CPAR
CPA REVIEW SCHOOL OF THE PHILIPPINES
Manila
MANAGEMENT ADVISORY SERVICES
APRIL 28 AND MAY 1, 2021
Final Pre-board Examination
Instructions: Choose the BEST answer for each of the following items.
1.
A company is using a constant growth dividend discount model to
forecast the value of a share of common stock. Inherent in such
company’s assumptions is the idea that
a. compounding growth is linear.
b. dividends will grow at a rate faster than the presumed discount
rate.
c. stock price will grow at the same rate as the dividend.
d. stock price will grow at the same amount as the dividend.
2.
ABC Company wants to buy shares of XYZ Company in two years. ABC
Company uses a constant growth dividend discount model with a
presumed dividend growth rate of 5%. If ABC’s discount rate is 10%
and XYZ’s current year dividend is P20, what is the approximate price
ABC Company will pay?
a. P400
c. P441
b. P420
d. P463
3.
In equipment replacement decisions, which one of the following does
not affect the decision-making process?
a. current disposal price of the old equipment
b. original fair market value of the old equipment
c. cost of the new equipment
d. operating costs of the new equipment
4.
In considering the payback period for three projects, X Corporation
gathered the following data about cash flows:
Which of the projects will achieve payback within three years?
a. Projects A, B, and C
b. Projects B and C
c. Project B only
d. Projects A and C
5.
If a product required a great deal of electricity to produce, and crude
oil prices increased, which of the following costs most likely increased?
a. Direct materials
c. Prime costs
b. Direct labor
d. Conversion costs
6.
Listed below are selected line items from the cost of quality report for
a company for last month.
Category
Rework
Equipment maintenance
Product testing
Product repair
Amount
P 725
1,154
786
695
What is the company’s total prevention and appraisal cost for last
month?
a. P 786
c. P1,849
b. P1,154
d. P1,940
7.
A corporation had sales of P2,000,000, a profit margin of 11%, and
assets of P2,500,000. The company decided to reduce its debt ratio to
0.40 from 0.50 by selling new common stock and using the proceeds
to repay principal on some outstanding long-term debt.
After the refinancing, what is the company’s return on equity?
a. 3.5 percent
c. 14.7 percent
b. 5.3 percent
d. 22.9 percent
8.
The coefficient of determination, r2, in a multiple regression equation
is the
a. percentage of variation in the independent variables explained
by the variation in the dependent variable.
b. percentage of variation in the dependent variables explained by
the variation in the independent variable.
c. measure of the proximity of actual data points to the estimated
data points.
d. coefficient of the independent variable divided by the standard
error of regression coefficient.
9.
Which of the following is correct if there is an increase in the resources
available within an economy?
a. More goods and services will be produced in the economy.
b. The economy will be capable of producing more goods and
services.
c. The standard of living in the economy will rise.
d. The technological efficiency of the economy will improve.
10.
Assume an economy is at the peak of the business cycle. Which of the
following policy combinations is the most effective way to dampen the
economy and prevent inflation?
a. Increase government spending, reduce taxes, increase money
supply, and reduce interest rates.
b.
c.
d.
Reduce government spending, increase taxes, increase money
supply, and increase interest rates.
Reduce government spending, increase taxes, reduce money
supply, and increase interest rates.
Reduce government spending, reduce taxes, reduce money
supply, and reduce interest rates.
11.
The benefits of a just-in-time system for raw materials usually include:
a. elimination of non-value adding operations.
b. increase in the number of suppliers, thereby ensuring
competitive bidding.
c. maximization of the standard delivery quantity, thereby
lessening the paperwork for each delivery.
d. decrease in the number of deliveries required to maintain
production.
12.
Controllers ordinarily are not responsible for
a. preparation of tax returns.
b. reporting to government.
c. protection of assets.
d. investor relations.
13.
The professional certification program most suited for one interested
in a career in management accounting leads to which of the following
designations?
a. Certified Computing Professional (CCP)
b. Certified Internal Auditor (CIA)
c. Certified Information Systems Auditor (CISA)
d. Certified Management Accountant (CMA)
14.
The IMA Statement of Ethical Professional Practice includes an integrity
standard. It requires an IMA member to
a. refrain from conduct that prejudices the ability to perform
duties ethically.
b. report any relevant information that could influence users of
financial statements,
c. disclose confidential information when authorized by his or her
firm or required under the law.
d. refuse gifts from anyone.
15.
