University of San Carlos

School of Business and Economics

Department of Accountancy

AC1103 – Summative Exam (Finals)

Name: Group: Date:__________________

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Instructions: Read each question carefully and answer honestly. You have 60 minutes to answer the entire
exam. NO CHEATING PLS!

1. A manufacturing company has the opportunity to submit a bid for 20 units of a product on which it has
already produced two 10-unit lots. The production manager believes that the learning experience
observed on the first two lots will continue for at least the next two lots. The direct labor required on the
first two lots was as follows:

• 5,000 direct labor hours for the first lot of 10 units

• 3,000 additional direct labor hours for the second lot of 10 units

The learning rate experienced by the company on the first two lots of this product is:

a. 40%
b. 60%
c. 70%
d. 80%

2. The Ogee Co. needs 40 hours to produce the first unit of its product and 60 hours to produce its first two units.
The controller states that the learning curve rate is 67 percent. Is this statement correct?
a. Yes, because the learning curve rate is equal to 40 hours divided by 60 hours.
b. Yes, because the second unit only requires two thirds as much time as the first unit.
c. No, because the learning curve rate of 50 percent is equal to 20 hours divided by 40 hours.
d. No, because the learning curve rate of 75 percent is calculated by dividing 60 hours by 80 hours.

3. Which of the following are the shortcomings of regression analysis?

I. Regression analysis requires the collection of numerous data points to be accurate.
II. The user must evaluate whether the relationship between the dependent and independent variables is
reasonable.
III. Regression analysis is limited to the use of one independent variable.
IV. Regression analysis can be strongly influenced by outlying data points.

a. II and IV only
b. I, II, III, and IV
c. I only
d. I, II, and IV only

4. An analyst has developed a multiple regression model to forecast the selling price for a piece of equipment three
years from now. Which of the following independent variables is least likely to be included in the regression
equation?

a. Hours logged on the machine

b. The useful life of the machine
c. The color of the machine
d. The number of nonroutine repairs needed to date

5. A manufacturing company required 800 direct labor hours to produce the first lot of four units of a new motor.
Management believes that a 90 percent learning curve will be experienced over the next four lots of production.
How many direct labor hours will be required to manufacture the next 12 units?

a. 1,792
b. 1,944
c. 2,016
d. 2,160
6. High Concept Fashion is planning its next advertising campaign to coincide with its store expansion in the
following months. Using information from the past few years, the company was able to perform a regression
analysis with the following results:

Sales revenue = $200,000 + 15(Advertising budget)

R2 = 0.85

The company's advertising budget over the last few years usually fell between the range of $10,000 and $15,000
a year. The company plans to spend $50,000 this year as a result of its expansion. Given its new advertising
budget, High Concept Fashion should expect:

a. Unable to make any prediction because the new budget lies outside the range of the sample used to
estimate the regression equation.
b. $950,000 in sales revenue.
c. $200,000 in sales revenue.
d. $750,000 in sales revenue.

7. In order to determine how its in-house training program is affecting its employees' performance rating, Maxis Tech
performed a regression analysis with the following results:

Performance rating = 0.2 + 0.05 hours of training

R2 = 0.1

Given the above information, Maxis Tech can conclude that:

a. An employee's performance rating will be 0.35 if the employee receives only one hour of training.
b. The number of training hours received has a significant impact on an employee's performance rating.
c. For every hour of training received, an employee's performance rating will decrease by 0.05.
d. There are factors other than number of training hours received that can better explain an employee's
performance rating.

8. The primary difference between simple linear regression and multiple linear regression is:

a. Multiple linear regression analysis involves more than one independent variable while simple linear
regression only considers one independent variable.
b. Multiple linear regression analysis considers the impact of one independent variable on multiple dependent
variables while simple linear regression analysis only considers one dependent variable.
c. Multiple linear regression analysis considers the impact of multiple independent variables on multiple
dependent variables while simple linear regression analysis only considers one independent and one
dependent variable.
d. Multiple linear regression analysis considers codependent variables while simple linear regression analysis
only considers mutually exclusive variables.

9. The results of regressing Y against X are as follows:

Coefficient

Intercept 5.23

Slope 1.54

When the value of X is 10, the estimated value of Y is:

a. 6.78.
b. 8.05.
c. 20.63.
d. 53.84.

10. A regression equation:

a. Estimates the dependent variables.
b. Is based on objective and constraint functions.
c. Estimates the independent variable.
d. Ignores the coefficient of determination.
11. Refer to the table below. One new worker can produce a garment in 20 hours. Due to increased learning, the
second garment can be produced in 16 hours. The same worker can produce his or her fourth garment in 12.8
hours. Using the cumulative average‐time learning model, what is the individual time for producing the fourth
garment?
Garment (x) Cumulative
Average Time
per unit
1 20
2 16
3 14.04
4 12.8
a. 12.08 hours
b. 9.08 hours
c. 9.6 hours
d. 16 hours

12. In order to analyze sales as a function of advertising expenses, the sales manager of Smith Company developed
a simple regression model. The model included the following equation, which was based on 32 monthly
observations of sales and advertising expenses with a related coefficient of determination of 0.90.

