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(MAS) Management Advisory Services (35-item Quiz): Attempt review
Home / My Courses / ACP323_10420_2021-2022_2NDSEM-SEM_CAE / Unit Learning Outcome (ULO) - Weeks 13 to 14 / (MAS) Management Advisory Services (35-item Quiz)
Started on Friday, April 22, 2022, 5:08 PM
State Finished
Completed on Friday, April 22, 2022, 5:34 PM
Time taken 25 mins 44 secs
Grade 27.00 out of 35.00 (77%)
Question 1
Correct
Mark 1.00 out of 1.00
When a firm prepares financial reports by using absorption costing, it may find that
a. profits will always decrease with decreases in sales.
b. profit may decrease with increased sales even if there is no change in selling price and costs. 
c. decreased output and constant sales result in increased profit.
d. profits will always increase with increase in sales.
The correct answer is: profit may decrease with increased sales even if there is no change in selling price and costs.
Question 2
Correct
Mark 1.00 out of 1.00
Glenda Company expects to generate P10 million internally which could be available for
financing part of its P12 million capital budget for this coming year. Glenda’s management
believes that a debt-equity ratio of 40 percent is best for the firm. How much should be
paid in dividends if the target debt-equity ratio is to be maintained?
a. P2,800,000
b. P1,428,571 
c. P4,000,000
d. P8,571,429
The correct answer is: P1,428,571
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Question 3
Correct
Mark 1.00 out of 1.00
Six-Two Convenience Store currently opens only Monday through Saturday. Six-Two is
considering opening on Sundays. The annual incremental fixed costs of Sunday openings
are estimated at P39,000. Six-Two’s gross margin on sales is 25 percent. Six-Two
estimates that 60 percent of its Sunday sales to customers would be made on other days if
the stores were not open on Sundays. The one-day volume of Sunday sales that would be
necessary for Six-Two to attain the same weekly operating income as the current six-day
week is
a. P4,500
b. P5,000
c. P6,000
d. P7,500 
The correct answer is: P7,500
Question 4
Correct
Mark 1.00 out of 1.00
Tamaraw Company is negotiating to purchase equipment that would cost P200,000, with
the expectation that P40,000 per year could be saved in after-tax cash costs if the
equipment were acquired. The equipment’s estimated useful life is 10 years, with no
salvage value, and would be depreciated by the straight-line method. Tamaraw’s minimum
desired rate of return is 12 percent. Present value of an annuity of 1 at 12 percent for 10
periods is 5.65. Present value of 1 due in 10 periods at 12 percent is 0.322. The average
accrual accounting rate of return during the first year of asset’s use is
a. 20.0 percent
b. 40.0 percent
c. 10.0 percent
d. 10.5 percent 
The correct answer is: 10.5 percent
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Question 5
Correct
Mark 1.00 out of 1.00
Claremont Company had is a manufacturer of its only one product line. It had sales of
P400,000 for 2017 with a contribution margin ratio of 20 percent. Its margin of safety ratio
was 10 percent. What are the company’s fixed costs?
a. P72,000 
b. P288,000
c. P320,000
d. P80,000
The correct answer is: P72,000
Question 6
Correct
Mark 1.00 out of 1.00
Care Products Company is considering a new product that will sell for P100 and have a
variable cost of P60. Expected volume is 20,000 units. New equipment costing P1,500 and
having a five-year useful life and no salvage value is needed, and will be depreciated using
the straight-line method. The machine has cash operating costs of P20,000 per year. The
firm is in the 40 percent tax bracket and has cost of capital of 12 percent. The present
value of 1, end of five periods is 0.56743; present value of annuity of 1 for 5 periods is
3.60478. Suppose the 20,000 estimated volume is sound, but the price is in doubt. What is
the selling price (rounded to nearest peso) needed to earn a 12 percent internal rate of
return?
a. P81.00
b. P85.00 
c. P70.00
d. P90.00
The correct answer is: P85.00
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Question 7
Correct
Mark 1.00 out of 1.00
Which of the following is not classifiable as a management advisory service by CPA?
a. Assistance in budget preparation. 
b. Systems design.
c. Project feasibility study.
d. Make or buy analysis.
