MAS REVIEW PART 1

1 The Standards of Ethical Conduct for Management Accountants developed by the C The amount of beginning work in process inventory is:
Institute of Management Accountants contain a policy regarding confidentiality that A) P24,000
requires management accountants to refrain from disclosing confidential information B) P2,000
acquired in the course of their work: C) P22,000
A) except when authorized by management. D) P3,000
B) in all situations.
C) except when authorized by management, unless legally obligated to do so. 6 Aable Company's manufacturing overhead is 20% of its total conversion costs. If A
D) in all cases not prohibited by law. direct labor is P45,000 and if direct materials are P53,000, the manufacturing
overhead is:
2 Samantha Galloway is a managerial accountant in the accounting department of A A) P11,250
Mustang Industries, Inc. Samantha has just discovered evidence that some of the B) P13,250
corporation's marketing managers have been wrongfully inflating their expense C) P180,000
reports in order to obtain higher reimbursements from the firm. According to the D) P24,500
Institute of Management Accountants' Standards of Ethical Conduct, what should
Samantha do upon discovering this evidence? 7 The nursing station on the fourth floor of Central Hospital is responsible for the care A
A) notify the controller. of patients who have undergone orthopedic surgery. The costs of drugs
B) notify the marketing managers involved. administered by the nursing station to patients would be classified as:
C) notify the president of the corporation. A) direct costs of the patients.
D) ignore the evidence because she is not part of the Marketing Department. B) indirect costs of the patients.
C) overhead costs of the nursing station.
3 Process Reengineering includes all of the following steps except: D D) period costs of the hospital.
A) constructing a diagram flowcharting the current process.
B) redesigning the process. 8 Fisher Company uses a predetermined overhead rate based on direct labor cost to A
C) elimination of non-value-added activities. apply manufacturing overhead to jobs. The following information about Fisher
D) elimination of all constraints. Company's Work in Process inventory account has been provided for the month of
May:
4 During the month of January, direct labor cost totaled P17,000 and direct labor cost B
was 60% of prime cost. If total manufacturing costs during January were P82,000, May 1 balance ........................................ P26,000
the manufacturing overhead was: Debits during May:
A) P11,333 Direct Materials ...................................... P40,000
B) P53,667 Direct Labor ........................................... P50,000
C) P28,333 Manufacturing Overhead ........................ P37,500
D) P65,000
During the month, Fisher Company's Work in Process inventory account was
5 The following information is taken from the records of DW Company for last year: B credited for P120,500, which represented the Cost of Goods Manufactured for the
month. Only one job remained in process on May 31; this job had been charged with
Direct materials ............................................. P8,000 P9,600 of applied overhead cost. The amount of direct materials cost in the
Direct labor ................................................... P3,000 unfinished job would be:
Manufacturing overhead ............................... P11,000 A) P10,600
Ending work in process inventory ................ P5,000 B) P16,700
Cost of goods manufactured ......................... P19,000 C) P12,800
D) P23,400

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MAS REVIEW PART 1

Sold, after adjustment for any over- or underapplied overhead, for the year must
9 Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At D have been:
the beginning of the year, the estimated direct labor-hours were 17,500 hours. At the A) P98,000
end of the year, actual direct labor-hours for the year were 16,000 hours, the actual B) P73,000
manufacturing overhead for the year was P233,000, and manufacturing overhead C) P71,000
for the year was underapplied by P15,400. The estimated manufacturing overhead D) P69,000
at the beginning of the year used in the predetermined overhead rate must have
been: 13 Williams Company uses the FIFO method in its process costing system. The C
A) P249,375 beginning work in process inventory in a particular department consisted of 10,000
B) P217,600 units, 100% complete with respect to materials and 60% with respect to conversion
C) P228,000 costs. The total cost in the beginning work in process inventory was P48,200. During
D) P238,000 the month, 25,000 units were transferred out of the department. The costs per
equivalent unit were computed to be P3.10 for materials and P4.50 for conversion
10 Rio Manufacturing Company uses a job order cost system. At the beginning of C costs. The total cost of the units completed and transferred out of the department
February, Rio only had one job in process, Job #594. The direct costs assigned to was:
this job at that time were P800 of materials and P650 of labor. Job #594 was A) P190,000
finished during February incurring additional direct costs of P120 for materials and B) P189,200
P370 for labor. Job #595 was started and finished during February. The direct costs C) P180,200
assigned to this job were P310 for materials and P190 for labor. Job #596 was D) P132,000
started during February but was not finished by the end of the month. The direct
costs assigned to this job were P740 for materials and P300 for labor. Rio applies 14 At a sales level of P365,000, Lewis Company's gross margin is P20,000 less than its C
manufacturing overhead to its products at a rate of 200% of direct labor cost. What contribution margin, its net operating income is P70,000, and its selling and
is Rio's cost of goods manufactured for February? administrative expenses total P130,000 At this sales level, its contribution margin
A) P2,440 would be:
B) P3,750 A) P295,000
C) P4,860 B) P180,000
D) P6,500 C) P220,000
D) P200,000
11 On the Schedule of Cost of Goods Manufactured, the final Cost of Goods D
Manufactured figure represents: 15 Cardiv Corporation has provided the following production and average cost data for B
A) the amount of cost charged to Work in Process during the period. two levels of monthly production volume. The company produces a single product.
B) the amount of cost transferred from Finished Goods to Cost of Goods Sold during
the period. Production volume ............................. 4,000 units 5,000 units
C) the amount of cost placed into production during the period. Direct materials .............................. P85.80 per unit P85.80 per unit
D) the amount of cost of goods completed during the current year whether they were Direct labor .....................................P56.10 per unit P56.10 per unit
started before or during the current year. Manufacturing overhead ................ P73.60 per unit P62.10 per unit