S= $10,000 + $2.50A
S= Sales
A= Advertising expenses

If Smith Company’s advertising expenses in one month amounted to $1,000, the related point estimate of sales
would be:

a. $2,500
b. $11,250
c. $12,250
d. $12,500

13. Which of the following best describes a fixed cost?

a. It is constant per unit of changes in production.
b. It may change in total when such change is related to changes in production.
c. It may change in total when such change is unrelated to changes in production.
d. It may change in total when such change depends upon production or within the relevant range.

14. What is the appropriate range for the coefficient of determination (r2)?
a. 0 to +1 c. - 1 to 0
b. 0 to -1 d. -1 to +1

15. A company has developed a production cost function for its lone product: Y = 100 + 5X, where X is based on the
number of labor hours. Based on a relevant range of 10 to 20 labor hours, what is the estimated production cost
at zero (0) labor hour?
a. P 100
b. P 150
c. P 200
d. The exact amount cannot be determined without additional information

16. MAOLAGENIGIDISCUSS. is preparing a bid to the Department of the Navy to produce engines for rescue boats.
The company has manufactured these engines for the Navy for the past 3 years, on an exclusive contract, and has
experienced the following costs:

At MAOLAGENIGIDISCUSS, variable overhead is applied on the basis of $1.00 per ½ of direct labor dollar. Based
on historical costs, MAOLAGENIGIDISCUSS knows that the production of 40 engines will be allocated $150,000
of fixed overhead costs. The bid request is for an additional 40 units; all companies submitting bids are allowed to
charge a maximum of 25% above full cost for each order
 In order to ensure that the company would not lose money on the project, MAOLAGENIGIDISCUSS 's minimum
bid for the 40 units would be

a. $1,189,440
b. $912,960
c. $1,012,960
d. $1,266,200

17. The slope of the line of regression is

a. The rate at which the independent variable varies.
b. The rate at which the dependent variable varies.
c. The level of the fixed costs.
d. The level of the total variable costs.

18. The segregation of fixed costs and variable costs is key to proper cost analysis. Regression analysis is a
technique used for this purpose. Identify the appropriate statements below on regression analysis:
1. It assumes that a change in value of a dependent variable is related to the change in the value of an
independent variable.
2. A linear relationship between direct cost and production volume can cause a problem when using accounting
data for regression analysis.
3. It attempts to find an equation for the linear relationship among variable.
4. It establishes a cause and affect relationship.

a. All four statements are appropriate. c. Statements 1 and 3 only.

b. Statements 1, 3 and 4 only. d. Statements 2 and 4 only.

19. For the month just ended, the cost components to make Product FX was 50 per unit plus fixed costs of P250,000.
One thousand units were produced. For the current month, the cost to make the product will be P55 per unit plus
fixed cost of P250,000. Fifteen hundred units are expected to be produced. The estimates of the underlying, but
unknown intercept and slope coefficient for the current month are

a. P250,000 and P50. c. P50 and P250,000.

b. P55 and P250,000. d. P250,000 and P55.

20. In the standard regression equation Y = a + bx, the letter b is best described as a(n):

a. Independent variable. c. Constant coefficient.

b. Dependent variable. d. Variable coefficient.

21. A quantitative technique used for selecting the combination of resources that maximized profits or minimized
costs is
a. Curvilinear analysis. c. Linear programming.
b. Queuing theory. d. Dynamic programming.

22. The two inequality functions are

a. Contributions. c. Objectives.
b. Shadow points. d. Constraints.

23. Phy Manufacturing Corporation uses the following model to determine its product mix for metal (M) and scrap
metal (S).
Max Z = P30M + P70S
If: 3M + 2S < 15
2M + 4S < 18

The point at which M=3 and S=3 would

a. Minimize cost. c. Be a feasible point.

b. Lie in a corner. d. Be the optimal solution point.

24. Linear programming is used most commonly to determine

a. The fastest timing.
b. The best use of scarce resources.
c. The most advantageous prices.
d. The mix of variable that will result in the largest quantity.
25. Linear programming models are mathematical techniques in which an objective function is maximized or
minimized subject to constraints. These constraints must; be fully specified before a linear programming problem
can be solved, and generally describe:
a. Costs. c. Inefficiencies.
b. Resources. d. Dependent variables.

26. In a linear programming maximization problem for business problem solving, the coefficient of the objective
function usually are
a. Usage rates for scarce resources.
b. Profit based on allocations of overhead and all indirect costs.
c. Variable costs.
d. Marginal contributions per unit.

