Mastery in Management Advisory Services

A. Theories
1. The primary purpose of management accounting is to provide information
a. To internal users
b. To external users
c. To both internal and external users
d. To management and government

2. Which of the following statement is not False

a. Financial accounting is a subset of cost accouting
b. Management accouting is a subset of cost accounitng
c. Cost accounting is a subset of both management and financial accounting
d. Management is a subset of both Cost and financial accounting

3. Which of the following is not included in the basic management process

a. Planning
b. Rationalizing
c. Controlling
d. Organizing

4. Controllers are usually Not concern with

a. Preparation of tax returns
b. Reporting to government
c. Protection of assets
d. Investor relations

5. Treasurer are usually not concerned with

a. Financial Reporting
b. Short-term financing
c. Cash Custody and banking
d. Credit extention and collection of Bad debts

6. Which of the following is not a characteristic of MAS

a. MAS is broad in scope
b. Beneficiary of service is management
c. MAS is repetitive as far as the same client is concerned
d. MAS involves problem-solving affecting future operation of the client

7. This engagement involves the review of compliance with regualtory requirement and
ethicaal conduct standards
a. Strategic risk management
b. Financial Risk Management
c. Operational and system risk Management
d. Compliance risk management

8. Which of the following is not common reason for hiring a management consultant?
a. To render an independent opinion
 b. To provide specialized skills and experience
c. To serve as a catalyst for needed changes in the workplace
d. To implement solutions and decide on business matters on behalf of the client

9. As a business consultant, the CPA practitioner should

a. Encouurage dependence of client on the consultant’s staff so as to pinpoint clear
responsibility in implementing systems
b. Exercise administrative control over the clients staff to avoid unnecessary delays in
implementation
c. Not take responsibility for makingdesicions and policy judgments in MAS
engagement
d. Conduct his engagement as if he is a member of the client’s organization

10. The following are not considered in determining the scope of services that a CPA may
perform
a. Independence
b. Competence
c. Requirement for specialization
d. Range of fees that the CPA will earn

11. Which is not a type of key economic indicators

a. Leading indicators
b. Contra indicators
c. Lagging indicators
d. Coincident indicators

12.Which of the following measures of unemployment would be of least importance to

management when trying to predict the future state of the economy
a. Structural unemployment
b. Cyclical unemployment
c. Frictional unemployment
d. Productivity rates

13. Whic of the following is the best definition of the consumer price index
a. It is a cost of living index
b. It is defined in absolute peso
c. It is a measure of the average change in prices
d. It compares intercity cost of living

14.The money supply in nations economy will decrease following

a. Open Market purchases by the nations’s central bank
b. A decrease in the discount rate
c. An increase in the reserve ratio
d. A decrease in the margin requirement

15.Exchange rates are determined by

a. Each industrial country’s goverrnment
 b. The international Monetary fund
c. Supply and demand in the foriegn currency market
d. Exporters and importers of manufatured goods

16.A supply curve illustrates the relationship between

a. Price and quantity supplied
b. Price and consumer tastes
c. Price and quantity demanded
d. Supply and demand

17. The equilibrium market price of a good is the

a. Price that maximizes profit for sellers
b. Price were shortages exceed surpluses
c. Price that buyers are willing and able to pay
d. Price where the quantity demanded equals quantity supplied

18. Which of the following market features is likely to cause a surplus of a particular
product
a. A monopoly
b. A price floor
c. A price ceiling
d. A perfect market

19. X and y are subsitute products, if the price of product x increase, what is the effect on
product y?
a. Price will increase
b. Quantity supplied will increase
c. Quantity demanded will increase
d. Price, quantity demanded and supplied will increase

20. Which of the following is not a characteristic of purely competitive market

a. Differentiated products
b. A very alrge numbe rof producing firms
c. No barriers to market entry for new Firms
d. Lack of control over product price by individual firms

21. Which of the following best describes management accounting informations?

a. It is reliable and verifiable
b. It is prepared for shareholders
c. It is prepared in accordance with GAAP
d. It provides reasonable and timely estimates

22. The primary purpose of JIT processing is to.

a. Elimminate or reduce inventories
b. Identify non-value added ativities
c. Identify relevant activity cost drivers
d. Accumulate overhead in activity cost pools
23.What is the common characteristic of total quality management?
a. Quality by final inspection
 b. Education and self-improvement
c. Management by Objectives
d. On the job training by other workers

24.Under Theory of constraints

a. No company has constraints
b. Improvement efforts shouldbe focused on non-constraints
c. Efforts that are designed to improve the rate of output of a workstation should
generally be focused on the constraint
d. A company that wants to improve its operations should focus its improvement
efforts on the workstation with the highest productive capacity.