12 In the Vasquez Company, any over- or underapplied overhead is closed out to Cost D The best estimate of the total cost to manufacture 4,300 units is closest to:
of Goods Sold. Last year, the company incurred P27,000 in actual manufacturing A) P877,200
overhead cost, and applied P29,000 of overhead cost to jobs. The beginning and B) P909,400
ending balances of Finished Goods were equal, and the Company's Cost of Goods C) P901,925
Manufactured for the year totaled P71,000. Given this information, Cost of Goods D) P926,650

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MAS REVIEW PART 1

16 As the level of activity increases, how will a mixed cost in total and per unit behave? A 20 The contribution margin ratio always increases when the: C
A) break-even point increases.
In Total Per Unit B) break-even point decreases.
A) Increase Decrease C) variable expenses as a percentage of net sales decrease.
B) Increase Increase D) variable expenses as a percentage of net sales increase.
C) Increase No effect
D) Decrease Increase 21 How much will a company's net operating income change if it undertakes an D
E) Decrease No effect advertising campaign given the following data:

17 Anderson Corporation has provided the following production and average cost data D Cost of advertising campaign ...................................... P25,000
for two levels of monthly production volume. The company produces a single Variable expense as a percentage of sales ................... 42%
product. Increase in sales .......................................................... P60,000

Production volume ......................... 4,000 units 5,000 units A) P200 increase

Direct materials .............................. P99.20 per unit P99.20 per unit B) P25,200 increase
Direct labor .................................... P45.50 per unit P45.50 per unit C) P15,000 increase
Manufacturing overhead ................ P94.00 per unit P77.60 per unit D) P9,800 increase

The best estimate of the total monthly fixed manufacturing cost is: 22 Birney Company has prepared the following budget data: A
A) P388,000
B) P954,800 Sales .............................................................. 150,000 units
C) P376,000 Selling price .................................................. P25 per unit
D) P328,000 Variable expenses ......................................... P15 per unit
18 The Dog Hut hot dog stand expects the following operating results for next year: D Fixed manufacturing expenses ..................... P800,000
Fixed selling and admin. expenses ............... P700,000
Sales ............................................... P280,000
Net operating income .................... P21,000 An advertising agency claims that an aggressive advertising campaign would enable
Contribution margin ratio .............. 70% the company to increase its unit sales by 20%. What is the maximum amount that
the company can pay for advertising and obtain a net
What is Dog Hut's break-even point next year in sales pesos? operating income of P200,000?
A) P120,000 A) P100,000
B) P181,300 B) P200,000
C) P196,000 C) P300,000
D) P250,000 D) P550,000

19 A P2.00 increase in a product's variable expense per unit accompanied by a P2.00 C 23 The following information relates to Snowbird Corporation: B
increase in its selling price per unit will:
A) decrease the degree of operating leverage. Sales at the break-even point ......... P312,500
B) decrease the contribution margin. Total fixed expenses ...................... P250,000
C) have no effect on the break-even volume. Net operating income .................... P150,000
D) have no effect on the contribution margin ratio.
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MAS REVIEW PART 1

What is Snowbird's margin of safety? 27 Johnson Company produces a single product. Last year, the company had 25,000 B
A) P62,500 units in its ending inventory. Johnson's variable production costs were P10 per unit
B) P187,500 and fixed manufacturing overhead costs were P5 per unit. The company's net
C) P100,000 operating income last year was P10,000 higher under variable costing than it was
D) P212,500 under absorption costing. Given these facts, the number of units of product in
beginning inventory last year must have been:
24 The following information relates to Zinc Corporation for last year: C A) 24,000 units
B) 27,000 units
Sales ........................................................... P500,000 C) 23,000 units
Net operating income ................................ P25,000 D) 24,333 units
Degree of operating leverage .................... 5
28 Olympia Company produces a single product. Last year, the company had a net B
Sales at Zinc are expected to be P600,000 next year. Assuming no change in cost operating income of P92,000 using absorption costing and a net operating income of
structure, this means that net operating income for next year should be: P98,600 using variable costing. If the fixed manufacturing overhead cost was P3.00
A) P30,000 per unit for the last two years, and if production was 18,000 units, then sales in units
B) P45,000 last year were:
C) P50,000 A) 24,600
D) P125,000 B) 20,200
C) 15,800
25 Moruzzi Corporation is a single-product company that expects the following D D) 15,000
operating results for next year:
29 Stead Company produces a single product. Last year, the company's net operating C
Sales ...........................................................P320,000 income computed by the absorption costing method was P6,400, and its net
Contribution margin per unit ..................... P0.20 operating income computed by the variable costing method was P9,100. The
Contribution margin ratio .......................... 25% company's unit product cost was P17 under variable costing and P20 under
Degree of operating leverage .................... 8 absorption costing. If the ending inventory consisted of 2,100 units, the beginning
inventory in units must have been:
How many units would Moruzzi have to sell next year to break-even? A) 1,200
A) 50,000 B) 2,100
B) 200,000 C) 3,000
C) 280,000 D) 4,800
D) 350,000
30 A company that produces a single product had a net operating income of P85,500 C
26 The Breiden Company sells rodaks for P6.00 per unit. Fixed expenses total P37,500 C using variable costing and a net operating income of P90,000 using absorption
per month and variable expenses are P2.00 per unit. How many rodaks must be costing. Total fixed manufacturing overhead was P150,000, and production was
sold each month to realize a profit before income taxes of 15% of sales (to the 100,000 units. Between the beginning and the end of the year, the inventory level:
nearest whole unit): A) increased by 4,500 units
A) 9,375 units B) decreased by 4,500 units
B) 11,029 units C) increased by 3,000 units
C) 12,097 units D) decreased by 3,000 units
D) 9,740 unit

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