Following are a company’s production costs for the month just ended:
Direct materials
Direct labor
Factory overhead
P100,000
90,000
4,000
What amount of costs should be traced to specific products in the
production process?
a.
b.
P194,000
P190,000
c.
d.
P100,000
P 90,000
16.
A company has fixed costs of P100,000 and breakeven sales of
P800,000. What is the projected profit at P1,200,000 sales?
a. P 50,000
c. P200,000
b. P150,000
d. P400,000
17.
A company is concerned about its operating performance last year, as
summarized below:
Revenues (P12.50 per unit)
Variable costs
Operating loss
P300,000
180,000
(40,000)
How many additional units should have been sold in order for the
company to breakeven last year?
a. 32,000
c. 16,000
b. 24,000
d.
8,000
18.
A company is contemplating marketing a new product. Fixed costs will
be P800,000 for production of 75,000 units or less, and P1,200,000 if
production exceeds 75,000 units. The variable cost ratio is 60% for the
first 75,000 units. Variable costs will decrease to 50% of sales for units
in excess of 75,000. If the product is expected to sell for P25 per unit,
how many units must the company sell to breakeven?
a. 120,000
c. 96,000
b. 111,000
d. 80,000
ITEMS 19 TO 21 ARE BASED ON THE FOLLOWING:
A wholesale distributing company has budgeted its before-tax profit to
be P643,500 for Year 3. The company is preparing its annual budget
for Year 4 and has accumulated the following data:
Projected sales
Variable costs as a percent of sales:
Cost of merchandise
Sales commissions
Shipping expenses
Annual fixed operating costs:
Selling expenses
Administrative expenses
19.
P6,000,000
30%
5%
10%
P 772,200
1,801,800
If the wholesale distributing company wants to earn the same beforetax operating income in Year 4 as budgeted for Year 3, the projected
sales would not be P6,000,000 but would have to be:
a. P4,950,000
c. P5,850,000
b.
P5,362,500
d.
P7,150,000
20.
Using the original P6 million projection, the wholesale distributing
company’s margin of safety in terms of revenues for Year 4 would be
a. P 82,500
c. P 280,000
b. P150,000
d. P1,320,000
21.
Using the original P6 million projection, the wholesale distributing
company’s degree of operating leverage for Year 4 would be
a. 8.06 times
c. 4.54 times
b. 2.33 times
d. 1.82 times
22.
The following is a summarized income statement for a company’s profit
center for the month just ended:
Contribution margin
P70,000
Period costs:
Manager’s salary
P20,000
Facility depreciation
8,000
Corporate expense allocation
5,000
33,000
Profit center income
P37,000
Which of the following amounts would most likely be subject to the
control of the profit center’s manager?
a. P70,000
c. P37,000
b. P50,000
d. P33,000
ITEMS 23 TO 25 ARE BASED ON THE FOLLOWING:
A corporation is a highly automated manufacturing firm. The vice president of finance has
decided that traditional standards are inappropriate for performance measures in an
automated environment. Labor is insignificant in terms of the total cost of production and
tends to be fixed, material quality is considered more important than minimizing material
cost, and customer satisfaction is the number one priority. As a result, delivery performance
measures have been chosen to evaluate performance.
The following information is considered typical of the time involved to complete orders of
50 units.
Wait time from order being placed to start of production
Wait time from start of production to completion
Inspection time
Process time
Move time
23.
What is the manufacturing cycle efficiency for this order?
a. 40%
c. 80%
b. 32%
d. 61.5%
5
7
2
8
3
hours
hours
hours
hours
hours
24.
What is the delivery cycle efficiency for this order?
a. 40%
c. 80%
b. 32%
d. 61.5%
25.
What is the velocity for this order?
a. 0.16
c. 2.5
b. 0.40
d. 6.25
26.
A computer service center had the following operating statistics for the
month:
Sales
Operating income
Net profit after taxes
Total assets
Shareholders’ equity
Cost of capital
P450,000
25,000
8,000
500,000
200,000
6%
Based on the given information, which one of the following statements
is true? The computer service center has a
a. return on investment of 4%.
b. residual income of P(5,000).
c. return on investment of 1.6%.
d. residual income of P(22,000).