The correct answer is: Assistance in budget preparation.
Question 8
Correct
Mark 1.00 out of 1.00
The following characterize management advisory services except
a. utilize more junior staff than senior members of the firm 
b. broader in scope and varied in nature
c. relate to specific problems where expert help is required
d. involve decision for the future
The correct answer is: utilize more junior staff than senior members of the firm
Question 9
Incorrect
Mark 0.00 out of 1.00
If fixed costs increase while variable cost per unit remains constant, the contribution
margin will be
a. higher 
b. unchanged
c. unpredictable
d. lower
The correct answer is: unchanged
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Question 10
Correct
Mark 1.00 out of 1.00
Total production costs for Carera, Inc. are budgeted at P230,000 for 50,000 units of
budgeted output and P280,000 for 60,000 units of budgeted output. Because of the need
for additional facilities, budgeted fixed costs for 60,000 units are 25% more than budgeted
fixed costs for P50,000 units. How much is Carera’s budgeted variable cost per unit of
output?
a. P1.60
b. P3.00 
c. P5.00
d. P1.67
The correct answer is: P3.00
Question 11
Correct
Mark 1.00 out of 1.00
Lemery Corporation had sales of P120,000 for the month of May. It has a margin of safety
ratio of 25 percent, and after-tax return on sales of 6 percent. The company assumes its
sales constant every month. If the tax rate is 40 percent, how much is the monthly fixed
costs?
a. P90,000
b. P432,000 
c. P360,000
d. P36,000
The correct answer is: P432,000
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Question 12
Correct
Mark 1.00 out of 1.00
Resi, Inc. expects net income of P800,000 for the next fiscal year. Its targeted and current
capital structure is 40% debt and 60% common equity. The director of capital budgeting
has determined that the optimal capital spending for next year is P1,200,000. If Resi
follows a strict residual dividend policy, what is the expected dividend payout ratio for next
year?
a. 10.0% 
b. 66.7%
c. 80.0%
d. 40.0%
The correct answer is: 10.0%
Question 13
Correct
Mark 1.00 out of 1.00
Tiger Company’s stock is currently selling for P60 a share. The firm is expected to earn
P5.40 per share and to pay a year-end dividend of P3.60. If investors require a 9 percent
return, what rate of growth must be expected for Tiger?
a. 50.0 percent
b. Zero growth
c. 3.0 percent 
d. 40.0 percent
The correct answer is: 3.0 percent
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Question 14
Correct
Mark 1.00 out of 1.00
A very high operating leverage indicates that a firm
a. has high fixed costs
b. has high variable costs
c. has a high net income
d. is operating close to its breakeven point 
The correct answer is: is operating close to its breakeven point
Question 15
Correct
Mark 1.00 out of 1.00
The Didang Company has an operating leverage of 2. Sales for 2016 are P2,000,000 with a
contribution margin of P1,000,000. Sales are expected to be P3,000,000 in 2017. Net
income for 2017 can be expected to increase by what amount over 2016?
a. 200 percent
b. P500,000 
c. P250,000
d. 40 percent
The correct answer is: P500,000
Question 16
Incorrect
Mark 0.00 out of 1.00
Opportunity costs:
a. Do not vary among alternative courses of action. 
b. Are benefits that could have been obtained by following another course of action.
c. Have already been incurred as a result of past action.
d. Are treated as period costs under variable costing.
The correct answer is: Are benefits that could have been obtained by following another course of action.
