CUP- MANAGEMENT ADVISORY SERVICES

EASY

1. Throughput is consist of
a. A process time
b. Inspection time and move time
c. Process time, inspection time, move time
d. Process time, inspection time, move time and queue time
2. Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25%. Over
the past several years, one of Astin’s divisions has consistently had the following information:

Sales ₱2,000,000
Net operating income 500,000

What is the maximum average operating assets for the company to achieve its ROI goals?

a. P1,900,000
b. P1,950,000
c. P2,000,000
d. P2,100,000
3. Much of the managerial accounting information is based on
a. A cost-benefit theme
b. Profit maximization
c. Cost minimization
d. The generation of external information
4. Customer-satisfaction measures are an example of
a. Balance scorecard approach
b. Goal congruence approach
c. Financial report scorecard approach
d. Investment success approach
5. Hardcastle Ltd. had sales of ₱3,000,000 and net operating income of ₱800,000. Operating assets
during the year averaged ₱1,500,000. The manager of Hardcastle is considering the purchase of a
new machine which is expected to increase average operating assets by 5%. If the new machine is
purchased, the company's new return on investment (ROI) would be:
a. 50.70%
b. 50.80%
c. 50.90%
d. 50.95%
6. Management of Children Are Precious (CAP), an operator of day-care facilities, wants the firm's profit
to be subdivided by center. The firm's accountant has provided the following data:

Actual Budgeted
Actual Budgeted Direct Direct
Center Revenue Revenue Costs Costs
Downtown ₱ 340,200 ₱ 320,000 ₱ 300,000 ₱ 300,000
 Irvine 534,600 560,000 440,000 510,000
H Beach 745,200 720,000 740,000 690,000
Totals ₱1,620,000 ₱1,600,000 ₱1,480,000 ₱1,500,000

CAP's advertising, which is handled by the home office, is not reflected in the preceding figures
and amounted to ₱60,000.

Assume that management used the allocation base that is most influenced by advertising effort
and consistent with sound managerial accounting practices. How much advertising would be
allocated to Irvine?
a. P60,000
b. P25,000
c. P21,000
d. P15,000
7. Whose perceptions of the company's products or services are the most important to the manager?
a. board of directors' perception
b. customers' perception
c. president's perception
d. stockholders' perception
8. Management accounting:
a. focuses on estimating future revenues, costs, and other measures to forecast activities
and their results
b. provides information about the company as a whole
c. reports information that has occurred in the past that is verifiable and reliable
d. provides information that is generally available only on a quarterly or annual basis
9. The most important planning tool is a ________.
a. performance evaluation report
b. balanced scorecard
c. goal
d. budget
10. Which of the following people is LEAST likely to use management accounting information?
a. the controller
b. a shareholder evaluating a stock investment
c. the treasurer
d. an assembly department supervisor

AVERAGE

1. WSR Inc. sells a variety of drink and food products including potato chips and sodas. The segmented
income statements for these two products are as follows:

Sodas Chips
Sales ₱800,000 ₱900,000
Variable expenses 200,000 315,000
Contribution margin 600,000 585,000
Traceable fixed expense 120,000 160,000
Segment margin ₱480,000 ₱425,000
WSR's management is considering a special advertising campaign that will run during a major sporting
event. The advertising campaign is expected to cost ₱30,000 and only one product can be featured. In-
house marketing studies show that the campaign could increase sales of the soda division by ₱200,000
or increase sales of the chips division by ₱275,000.