25.The process of managing various activities in the value chain, along with the
associated costs is commonly known as
a. Activity based costing
b. Strategic cost management
c. Total quality management
d. Computer integrated costing

26.As volume increase, averag cost per unit

a. Increase
b. Decrease
c. Remains constant
d. Increases or remains constant but never decreases

27. The slope of the cost line does not in any way affect
a. Fixed cost
b. Margin of safety
c. Break even peso sales
d. Degree of operating leverage

28. Under variable costing income statement, the difference between the “contribution
margin” and “income before income tax” is equal to the
a. Total fixed cost
b. Total variable cost
c. Total operating expenses
d. Fixed selling and admiistrative expenses

29. In a make or buy desicion analysis, the cost to buy is compared with the
a. Cost to purchase
b. Total cost to make
c. Relevant cost to make
d. Variable manufaturing cost

30.Comparing actual results with a budget based on achieve volume is possible wiht the
use of a
a. Monthly budget
 b. Master budget
c. Rolling budget
d. Flexible budget

31. Individual budget schedules are prepared to develop an annual comprehensive

ormaster budget. The budget schedule that woul provide the necessary input data for
the direct labor budget would be the
A. Sales forecast
B. Raw materials purchases budget
C. Schedule of cash receipts and disbursement
D. Production budget

32. In deciding how, or which, costs should be assigned to a responsiblity center, primary
consideration is given to the degree of
a. Avoidability
b. Variability
c. Controllability
d. Profitability

33.Which classification of cost is least relevant in responsibility accounting system?

a. Direct cost vs. indirect cost
b. Product cost vs. Period cost
c. Committed cost vs. Discretionary cost
d. Controllable cost vs. Non-controllable cost

34.Relative to traditional product costing, activity based costing differs in the way cost
are
a. Incurred
b. Allocated
c. Processed
d. Benchmark

35. Which of the following is not a characteristic of the balance score card
a. Both financial and non financial performance measures are included
b. Cause and effect linkage between strategic objectives
c. Costumer performance measures are excluded
d. Internal process performance measures are included

36.In PERT network, slack is the

a. Most likely time estimate for an activity
b. Average of time estimates for an activity
c. Path that requires the longest completion of time
d. Time and activity can be delayed without causing delay to the entire project

37.What is the cost factor that is least likely to be affected by the lelarning curve
a.Materials
b. Labor
 c. Indirect labor
d. Variable Overhead

38. Which of the folllowing is not considered a cost of carrying inventory

a. Shipping and handling
b. Property tax
c. Insurance
d. Depreciation ad obsolences

39. In Inventory management, the safety stock will tend to increase if the
a. Carrying cost increases
b. Cost of running out of stock decreses
c. Variability of the lead time increases
d. Variability of the usage rate decreases

40. As a company becomes more conservative in working capital policy, it would tend to
have an
a. Decrease in acid test ratio
b. Increase in the ratio of current liablitites to non current liabilities
c. Increase in the ratio of current assets to units output
d. Increase in funds invested in common stock and a decrease in funds invested in
securities

41. Which of the following is true about firm’s float?

a. A firm strive to minimize the float for both cash receipts and cash disbursement
b. A firm strive to maximize the float for both cash receipts and cash disbursement
c. A firm strive to maximize the float for cash receipts and minimize the float for
cash disbursement
d. A firm strive to maximize the float for cash disbursement and minimize the float
for cash receipts

42. A high degree of operating leverage compared with the industry average implies that
the firm
a. Has higher variable cost
b. Has profits that are more sensitive to changes in sales volume
c. Is more profitable
d. Is less risky

43.Return on Investment may be calculated by multiplying total asset turnover by

a. Average collection period
b. Profit margin
c. Debt ratio
d. Fixed charge coverage

44. Financial Statement analysis is least associated with

a. Common size income statement
b. Gross profit variance
 c. Liquidity and profitability
d. Productivity

45.Under the direct method of determining net cash provided by operating activities on
the statement of cash flows, a gain on the sale of the plant assets would be
a. Added to the amount of operating expenses reported under the accrual basis
b. Deducted from the amount of operating expenses reported under accrual basis
c. Deducted from the amount od sales reported under the accrual basis
d. Totally ignored since the gain is not part of the sales, cost of good sold or
operating expenses.

