MAS

Question 1

Analysts use horizontal and vertical analysis to better comprehend a company’s financial statements. Which of the following is an example of a vertical, common-size analysis?

Answer 1

Commission expense in 2023 is 8% of sales.

Question 2

It indicates that the input’s actual price (AP) was less than the standard price (SP) per unit.

Answer 2

Favorable price variance

Question 3

Penthouse Corp. has the following information in its first year of operations in 201A:
Units produced
20,000
Units sold
19,000

Selling price per unit
P150
Direct material costs
20
Direct labor
15
Variable manufacturing overhead
50
Variable selling costs
20

Fixed manufacturing costs
P460,000
Fixed administrative costs
300,000

Using variable costing, compute for the net income.

Answer 3

P95,000

Question 4

In national income terms, which of the following pertains to aggregate demand?

Answer 4

Total expenditures on consumer goods and investment, including government and foreign expenditures, during a given period

Question 5

The market price of a commodity is beyond the control of individual buyers and sellers in a perfect competition. Which of the following explains the given statement?

Answer 5

Many firms are selling homogenous products.

Question 6

Pag-asa Corp. plans to borrow P1,000,000 funds from Unlad Inc. The risk-free rate imposed on the loan is 6%. Unlad’s debt margin is ½ of the imposed risk-free rate. How much interest rate should Unlad Inc. impose on Pag-asa Corp.?

Answer 6

9%

Question 7

Veluz Company acquired a machine with a seven (7) year projected useful life and no salvage value. In each of the seven (7) years, the machine is estimated to generate P90,000 in cash flows from operations net of income taxes. Veluz’s expected rate of return is 12%. Information on present value factors is as follows:
Present value of P1 at 12% for 7 periods: 0.452
Present value of an ordinary annuity of P1 at 12% for 7 periods: 4.564

Assuming a positive net present value of P22,691, what is the cost of the machine?

Answer 7

P388,069

Question 8

A project costing P260,000 will produce the following annual cash benefits and salvage value:

Old Equipment
New Equipment
Revenue
P199,841
P260,000
Cash operating costs
85,699
69,720
Annual depreciation
40,000
50,000
Income tax, 46%

What is the incremental annual cash income after taxes?

Answer 8

P45,714

Question 9

Sparks Plug Corporation budgets factory overhead costs of P600,000 for the coming year. The following data are available: budgeted annual overhead for planned production – P600,000; budgeted annual direct labor hours – 60,000; and actual direct labor hours applied to the job – 600 hours. Compute for the predetermined overhead rate.

Answer 9

P10 per direct labor hour

Question 10

A bottle of white vinegar is sold at a price of P250 with a variable cost of P50 per bottle. The fixed expense of the business is P20,000 per year. Compute for the required sales to earn a profit of P50,000 in annual terms.

Answer 10

P87,500

Question 11

Jason Cruz issued a 72-day Treasury bill with P8,000 par value and an annual interest rate of 6%. What is the price of the said investment?

Answer 11

P7,905.14

Question 12

Queens Corp. data is shown in the table below. The distinction between average and ending inventories is insignificant. Current assets are comprised mainly of cash, receivables, and inventories.
Current ratio
3.0
Quick ratio
1.0
Current liabilities
P763,421
Inventory turnover (based on cost of sales)
8 times
Gross profit margin
35%

What were Queens Corp.’s net sales for the year?

Answer 12

P18,791,902

Question 13

The total fixed costs of Talisman Designs amount to P120,000. The total variable costs equal P20,000. For this month, they produced a total output of 1,000 pieces. What is the average fixed cost?

Answer 13

P120

Question 14

Which of the following does absorption costing do?

Answer 14

It includes fixed and variable manufacturing overhead as an inventoriable cost.

Question 15

Benjamin keeps its ending finished goods inventory at 65% of the next month’s budgeted sales and ending raw material inventories at 50% of the next month’s budgeted production needs. Three (3) pounds of materials are required for each product unit. The production budget is, in units: May, 1,000; June, 1,200; July, 1,300; and August, 1,600. What would be the raw material purchases in June?