What will be the overall net effect on the company's total profits if the advertising focuses on sodas
(indicate if increase or decrease)?
a. P200,000
b. P150,000
c. P120,000
d. P100,000
2. Which of the following statements refers to management accounting information?
a. There are no regulations governing the reports.
b. The reports are generally delayed and historical.
c. The audience tends to be stockholders, creditors, and tax authorities.
d. It primarily measures and records business transactions
3. A company should decide to make, rather than to buy, a part required for their product, if the:

a. Company’s production facility is at full capacity

b. Relevant cost per unit of making the part exceeds the per-unit relevant costs of
purchasing the part
c. Supplier of the part can produce a higher quality part
d. Supplier of the part has questionable reliability
4. Heilongjiang Inc. evaluates manufacturing overhead in its factory, by using variance analysis. The
following information applies to the month of July:

ACTUAL BUDGETED
Number of units produced 9,000 20,000
Variable overhead costs ₱4,100 ₱2 per DLH
Fixed overhead costs ₱22,000 ₱20,000
Direct labor hours 2,100 0.1 hr. per unit

Using the three-way variance analysis, determine the spending variance. P100 favorable
a. P2,000 unfavorable
b. P1,900 unfavorable
c. P2,100 favorable
5. Cost accounting provides all of the following EXCEPT:
a. information for management accounting and financial accounting
b. pricing information from marketing studies
c. financial information regarding the cost of acquiring resources
d. nonfinancial information regarding the cost of operational efficiencies
6. McMd's standard cost card indicates that it takes three hours of direct labor to produce one unit of
product. A recently conducted time and motion study revealed that it should take one hour to
produce the same unit. Labor cost is P150 per hour. McMd's value-added, and non-value-added
costs would be
A. P150 and P0
B. P150 and P300
 C. P0 and P150
D. P450 and P0
7. Total production costs for Jordan, Inc. are budgeted at P2,300,000 for 50,000 units of budgeted
output and P2,800,000 for 60,000 units of budgeted output. Because of the need for additional
facilities, budgeted fixed costs for 60,000 units are 25 percent more than budgeted fixed costs for
50,000 units. How much is Jordan’s budgeted variable cost per unit of output?
A. P 7.50
B. P16.00
C. P30.00
D. P62.50
8. Statement 1:Strategy does NOT specify how an organization matches its capabilities with the
opportunities in the marketplace.
Statement 2:The key to a company's success is always to be the low cost producer in a particular
industry.
a. True, True
b. True, False
c. False, True
d. False, False
9. Boy & Millie Company uses an annual cost formula for overhead of P72,000 + P1.60 for each direct
labor hour worked. For the upcoming month Karla plans to manufacture 96,000 units. Each unit
requires five minutes of direct labor. Boy & Millie’s budgeted overhead for the month is
A. P12,800
B. P18,800
C. P84,800
D. P774,000
10. ________ is a philosophy in which management improves operations throughout the value chain to
deliver products and services that exceed customer expectations.
a. Cost-benefit approach
b. Customer focus
c. Customer relationship management
d. Total quality management

DIFFICULT

1. The last step in activity-based costing is to

A. identity the major activities that pertain to the manufacture of specific products
B. allocate manufacturing overhead costs to activity cost pools
C. Identify the cost drivers that accurately measure each activity’s contribution to the
finished product
D. Assign manufacturing overhead costs for each activity cost pool to product
2. Moon Company makes two products, Alpha and Beta. Alpha is being introduced this period,
whereas Beta has been in production for 2 years. For the period about to begin, 1,000 units of each
 product are to be manufactured. The only relevant overhead item is the cost of engineering change
orders. Alpha and Beta are expected to require eight and two change orders, respectively. Alpha
and Beta are expected to require 2 and 3 machine hours, respectively. The cost of a change order is
P600. If Moon is using direct tracing, the amount of overhead per unit that will be assigned to
Alpha and Beta, respectively, are
A. P2.40 and P3.60, respectively
B. P3.60 and P2.40, respectively
C. P4.80 and P1.20, respectively
D. P1.20 and P4.80, respectively
3. Which of the following is not a typical characteristic of a just-in-time (JIT) production environment?
A. Lot sizes equal to one
B. Insignificant set up times and costs
C. Push-through system
D. Balanced and level workloads
4. A department adds material at the beginning of a process and identifies defective units when the
process is 40% complete. At the beginning of the period, there was no work in process. At the end of
the period, the number of work in process units equaled the number of units transferred to finished
goods. If all units in ending work in process were 66 2/3% complete, then ending work in process
should be allocated?
a. 50% of all normal defective unit costs.
b. 40% of all normal defective unit costs.
c. 50% of the material costs and 40% of the conversion costs of all normal defective unit
costs.
d. None of the normal defective unit costs.

