answer: P48,000
Score: 1 out of 1 Yes

Question 5
 Under variable costing
Response: inventory costs will be lower than under absorption costing
Correct answer: inventory costs will be lower than under absorption costing
Score: 1 out of 1 Yes

Question 6
 Which of the following cost(s) are inventoried when using variable costing?
Response: direct manufacturing costs
Correct answer: direct manufacturing costs
Score: 1 out of 1 Yes

Question 7
A manufacturing company that produces a single product has provided the following data concerning
its most recent month of operations:

Selling price P103

Units in beginning inventory 0

Units produced 1,700

 Units sold 1,400

Units in ending inventory 300

Variable costs per unit:  

Direct materials P39

Direct labor P32

Variable manufacturing overhead P6

Variable selling and administrative P5

Fixed costs:  

Fixed manufacturing overhead P6,800

Fixed selling and administrative P8,400

What is the net operating income for the month under absorption costing?

Response: P15,400
Correct answer: P15,400
Score: 1 out of 1 Yes

Question 8
 The gross-margin format of the income statement
Response: distinguishes between manufacturing and nonmanufacturing costs
Correct answer: distinguishes between manufacturing and nonmanufacturing costs
Score: 1 out of 1 Yes

Question 9
With a production of 200,000 units of Product A during the month of June, Martin Corporation has
incurred costs as follows:

  Variable Costs Fixed Costs

Direct materials P200,000  

Direct labor 135,000  

Manufacturing overhead 75,000 P90,000

 Selling & general expenses 30,000 85,000

Under variable costing, the unit cost of Product A was

Response: P2.05
Correct answer: P2.05
Score: 1 out of 1 Yes

Question 10
During July, Roy Co. produced 10,000 units. Costs incurred by Roy during the month were as follows:

  Variable Costs Fixed Costs

Direct materials P10,000  

Direct labor 20,000  

Manufacturing overhead 5,000 P9,000

Selling & general expenses 3,000 4,000

Under absorption costing, any unsold units would be carried in the inventory account at a unit product
cost of:

Response: P4.40
Correct answer: P4.40
Score: 1 out of 1 Yes

Question 11
 Under absorption costing, fixed manufacturing overhead costs
Response: are deferred in inventory when production exceeds sales
Correct answer: are deferred in inventory when production exceeds sales
Score: 1 out of 1 Yes

Question 12
 What is the primary difference between variable and absorption costing?
Response: inclusion of fixed factory overhead in product costs
Correct answer: inclusion of fixed factory overhead in product costs
Score: 1 out of 1 Yes
Question 13
 In an income statement prepared using the variable costing method, fixed selling and
administrative expenses would
Response: be used in the computation of net operating income but not in the computation of the
contribution margin
Correct answer: be used in the computation of net operating income but not in the computation
of the contribution margin
Score: 1 out of 1 Yes

Question 14
A manufacturing company that produces a single product has provided the following data concerning
its most recent month of operations:

Selling price P85

Units in beginning inventory 0

Units produced 2,900

Units sold 2,700

Units in ending inventory 200

Variable costs per unit:  

Direct materials P22

Direct labor P13

Variable manufacturing overhead P3

Variable selling and administrative P5

Fixed costs:  

Fixed manufacturing overhead P46,400

Fixed selling and administrative P51,300

What is the net operating income for the month under variable costing?

Response: P15,700
Correct answer: P15,700
Score: 1 out of 1 Yes
Question 15
 Advocates of variable costing argue that
Response: fixed production costs should be charged to the period in which they are incurred
Correct answer: fixed production costs should be charged to the period in which they are
incurred
Score: 1 out of 1 

MAS.06 Short-term Budgeting, AFN and Forecasting

Question 1
 Which of the following budgets is based on many other master-budget components?
Response: Cash budget
Correct answer: Cash budget
Score: 1 out of 1 Yes

Question 2
Sta. Barbara is one of the manufacturers of a part used in the production of a popular consumer
product.  Sales of the consumer product in 2021 are estimated at 5,000,000 units.    Sta. Barbara
regularly supplies 40% of the parts used in the new products.  Two parts units are needed for each
product unit.  Aside from the new products, there is also a replacement parts market.  Over the past
three years, the company has sold the following number of replacement parts:

2018 300,000

2019 330,000

2020 363,000

This trend is expected to continue.  The parts are sold for P4 per piece in the new products market
and P4.50 in the replacement parts market. 