Answer 15

3,750 pounds

Question 16

Adore Inc. is a monopoly company that wants to maximize revenue. Which strategy should they use to achieve this goal?

Answer 16

Produce more units at a higher price.

Question 17

Why do perfectly competitive firms refuse to charge a price lower than the market price?

Answer 17

It would mean lower revenue and profit.

Question 18

As a gadget enthusiast, Sophia knows that she can get a laptop at a lower price if she finds another business that has a better deal. Which type of pricing strategy is being described?

Answer 18

Price matching

Question 19

Women’s footwear is sold at a price of P200 per pair with a variable cost of P40 per unit. The fixed expense of the business is P60,000 per year. Compute for the profit for sales of 500 units.

Answer 19

P20,000

Question 20

Jolene desires to sell her shares from Jolly Been Foods Corporation. To do so, she finds a stockbroker, such as FB Capital Securities Inc., to sell her shares. In return, a commission will be paid to the broker. This is an example of:

Answer 20

Conventional Brokerage

Question 21

Women’s footwear is sold at a price of P200 per pair with a variable cost of P40 per unit. The fixed expense of the business is P60,000 per year. Compute for the break-even point in units and values.

Answer 21

375 units; P75,000

Question 22

Penthouse Corp. has the following information in its first year of operations in 201A:
Units produced
20,000
Units sold
19,000

Selling price per unit
P150
Direct material costs
20
Direct labor
15
Variable manufacturing overhead
50
Variable selling costs
20

Fixed manufacturing costs
P460,000
Fixed administrative costs
300,000

Using absorption costing, compute for the cost of goods sold (COGS).

Answer 22

P2,052,000

Question 23

Which of the following expresses the relationship between risk and return?

Answer 23

Direct relationship

Question 24

Which of the following pertains to the difference between Gross National Product (GNP) and Gross Domestic Product (GDP)?

Answer 24

GNP measures what is produced and earned by a nation’s people and property while GDP measures what is produced and earned in the domestic economy.

Question 25

The following ratios were computed from Guido Company’s financial statements for 202X: Return on asset 36% Asset turnover 1.6 times What was the company’s profit margin ratio?

Answer 25

22.5%

Question 26

Women’s footwear is sold at a price of P200 per pair with a variable cost of P40 per unit. The fixed expense of the business is P60,000 per year. Compute for the profit-volume (P/V) ratio (Contribution Margin Ratio).

Answer 26

80%

Question 27

The owner of a premium coffee shop desires to achieve a profit of P100,000 by selling 1,000 cups of coffee. The fixed cost involved in acquiring the coffee beans is P60,000, while the variable cost per cup is P100. Determine the price per cup of coffee.

Answer 27

P260

Question 28

In planning its 202X operations based on a sales forecast of P7,000,000, Villa Inc. prepared the following data: Cost and Expenses Variable Fixed Direct materials P1,600,000 Direct labor 1,400,000 Factory overhead 600,000 900,000 Selling expenses 240,000 360,000 Administrative expenses 60,000 140,000 P3,900,000 P1,400,000 What would be the amount of peso sales at the break-even point?

Answer 28

P3,160,984

Question 29

The American multinational investment bank and financial services holding company J.P. Morgan Chase & Co. expanded its business in the Philippines. Which type of Foreign Direct Investment (FDI) is demonstrated?

Answer 29

Horizontal

Question 30

Sparks Plug Corporation budgets factory overhead costs of P600,000 for the coming year. The following data are available: budgeted annual overhead for planned production – P600,000; budgeted annual direct labor hours – 60,000; and actual direct labor hours applied to the job – 600 hours. Compute for the overhead cost applied to the job.

Answer 30

P6,000 per direct labor hour

Question 31

Management accounting is considered successful when it:

Answer 31

Helps managers improve their decision

Question 32

Luz Corporation has 1,000 obsolete lanterns in stock, with a manufacturing cost of P20,000. If the lanterns cost P5,000 to rework, they might be sold for P9,000. The lanterns might be sold for P1,000 if they are discarded. What alternative is more desirable, and what are the total relevant costs of the alternative?