27. The Lacquers “R” Us Company manufactures lacquered jewelry boxes (J) and lacquered mirrors (M). these data
are presented to you as financial consultant:
1. The J’s need 3 kilos of material and 3 hours of labor; the M’s need 1.5 kilos of
material and 1 hour of labor.
2. Materials costs P4.00 a kilo and labor costs P20.00 an hour.
3. P20,000 in fixed factory overhead is expected for the month’s population.
4. To be available is 400 kilos of material and 240 hours of labor.
5. Contribution margin ration for J is 40% and 20% for M.
The objective function for Lacquers “R” Us Company will be:
a. Maximize: Contribution Margin = P.4J + P.2M.
b. Maximize: Contribution Margin = P48J+P6.5M-P20,000.
c. Maximize: Contribution Margin = P48J+P6.5M.
d. Maximize: Contribution Margin = P28.8J+P5.2M.

28. Food Co. has a limited number of machine hours that it can use for manufacturing two products, X and Y. Each
product has a selling price of P 160 per unit but product X has 40% contribution margin and product Y has 70%
contribution margin. One unit of Y takes twice as many machine hours to make as a unit of X. Assuming unlimited
demand, which product(s) should the limited machine hours be used for?
a. X c. Either X and Y
b. Both X and Y d. Y

29. Which of the following is a valid objective function for a linear programming problem?
a. Min 8xy
b. Min 4x + 3y + (1/2)z
c. Min 5x2 + 6y2
d. Max (x1 + x2)/x3

30. Flow in a transportation network is limited to one direction.

a. True
b. False
c. Pwede sad sir
d. It depends on management

31. In a transportation problem with total supply equal to total demand, if there are four origins and seven
destinations, and there is a unique optimal solution, the optimal solution will utilize 11 shipping routes.
a. True
b. False
c. Maybe
d. What do you think?

32. The difference between the transportation and assignment problems is that
a. total supply must equal total demand in the transportation problem.
b. the number of origins must equal the number of destinations in the transportation problem.
c. each supply and demand value is 1 in the assignment problem.
d. there are many differences between the transportation and assignment problems.

33. The assignment problem is a special case of the

a. transportation problem.
b. transshipment problem.
c. maximal flow problem.
d. shortest-route problem.

34. Which of the following is NOT true regarding an LP model of the assignment problem?
 a. Costs appear in the objective function only.
b. All constraints are of the ≥ form.
c. All constraint left-hand-side coefficient values are 1.
d. All decision variable values are either 0 or 1.

35. The assignment problem constraint x31 + x32 + x33 + x34 ≤ 2 means
a. agent 3 can be assigned to two tasks.
b. agent 2 can be assigned to three tasks.
c. a mixture of agents 1, 2, 3, and 4 will be assigned to tasks.
d. there is no feasible solution.

36. . If a transportation problem has four origins and five destinations, the LP formulation of the problem will have
a. 5 constraints.
b. 9 constraints.
c. 18 constraints.
d. 20 constraints.
37. The Gantt Chart below shows that the project is

a. Complete
b. Ahead of schedule
c. On schedule
d. Behind schedule

38. PERT and the critical path method (CPM) are used for
a. Determining the optimal product mix.
b. Project planning and control.
c. Determining product costs.
d. Determining the number of servers needed in a fast food restaurant.

39. California Building Corporation uses the critical path method to monitor construction jobs. The company is
currently 2 weeks behind schedule on Job #181, which is subject to a P10,500-per-week completion penalty. Path
A-B-C-F-G-H-I has a normal completion time of 20 weeks, and critical path A-D-E-F-G-H-I has a normal
completion time of 22 weeks. The following activities ca be crashed:
Cost to Crash Cost to Crash
Activities 1 Week 2 Weeks
BC P 8,000 P 15,000
DE 10,000 19,600
EF 8,800 19,500
California Building desires to reduce the normal completion time of Job #181 and, at the same time, report the
highest possible income for the year. California Building should crash
a. Activity BC 1 week and activity EF 1 week.
b. Activity DE 1 week and activity BC 1 week.
c. Activity EF 2 weeks.
d. Activity DE 1 week and activity EF 1 week

40. The earliest time rule

a. Compares the starting times of all activities for successors of an activity
b. Compares the finish times for all immediate predecessors of an activity
c. Determines when the project can begin
d. Determines when the project must begin

41. Activities following a node

a. Can begin as soon as any activity preceding the node has been completed
b. Have an earliest start time equal to the largest of the earliest finish times for all activities entering
the node
c. Have a latest start time equal to the largest of the earliest finish times for all activities entering the node.
d. None of the alternatives is correct sir murag imo ming giilad
42. In PERT Chart, the activity time distribution is
a. Normal
b. Binomial
c. Poisson
d. Beta

43. Pessimistic time and optimistic time of completion of an activity are given as 10 days and 4 days respectively, the
variance of the activity will be.
a. 1
b. 6
c. 12
d. 18

44. Which among the following uses probabilistic time estimates for project management
a. CPM
b. Gantt Chart
c. PERT
d. OC Curve

45. The path which moves along the activities having total float zero, in the network diagram is called
a. Free float
b. Critical Path
c. Total float
d. Independent
e. Coke float

46. – 50 Write a message to the president of the Nugget Army – John Davis Baguio, CPA, CMA (US)