46. Which of the following account changes would be classified as a use of funds
a. An increase in accounts payable
b. An increased in Retained Earnings
c. A decreased in Bonds payable
d. A decrease in accounts receivable

47. Capital Budgeting is concern with

a. Decisions affecting only capital intensive industries
b. Analysis of short range decision
c. Analysis of long range decisions
d. Scheduling of office personnel in the office building

48. In deciding whether to replace a machine which ofthe following is not a sunck cost
a. The expected resale price of the existing machine
b. The book value of the existing machine
c. The original cost of the existing machine
d. The depreciated cost of the existing machine

49. In computing the initial investment for desicion making, taxes would be relevant for
all of the following, except:
a. Avoidable repair of old assets
b. Profit on sale of old asset replaced by new one
c. Increase in working capital require to support new capital investment
d. Loss on write off of other assets disposed because of new capital investment.

50.In an investment inplant assets, teh return that investors demand for investing in a
firm is known as
a. DCF rate of return
b. Net present value
c. Payack
d. Cost of capital

51.The payback method assumes that all cash inflows are reinvested to yeild a return
equal to
a. Discount rate
b. Hurdle rate
 c. The internal rate of return
d. Zero

52. Which of the capital budgeting method assumes that the funds are reinvested at the
company’s cost of capital?
a. Payback
b. Accounting rate of return
c. Net present value
d. Time adjusted rate of return

53.The Internal Rate of return is the

a. Hurdle rate
b. Rate of interest at which the net present value is greater that 1.0
c. Rate of return generated from operational cash flows
d. Rate of interest at which the net present value is equal to zero

54. Batch processing

a. Is not used y most business bevccause it reduces audit trail
b. Processes individual transaction as they occur
c. Allows users to inquire about groups of information contained in the system
d. Accumulates transaction records into groups for processing against the master file

55. When interest rates increases, ceteris paribus, the demand for money
a. Increases
b. Decreases
c. Remains constant
d. May increase or decrease

B. Problems
56. The following information pertains to data that have been gathered in the process of
estimating a simple least square regression for ZION Corporation
Mean value of the dependent variable--------30
Mean value of the independent variable----- 8
Coefficient of the independent variable------ 3
Number of observation---------------------------- 12

What is the “a” value for the least squares regression model?
a. 60
b. 20
c. 6
d. 0

Items 57-58 are based on the following information

Jeffrey Company incurred the following factory overhead cost for the second quarter
of the year:
Machine hours Factory overhead
April 150 P4, 200
May 120 P3,600
June 180 P4,800
 57.Using High-low method how much is the fixed factory overhead cost for the second
quarter?
a. P1,200 b. P2,400 c. P3,600 d. P4,800

58.Which of the following equations shall be used under the least square methods
a. 12,600=3a +69,300b c. 1,890,000 = 450a +69,300b
b. 1,926,000 = 3a +69,300b d. 1,926,000 = 450a +69,300b

Items 59-62 are based in this information

The following is available for an investment center of Cess Corporation for 2018
Sale P100,000
Operating Expenses 85,000
Average operating assets 40,000
Stockholders equity 25,000
Require rate of return 18%
59.Determine the operating profit margin
a. 15% b. 25% c. 37.5% d. 60%
60.What is the assets turnover?
a. 1.5x b.2.5x c. 3.5x d. 4x
61.What is the return on investment?
a. 15% b. 25% c. 37.5% d. 60%
62.What is the residual income?
a. P7,200 b. P7,800 c.P9,600 d. P15,000

63.A growing company is assesing current working capital requirements. An average of

60 days is required to convert raw materials into finished goods and to sell them. An
average of 35 days is required to collect on recceivables. If the average time of the
company takes to pay its raw material were 20 daysafter they are received, then what
would be the total cash conversion cycle for this company?
a. 11 days b. 95 days c. 75 days d. 110 days

64. Queen Corporation’economic order quantity fro mateial jkl is 5000pounds. If the
company maintains a safety stock of jkl at 500 pounds and its order points is 1,500
pounds, what would be the total annual carrying cost assuming the carrying cost per
unit is P0.20?
a. P100 b. P600 c.P1,000 d.P1,400

65. Based on the data below, what is the David Corporation’s cost of sales for the year
Current ratio 3.5
Acid test ratio 3.0
Year end current liabilities P600,000
Beginning Inventory P500,000
Inventory Turnover 8.0
a. P1,600,000 b. P2,400,000 c. P3,200,000 d. P6,400,000

Items 66-67 are based on the following informations

Eiren Company has earning per share of P6.20, pays dividend of P3.72 per share and has a
market price of P 49.60 per share
 66.What is the dividend yied?
a. 7.5% b.8% c. 13.3% d. 60%
67.What is the payout ratio?
a. 7.5% b.8% c. 13.3% d. 60%