Answer 32

Rework with a total cost of P5,000

Question 33

Neo Company is considering a certain project with the following projected cash income after taxes for four (4) years, the life of the project: year 1, P11,000; year 2, P9,000; year 3, P8,000; year 4, P7,000. What is the payback period if the project requires an investment of P25,000 with a salvage value of P5,000?

Answer 33

2.625 years

Question 34

The following information is available for ATS Company. Based on this information, the management is considering eliminating product line C. They assumed that by operating only product lines A and B, they would have higher profits. It was also determined that if product line C is discontinued, 80% of the fixed overhead can be avoided, and 70% of the fixed selling and administrative expenses can also be avoided. Product A Product B Product C Sales P200,000 P600,000 P400,000 Cost of Goods Sold Direct Materials 50,000 150,000 160,000 Labor 40,000 80,000 100,000 Variable Overhead 20,000 40,000 30,000 Fixed Overhead 10,000 30,000 70,000 Total 120,000 300,000 360,000 Gross Profit 80,000 300,000 40,000 Selling and Administrative Variable 24,000 60,000 20,000 Fixed 16,000 80,000 60,000 Total 40,000 140,000 80,000 Net Income (Loss) P40,000 160,000 (40,000) Based on the above data, should product line C be continued or eliminated?

Answer 34

The net loss to continue product C is P40,000. If product C is eliminated, the net loss to be absorbed by the entire company will decrease to P32,000 or a net differential cost of P8,000. Therefore, it is better to eliminate the product line than to continue it.

Question 35

PMG Resort is contemplating closing its operations temporarily. Due to lockdowns brought by the COVID-19 pandemic, the expected demand of the club was reduced, which is expected to last for six (6) months. Assume the typical monthly operating revenues and costs of the company’s operations are as follows: Selling price per membership P800 Variable costs per membership 540 Contribution margin 260 Fixed costs per month P300,000 Fixed costs avoided if stop operations 140,000 Additional costs during the shutdown period for six (6) months 80,000 Estimated restarting costs 200,000 If it continues operating, the company will be forced to reduce the membership selling price by 12.50%. Determine the shutdown costs and shut down savings.

Answer 35

The shutdown costs are P1,240,000, while the savings is P560,000.

Question 36

JKJ Corp.’s actual data for 201A is given as follows: Units produced 50,000 Units Sold 48,000 Selling price per unit P400 Direct materials cost 60 Direct labor 40 Variable manufacturing overhead 120 Variable selling costs 40 Fixed manufacturing costs P1,200,000 Fixed Administrative costs 600,000 Compute for the selling and administrative costs under absorption costing.

Answer 36

P2,520,000

Question 37

PMG Resort is contemplating closing its operations temporarily. Due to lockdowns brought by the COVID-19 pandemic, the expected demand of the club was reduced, which is expected to last for six (6) months. Assume the typical monthly operating revenues and costs of the company’s operations are as follows: Selling price per membership P800 Variable costs per membership 540 Contribution margin 260 Fixed costs per month P300,000 Fixed costs avoided if stop operations 140,000 Additional costs during the shutdown period for six (6) months 80,000 Estimated restarting costs 200,000 If it continues operating, the company will be forced to reduce the membership selling price by 12.50%. Determine the shutdown point.

Answer 37

3,500 memberships

Question 38

Vivo Firm manufactures one (1) product. Its sales price is expected to be P200 per unit. Actual sales for November 201A are 1,550 units and 1,700 units for December 201A. Vivo budgets its sales for the next six (6) months for 201B: January – 3,375; February – 3,250; March – 3,440; April – 3,125. All sales are on account. The company collects its accounts as follows: 70% in the month of the sale, 20% in the month following the sale, and 10% in the second month following the sale. Uncollectible accounts are negligible and can be disregarded. The beginning inventory on January 1, 201B is 340 units. Vivo desires an ending inventory of 10% of the next month’s budgeted sales. Determine the sales budget for the first quarter of 201B.