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Question 17
Correct
Mark 1.00 out of 1.00
The Auto Division of Fly Insurance employs three claims processors capable of processing
5,000 claims each. The division currently processes 12,000 claims. The manager has
recently been approached by two sister divisions. Division A would like the auto division to
process approximately 2,000 claims. Division B would like the auto division to process
approximately 5,000 claims. The Auto Division would be compensated Division A or
Division B for processing these claims. Assume that these are mutually exclusive
alternatives. Claims processor salary cost is relevant for
a. division B alternative only 
b. neither Division A nor Division B alternatives
c. division A alternative only
d. both Division A and Division B alternatives
The correct answer is: division B alternative only
Question 18
Correct
Mark 1.00 out of 1.00
If actual overhead is P14,000, overhead applied is P13,400, and overhead budgeted for the
standard hours allowed is P15,600, then the overhead controllable variance is
a. P2,200U
b. P600F
15600-14000=1600F
c. P1,600U
d. P1,600F 
The correct answer is: P1,600F
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Question 19
Correct
Mark 1.00 out of 1.00
Signal Co. manufactures a single product. For 2015, the company had 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 2016, however total sales are expected to jump
by 20%. If the 2016 projections are realized, net income in 2016 should exceed net income
in 2015 by
a. 20%
b. 100%
c. 50%
d. 80% 
The correct answer is: 80%
Question 20
Correct
Mark 1.00 out of 1.00
Isabelle, Industries plans to sell 200,000 units of Batik products in October and anticipates
a growth in sales of 5 percent per month. The target ending inventory in units of the
product is 80 percent of the next month’s estimated sales. There are 150,000 units in
inventory as of the end of September. The production requirement in units of Batik for the
quarter ending December 31 would be
a. 675,925
b. 670,560
c. 691,525
d. 665,720 
The correct answer is: 665,720
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Question 21
Correct
Mark 1.00 out of 1.00
Which of the following is a difference between a static budget and a flexible budget?
a. A flexible budget includes all costs, a static budget includes only fixed costs.
b. A flexible budget gives different allowances for different levels of activity, a static budget does not. 
c. There is no difference between the two.
d. A flexible budget includes only variable costs; a static budget includes only fixed costs.
The correct answer is: A flexible budget gives different allowances for different levels of activity, a static budget does
not.
Question 22
Incorrect
Mark 0.00 out of 1.00
Which of the following statements about the selection of standards is true?
a. Ideal standards tend to extract higher performance levels since they give employees something to live up 
to.
b. Currently attainable standards may encourage operating inefficiencies.
c. Currently attainable standards discourage employees from achieving their full performance potential.
d. Ideal standards demand maximum efficiency which may leave workers frustrated, thus causing a decline in
performance.
The correct answer is: Ideal standards demand maximum efficiency which may leave workers frustrated, thus causing
a decline in performance.
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Question 23
Correct
Mark 1.00 out of 1.00
Hilltop Company is planning to invest P80,000 in a three-year project. Hilltop’s expected
rate of return is 10%. The present value of P1 at 10% for one year is .909, for years is .826,
and for three years is .751. The cash flow, net of income taxes, will be P30,000 for the first
year (present value of P27,270) and P36,000 for the second year (present value of
P29,736). Assuming the rate of return is exactly 10%, what will the cash flow, net of income
taxes, be for the third year?
a. P17,268
b. P22,000
c. P22,994
d. P30, 618 
The correct answer is: P30, 618
Question 24
Correct
Mark 1.00 out of 1.00
Scrambled Brain Company has fixed costs of P90,000. At a sales volume of P300,000,
return on sales is 10%; at a P500,000 volume, return on sales is 22%. What is the breakeven volume?
a. P225,000* 
b. P450,000
c. P200,000
d. P120,000
The correct answer is: P225,000*
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Question 25
Correct
Mark 1.00 out of 1.00
The per-unit standard cost for variable overhead is normally based on the
a. budgeted total cost for variable overhead divided by the number of units expected to be produced.
b. ratio of fringe benefits to the basic cost of labor.
c. standard quantity of an input factor used in a unit of product. 
d. actual variable overhead cost incurred at the achieved level of production.
The correct answer is: standard quantity of an input factor used in a unit of product.
Question 26
Incorrect
Mark 0.00 out of 1.00
Galvez Company expects next year’s after-tax income to be P7,500,000. The firm’s debt
ratio is currently 40 percent. Galvez has P6,000,000 of profitable investment opportunities,
and it wishes to maintain its existing debt ratio. According to the residual dividend policy,
what is the expected dividend payout ratio next year?
a. 52.0 percent
b. 75.0 percent
c. 25.0 percent 
d. 48.0 percent
The correct answer is: 52.0 percent
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Question 27
Correct
Mark 1.00 out of 1.00
Firm D and Firm S are competitors within the same industry. Firm D produces its product
using large amounts of direct labor. 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 S will lose more profit than Firm D. 
b. Neither Firm D nor Firm S will lose profit.
c. Firm D will lose more profit than Firm S.
d. Firm D and Firm S will lose the same amount of profit.