68. LAG will make P500,000 if the fishing season weather is good, P200,000 if the weather
is fair and would actually lose P50,000 if the weather is poor during the season. If the
weather service gives 40% probability of good weather, a 25% probability of fair
weather and a 35% probability of poor weather what is the expected monetary value
of LAG.
a. P200,000 b. P232,500 c. P267,500 d. P500,000

69.JGL plans to Shut down a division with P20,000 contribution margin. Overhead
allocated to the divisionis P50,000.P5,000 of which can be eliminated. What is the
increase in income by discontiniung the division?
a. P5,000 b. P20,000 c.P25,000 d.30,000

70. PCJAL’s income decline by 300% when sales declined from P10M to P8 M. What was
the operating leverage?
a. 2.7 b. 12 c. 15 d. 30

Items 71-72 are based on teh following information

An organization sells a single product for P40 per unit, which it purchases for P20. The
sales person receive a salary plus a commission of 5% of sales. Last year the organization’
net income (after taxes) was P100,800. The organization is subject to an income tax rate of
P30%. The fixed cost of the organization are:
Advertising P124,000
Rent 60,000
Salaries 180,000
Other fixedcost 32,000
Total P396,000

71.What is the break even point in unit sales for the organization?
a. 8,800 units b. 18,000 units c. 19,800units d. 22,000 units

72.The organization is considering changing the compensation plan for sales personnel. If
the organization increases the commission to 10% of sales and reduces salaries by
P80,000. What peso sales volume must the organization have in order to earn the
same net income as last year
a. P1,042,000 b.P1,100,000 c.P1,150,000 d. P1,630,000

73. UVW has a total budgeted fixed overhead cost of P150,000. Actual production
ofP39,000 units resulted to a favorableP6,000 volume variance. What normal capacity
was used to determined thee fixed overhead rate?
a. 33,000 b. 37,500 c. 39,500 d. 40,500
 74.PST Company manufatures a single product. Unit variable production cost are P20
and fixed production costs are P150,000. PST uses normal activity of 10,000 units to
sets it standard costs. PST began the year with no inventory, produced 11,000 units,
and sold 10,500 units. Ending inventory under absorbtion costing amounts to.
a. P10,000 b. P15,000 c. 17,500 d. P20,000

Items 75-76 are based on the followinf information

The ABC Company has a budgeted normal monthly capacity of 5,000 labor hours with
a standard production of 4,000 units a this capacity. Standard cost are:
Materials 2 kilos atP1.00
Labor P8.00 per hour
Factory ovrhead at normal capacity :
Fixed expenses P5,000
Variable expenses P1.50 per labor hour
During November, actual factory overhead totaled P11,250 and 4,500 labor hours
cost P33,750. Production during the month was 3,500 units using 7,200 kilos of materials at
a cost of P1.20 perkilo.

75. What was the material price variance?

a. P1,440 u b. 3,440 u c. P204 f d. P2,187.50F
76.What was the labor efficiency variance?
a. 2,250u b. 1,000 u c. 2,187.50 f d. 62.50 f

77.If PST Corp carries no debt in its capital structure. Its beta is 0.8. the risk free rate is 9
percent and the expected return on the market is 15 %. The company has an
opportunity to invest in a project that earns 12%. What is PST cost of capital?
a. 4.8% b. 9% c. 12% d. 13.8%

78. A piece of labor saving equipment that ABC company could use to reduce cost in one
of its plants in XYZ province has just come into the market. Relevant date follow:
Life of equipment 12 years
Purchase cost of the equipmen t P432,000
Annual cash savings from use of equipment P90,000
What is the simple rate of return to be provided by the equipment?
a. 8.3% b. 12.5% c. 20.8% d. 29.2%

Item 79-80 are based on the following information

DEF Foundation is a tax exempt charitable organization . DEF invested P400,000 in a

five –year project at the beginning of the year 1. DEF estimates that the annual cash savings
from this project will amount to P130,000.
 The P400,000 of assets will be depreciated over their five year life on the straight line
basis. On investments of this type, DEF require rate of return is 12%.

Information on present value factors is as follows

12% 14% 16%
PV of P1 for 5 periods 0.57 0.52 0.48
PV of an annuity ofP1 for 5 periods 3.60 3.40 3.30

79.What is the Net present value of the project?

a. P36,000 b. P57,000 c. P68,000 d. P250,000

80.What is the internal rate of return on the project?
a. Less than 12%
b. Less than 14% but more than 12%
c. Less than 16% but more than 14%
d. More than 16%

To God be all the Glory!