Answer 38

P2,013,000

Question 39

Juan Dela Cruz is planning to invest in the money market. One alternative is to invest in a one (1)-year Treasury bill with a face value of P5,000 and an annual interest rate of 3%. Compute for the market price or market security value.

Answer 39

P4,854.37

Question 40

A 1-year treasury bill has a coupon rate of 2%, and a 2-year treasury note has a coupon rate of 3%. Based on the pure expectations theory, what is the 1-year interest rate anticipated at t+1 (2nd year)?

Answer 40

4.00980%

Question 41

Information on Digibytes 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 centavo?

Answer 41

P3.45

Question 42

What is the other term for short-term solvency?

Answer 42

Liquidity

Question 43

NTC Firm is currently manufacturing part X143, producing 160,000 units annually. The part is used in the production of several products made by the company. The cost per unit for X143 is as follows: Direct material – P36.00; Direct labor – P12.00; Variable manufacturing overhead – P10.00; Fixed manufacturing overhead – P16.00. Of the total fixed overhead assigned to X143, P352,000 is avoidable (the lease of production machinery and salary of a production line supervisor–neither of which will be needed if the line is dropped). The remaining fixed overhead is a common fixed overhead. An outside supplier has offered to sell the part to NTC for P64. There is no alternative use for the facilities currently used to produce the part. Should NTC Firm make or buy part X143?

Answer 43

It is better to make the parts because the cost to make is lower than the cost to buy the parts from a supplier. It results in a P608,000 net advantage.

Question 44

Geo Company, a merchandising firm, is preparing its master budget and has gathered the following data to help budget cash disbursements: Cost of goods sold P1,420,000 Desired decrease in inventories 70,000 Desired decrease in accounts payable 150,000 All account payables are for inventory purchases, and all inventories are purchased on account. What are the estimated cash disbursements for inventories for the budget period?

Answer 44

P1,500,000

Question 45

Ligo Corporation budgets factory overhead cost of P250,000 for the coming year. The following data are available: budgeted annual overhead for planned production – P250,000; budgeted annual direct labor hours – 25,000; and actual direct labor hours applied to the job – 200 hours. Compute for the predetermined overhead rate.

Answer 45

P10 per direct labor hour

Question 46

Shoefits, Inc. sells with terms 3/10, net 30 days. Net credit sales for the year are P3,600,000, and the average accounts receivable balance is P320,000. Assuming 360 days in a year, what is the average collection period?

Answer 46

32 days

Question 47

After several years of producing and selling at a capacity of 200,000 units, Met Corp. faced a year with projected sales and production of 152,000 units. A potential customer offered to purchase 28,000 units at a price of P72 each. The normal sales price is P120 each. The following data are available: Direct material – P36.00; Direct labor – P26.00; Variable manufacturing overhead – P8.00; Fixed manufacturing overhead – P15.00. Compute for the incremental income and decide whether Met Corp. should accept the order.

Answer 47

Given the excess capacity, Met Corp. should accept the offer because it results in a P56,000 increase in income.

Question 48

Kim de Leon wanted to invest some of his earnings. However, she is risk-averse, and she wanted Surety Bank to manage her future investments. What is the best collective investment scheme (CIS) Kim must take to meet her objective.

Answer 48

Unit Investment Trust Fund (UITF)

Question 49

The market value of Flores Company’s common stock (book value: P65 million) is projected to be P60 million. In contrast, the market value of its interest-bearing debt (book value: P35 million) is estimated to be P40 million. The average annual before-tax yield on these liabilities is 12%, while the income tax is 40%. The company is projected to pay a P10 dividend per share, while the stock currently trades at P100 per share. Dividend growth is expected to average at 2.5% each year. What is the weighted average cost of capital (WACC) of the company as a whole?

Answer 49

10.38%

Question 50

According to the capital asset pricing model (CAPM), the expected risk premium of a portfolio varies:

Answer 50

In direct proportion to beta in competitive environment