5. Capital Invest Inc. uses a 12% hurdle rate for all capital expenditures and has done the following
analysis for four projects for the upcoming year

Project 1 Project 2 Project 3 Project 4

Initial capital outlay 200,000 298,000 248,000 272,000
Annual net cash Inflows
Year 1 65,000 100,000 80,000 95,000
Year 2 70,000 135,000 95,000 125,000
Year 3 80,000 90,000 90,000 90,000
Year 4 40,000 65,000 80,000 60,000
NPV (3,798) 4,276 14,064 14,662
Profitability index 98% 101% 106% 105%
IRR 11% 13% 14% 15%

Which project(s) should Capital Invest Inc. undertake during the upcoming year if it has only
$600,000 of funds available?
a. Projects 1 and 2
b. Projects 2 and 3
c. Projects 3 and 4
d. Projects 2 and 4
6. In calculating the break-even point for a multi-product company, which of the following
assumptions are commonly made when variable costing is used?
 I. Sales volume equals production volume
II. Variable costs are constant per unit
III. A given sales mix is maintained for all volume changes
A. I and II
B. I and III
C. II and III
D. I, II, and III

7. The following are selected data for Walkin Corporation for the year ended 2017:
Net operating profit before taxes P31,250,000
Inventory 5,000,000
Long-term debt 40,000,000
Depreciation expense 9,000,000
Change in net working capital 5,000,000
Capital expenditures 8,000,000
Invested capital (net assets) 80,000,000
Weighted average cost of capital 10%
Tax rate 20%

Which of the following measures the amount of free cash flow for Walkin Corporation for the
year?
a. P12,000,000
b. P26,000,000
c. P21,000,000
d. P29,000,000
8. Firm D and Finn S are competitors within the same industry. Firm D produces its product using large
amounts of direct tabor. Firm S has replaced direct labor with investment in machinery. Projected
sales for both firms are fifteen percent less than in the prior year. Which statement regarding
projected profits is true?
A. Firm D will lose more profit than Firm S
B. Firm S will lose more profit than Firm D.
C. Firm D and Firm S will lose the same amount of profit.
D. Neither Firm D nor Firm S will lose profit
9. A market analyst has estimated the equity beta of Modern Homes Inc. to be 1.4. This beta implies
that the company’s
a. Systematic risk is lower than that of the market portfolio.
b. Systematic risk is higher than that of the market portfolio.
c. Unsystematic risk is higher than that of the market portfolio.
d. Total risk is higher than that of the market portfolio.
10. Signal Co. manufactures a single product. For 2000, the company had a sales of P90,000, variable
costs of P50,000, and fixed costs of P30,000. Signal expects its cost structure and sales price per unit
to remain the same in 2001, however total sales are expected to jump by 20%. If the 2001
projections are realized, net income in 2001 should exceed net income in 2000 by
A. 100%
B. 80%
C. 20%
 D. 50%

CLINCHER

11. Which is not a pioneering MS service?

a. Financial Accounting
b. Management Accounting
c. Management Consulting
d. Financial Management
12. The following are characteristics of an MS engagement except?
a. Service is for management
b. Scope is broad
c. Present orientation
d. Non-recurring
13. It identifies the investment, revenues and expenses assigned and controlled by a manager in a
segment to monitor and assess the performance of each part of an organization.
a. Responsibility center
b. Responsibility accounting
c. Investment center
d. Management accounting