ITEMS 27 AND 28 ARE BASED ON THE FOLLOWING:
A company reported these data at year end:
Pre-tax operating income
Current assets
Long-term assets
Current liabilities
Long-term liabilities
P4,000,000
4,000,000
16,000,000
2,000,000
5,000,000
The long-term debt has an interest rate of 8%,and its fair value
equaled its book value at year-end. The fair value of the equity capital
is P2 million greater than its book value. The company’s income tax
rate is 25%, and its cost of equity capital is 10%.
27.
What is the weighted average cost of capital (WACC) to be used in the
economic value added (EVA) calculation?
a. 8.0%
c. 9%
b. 8.89%
d. 10%
28.
The economic value added (EVA) is
a. P1,380,000
c. P1,830,000
b. P1.620,000
d. P3,000,000
29.
An appropriate transfer price between two divisions of a manufacturer
can be determined from the following data:
FABRICATING DIVISION:
Market price of subassembly
Variable cost of subassembly
Excess capacity in units
P50
P20
0
ASSEMBLING DIVISION:
Number of units needed
500
If the Fabricating Division would consider to sell the needed
subassembly to the Assembling Division, the minimum transfer price
for this sale is:
a. P20
c. P50
b. P70
d. P35
ITEMS 30 TO 32 ARE BASED ON THE FOLLOWING:
A company purchased a new machine to stamp the company logo on
its products. The cost of the machine was P250,000, and it has an
estimated useful life of 5 years with an expected salvage value at the
end of its useful life of P50,000. The company uses the straight-line
depreciation method.
The new machine is expected to save P125,000 annually in operating
costs. The company’s tax rate is 40%, and it uses a 10% discount rate
to evaluate capital expenditures.
30.
What is the traditional payback period for the new stamping machine?
a. 2.00 years
c. 2.75 years
b. 2.63 years
d. 2.94 years
31.
What is the accounting rate of return based on the average investment
in the new stamping machine?
a. 20.4%
c. 40.8%
b. 34.0%
d. 51.0%
32.
What is the profitability index of the new stamping machine?
a. 1.504
c. 0.665
b. 1.380
d. 2.507
33.
An auditor used regression analysis to evaluate the relationship
between utility costs and machine hours. The following information
was developed using a computer software program:
Intercept
Regression coefficient
Correlation coefficient
Standard error of estimate
Number 0f observations
2,050
0.825
0.800
200
36
What is the expected utility cost if the company’s 10 machines will be
used 2,400 hours next month?
a. P4,050
c. P3,970
b. P4,030
d. P3,830
34.
A firm must decide the mix of production of Product X and Product Y.
There are only two resources used in the two products, resources A
and B. Data related to the two products are given as follows:
Resource A
Resource B
Unit profit
Product X
3
2
P8
Product Y
7
1
P6
What is the appropriate objective function to maximize profit?
a. 3x + 7y
c. 8x +6y
b. 2x + y
d. 5x + 8y
35.
Sustainability reporting
a. is about communicating how the company manages its long term
value creation by taking an integrated approach to both
traditional risks and the wider sustainability risks.
b. intends to show how the company integrates environmental and
social thinking into business.
c. is about communicating publicly how the company assesses
which environmental or social issues are most important, how
these issues are managed, and how the company is performing
against each of these key issues.
d. pulls together information that sits in separate reporting strands
to explain how the firm creates value.
ITEMS 36 TO 39 ARE BASED ON THE FOLLOWING:
LOS ANGELES CORP. manufactures a cleaning solvent. The company
employs both skilled and unskilled workers. Skilled workers class C are
paid P12 per hour, while unskilled workers class D are paid P7 per hour.
To produce one 55-gallon drum of solvent requires 4 hours of skilled
labor and 2 hours of unskilled labor. The solvent requires 2 different
materials: A and B. The standard and actual material information is
given below:
Standard:
Material A:
Material B:
30.25 gallons @ P1.25 per gallon
24.75 gallons @ P2.00 per gallon
Actual:
Material A:
Material B:
Skilled labor hours:
Unskilled labor hours:
10,716 gallons purchased and used @ P1.50 per gallon
17,484 gallons purchased and used @ P1.90 per gallon
1,950 @ P11.90 per hour
1,300 @ P7.15 per hour
During the current month LOS ANGELES CORP. manufactured 500
55-gallon drums. (Round all answers to the nearest whole peso.)
36.
What is the total material mix variance?
A.
P3,596 F
C.
P4,864 F
B.
P3,596 U
D.
P4,864 U
37.
What is the total material yield variance?
A.
P1,111 U
C.
P2,670 U
B.
P1,111 F
D.
P2,670 F
38.