The correct answer is: Firm S will lose more profit than Firm D.
Question 28
Correct
Mark 1.00 out of 1.00
Karla 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. Karla’s budgeted overhead for the
month is
a. P774,000
b. P12,800
c. P18,800 
d. P84,800
The correct answer is: P18,800
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Question 29
Incorrect
Mark 0.00 out of 1.00
Gorilla, Co. provides two products, M and W. M accounts for 60 percent of total sales,
variable cost as a percentage of selling price are 60% for M and 85% for W. Total fixed
costs are P225,000. If fixed costs will increase by 30 percent, what amount of peso sales
would be necessary to generate an operating profit of P48,000?
a. P910,000
b. P1,350,000 
c. P1,135,000
d. P486,425
The correct answer is: P1,135,000
Question 30
Correct
Mark 1.00 out of 1.00
Last month, Zamora Company had an income of P0.75 per unit with sales of 60,000 units.
During the current month when the unit sales are expected to be only 45,000, there is a loss
of P1.25 per unit. Both the variable cost per unit and total fixed costs remain constant. The
fixed costs amounted to
a. P360,000 
b. P80,000
c. P210,000
d. P247,500
The correct answer is: P360,000
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Question 31
Incorrect
Mark 0.00 out of 1.00
BM Motors, Inc. employs 40 sales personnel to market its line of luxury automobiles. The
average car sells for P1,200,000 and a 6% commission is paid to the salesperson. BM
Motors is considering a change to a commission arrangement that would pay each
salesperson a salary of P24,000 per month plus a commission of 2% of the sales made by
that salesperson. The amount of total car sales at which BM Motors would be indifferent
as to which plan to select is
a. P12,000,000
b. P30,000,000 
c. P24,000,000
d. P22,500,000
The correct answer is: P24,000,000
Question 32
Incorrect
Mark 0.00 out of 1.00
The Liberal Marketing Co., is expecting an increase of fixed costs by P78,750 upon moving
their place of business to the downtown area. Likewise it is anticipating that the selling
price per unit and the variable expenses will not change. At present, the sales volume
necessary to breakeven is P750,000 but with the expected increase in fixed costs, the sales
volume necessary to breakeven would go up to P975,000. Based on these projections,
what were the total fixed costs before the increase of P78,750?
a. P183,750 
b. P300,000
c. P262,500
d. P341,250
The correct answer is: P262,500
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Question 33
Correct
Mark 1.00 out of 1.00
The last step in activity-based costing is to
a. identify the major activities that pertain to the manufacture of specific products
b. identify the cost drivers that accurately measure each activity’s contribution to the finished product
c. assign manufacturing overhead costs for each activity cost pool to products 
d. allocate manufacturing overhead costs to activity cost pools
The correct answer is: assign manufacturing overhead costs for each activity cost pool to products
Question 34
Incorrect
Mark 0.00 out of 1.00
The Fields Company is planning to purchase a new machine which it will depreciate, for
book purposes, on a straight-line basis over a ten-year period with no salvage value and a
full year’s depreciation taken in the year of acquisition. The new machine is expected to
produce cash flow from operations, net of income taxes, of P66,000 a year in each of the
next ten years. The accounting (book value) rate of return on the initial investment is
expected to be 12%. How much will the new machine cost?
a. P550,000
b. P792,000
c. P300,000
d. P660,000 
The correct answer is: P300,000
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Question 35
Correct
Mark 1.00 out of 1.00
Colger Company manufactures a single product using standard costing. Variable
production costs are P12 and fixed production costs are P125,000. Colger uses a normal
activity of 12,500 units to set its standard costs. Colger began the year with 1,000 units in
inventory, produced 11,000 units, and sold 11,500 units. The standard costs of goods sold
under absorption costing would be
a. P132,000
b. P253,000 
c. P115,000
d. P242,000
The correct answer is: P253,000
◄ (AP) Audit of PPE Theories, PPE and Depreciation
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