The estimated number of parts to be sold by Sta. Barbara in 2021 is

Response: 4,399,300
Correct answer: 4,399,300
Score: 1 out of 1 Yes

Question 3
The following selected data pertain to Plaka Corporation:

Cash operating expenses P180,000

Depreciation 60,000
 Merchandise purchases in July 560,000

Estimated payments in July for purchases:  

  In June 220,000

  Prior to June 50,000

  In July 40%

July's cash disbursements are expected to be

Response: P674,000
Correct answer: P674,000
Score: 1 out of 1 Yes

Question 4
 Wilson Corporation is budgeting its equipment needs on an on-going basis, with a new quarter
being added to the budget as the current quarter is completed. This type of budget is most
commonly known as a
Response: rolling budget
Correct answer: rolling budget
Score: 1 out of 1 Yes

Question 5
Given the following weekly demand and weights, what is the forecast for the 4 th period of or week 4
using the weighted moving average?

Week Demand

1 650

2 678

3 720

4  

Use the following weights:

T – 1                   0.5

T – 2                   0.3

T – 3                   0.2

Response: 693.4
Correct answer: 693.4
Score: 1 out of 1 Yes

Question 6
 Vern's makes all sales on account, subject to the following collection pattern: 20% are collected
in the month of sale; 70% are collected in the first month after sale; and 10% are collected in the
second month after sale. If sales for October, November, and December were P70,000, P60,000,
and P50,000, respectively, what was the budgeted receivables balance on December 31?
Response: P46,000
Correct answer: P46,000
Score: 1 out of 1 Yes

Question 7
 Chronologically, the last part of the master budget to be prepared would be the
Response: pro forma financial statements
Correct answer: pro forma financial statements
Score: 1 out of 1 Yes

Question 8
Sta. Barbara is one of the manufacturers of a part used in the production of a popular consumer
product.  Sales of the consumer product in 2021 are estimated at 5,000,000 units.    Sta. Barbara
regularly supplies 40% of the parts used in the new products.  Two parts units are needed for each
product unit.  Aside from the new products, there is also a replacement parts market.  Over the past
three years, the company has sold the following number of replacement parts:

2018 300,000

2019 330,000

2020 363,000

This trend is expected to continue.  The parts are sold for P4 per piece in the new products market
and P4.50 in the replacement parts market.

The amount of expected revenue based on the estimated number of parts to be sold in 2021 is

Response: P17,796,850
Correct answer: P17,796,850
Score: 1 out of 1 Yes

Question 9
 Brooklyn makes all purchases on account, subject to the following payment pattern; 30% is paid
in the month of purchase, 65% is paid in the first month following purchase and 5% is paid in the
second month following purchase. If purchases for April, May, and June were P200,000,
P160,000, and P250,000, respectively, what was the firm's budgeted payables balance on June
30?
Response: P183,000
Correct answer: P183,000
Score: 1 out of 1 Yes

Question 10
 Swanson plans to sell 10,000 units of a particular product during July and expects sales to
increase at the rate of 10% per month during the remainder of the year. The June 30 and
September 30 ending inventories are anticipated to be 1,100 units and 950 units, respectively. On
the basis of this information, how many units should Swanson purchase for the quarter ended
September 30?
Response: 32,950
Correct answer: 32,950
Score: 1 out of 1 Yes

Question 11
 An enterprise has excess capacity in production-related property, plant, and equipment. If in a
given year these assets are being used to only 80% of capacity and the sales level in that year is 2
million, the full capacity sales level is
Response: 2,500,000
Correct answer: 2,500,000
Score: 1 out of 1 Yes

Question 12
 Coleman, Inc., anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August,
and September, respectively. Company policy is to maintain an ending finished-goods inventory
equal to 40% of the following month's sales. On the basis of this information, how many units
would the company plan to produce in August?
Response: 49,200
Correct answer: 49,200
Score: 1 out of 1 Yes

Question 13
 When preparing the series of annual operating budgets, management usually starts the process
with the
Response: sales budget
Correct answer: sales budget
Score: 1 out of 1 Yes

Question 14
Jackson Co. has the following balance sheet as of December 31, 2020.

Current assets P600,000

Fixed assets     400,000

Total assets       P1,000,000

   

Accounts payable          P100,000

Accrued liabilities           100,000

Notes payable 100,000

Long-term debt 300,000

Total common equity     400,000

Total liabilities and equity P1,000,000

In 2020, the company reported sales of P5 million, net income of P100,000, and dividends of P60,000. 
The company anticipates its sales will increase 20 percent in 2021 and its dividend payout will remain at 60
percent.  Assume the company is at full capacity, so its assets and spontaneous liabilities will increase
proportionately with an increase in sales. Assume the company uses the AFN formula and all additional
funds needed (AFN) will come from issuing new long-term debt.  Given its forecast, how much long-term
debt will the company have to issue in 2021?

Response: P112,000
Correct answer: P112,000
Score: 1 out of 1 Yes

Question 15
 Quattro makes all sales on account, subject to the following collection pattern: 30% are
collected in the month of sale; 60% are collected in the first month after sale; and 10% are
collected in the second month after sale. If sales for April, May, and June were P60,000,
P80,000, and P70,000, respectively, what were the firm's budgeted collections for June?
Response: P75,000
Correct answer: P75,000
Score: 1 out of 1