What is the labor mix variance?
A.
P1,083 U
B.
P2,588 U
C. P1,083 F
D. P2,588 F
39.
What is the labor yield variance?
A.
P2,583 U
B.
P2,583 F
C.
D.
P1,138 F
P1,138 U
ITEMS 40 TO 42 ARE BASED ON THE FOLLOWING:
BENGUET CORP. provided the following information in relation to its
operating activities which started only this year.
Units sold @ P20 per unit
Units produced during the period
Direct materials
Direct labor
Factory overhead
Office expense
Selling expense
40.
Unit Variable Cost
P8.00
5.00
2.00
4.00
30,000
25,000
Fixed Cost
P100,000.00
What is the total period cost under variable costing?
A.
P240,000
C.
P260,000
P40,000.00
B.
P140,000
D.
P160,000
41.
What is the total period cost under throughput costing?
A.
P450,000
C.
P415,000
B.
P470,000
D.
P400,000
42.
What is the total amount of fixed cost presented in the
income statement under absorption costing?
A.
P 40,000
C.
P140,000
B.
P123,333
D.
P120,000
43. In relation to variable and absorption costing, which of the following
statements is correct?
A.
Fixed overhead volume and spending variance do not exist under
variable costing.
B.
Even if sales are constant but production is fluctuating, net
income under variable costing also fluctuates.
C.
Variable costing income statement classifies cost that is useful
for CVP analysis while absorption costing income statements
classifies cost in accordance with PFRS.
D.
Both A and C.
44. In relation to comprehensive budgeting, which of the following
statements is incorrect?
A.
The budget committee DO NOT PREPARE and DEVELOP
BUDGETS. They only approve it because the preparation of
budgets rests with individual managers.
B.
Rolling budget is a budget that is revised on a regular
(continuous) basis.
C.
The information on budgeted balance sheet does not contain
information for the current budget only but rather it has
cumulative information like a usual balance sheet of a set of
financial statements.
D.
None from the statements is incorrect.
45.
Which of the following budgets are usually prepared first?
A.
Direct labor budget
C.
Purchases budget
B.
Cash budget
D.
Production budget
NUMBERS 46 TO 49 ARED ON THE FOLLOWING:
At the end of 2019, RAICHU CORP., beach volleyball merchandiser,
provided the following information regarding its statement of financial
position (balance sheet):
Assets
Cash
Receivables
Inventory
Plant, net
Total
Equities
P 40,000 Accounts payable
50,000
30,000 Stockholders’ equity
60,000
P 180,000 Total
P 45,000
135,000
P 170,000
RAICHU has recently completed its 2020 sales forecasting and
generated the following sales information for the next 4 months:
January
February
March
April
P120,000
80,000
150,000
100,000
Additional information:
•
RAICHU has a gross profit rate of 40% and applied constantly to
all of its sales.
•
RAICHU’s total sales comprise of 80% credit sales and 20% cash
sales.
•
RAICHU maintains inventory at 60% of the coming month’s
budgeted sales requirements.
•
RAICHU collects 70% of its sales in the month of sale, 30% in
the following month.
•
RAICHU pays for its purchases 40% in the month of purchase,
60% in the following month.
•
The company has a total monthly fixed costs of P15,000, P5,000
of which is the depreciation of the company’s plant. All cash fixed
costs are paid in the month they are incurred.
•
On the month of February, property taxes amounting to P60,000
are to be paid.
•
At the end of the first quarter, quarterly dividends amounting to
P70,000 are to be paid.
•
Due to a high capital expenditure requirements for 2020, RAICHU
is planning to issue additional shares of 10,000, with a par value
of P2, at P3 per share on March 15, 2020.
46.
How much is the total purchases of the first quarter of 2020?
A.
P 72,000
C.
P216,000
B.
P212,400
D.
P118,800
47.
What is the cash balance at the end of February 2020?
A.
45,720
C.
56,200
B.
97,880
D.
None of the above
48.
What are the total assets at the end of the first quarter of 2020?
A.
P181,500
C.
P192,400
B.
P165,320
D.
P173,200
49. What is the total shareholder’s equity as of the end of the first quarter
of 2020?
A.
P100,000
C.
P120,000
B.
P150,000
D.
P130,000
NUMBERS 50 AND 51 ARE BASED ON THE FOLLOWING:
CHARMANDER INC. manufactures and sells ski shirts and gears. For
the year 2020, the following sales forecasts are made:
January
120,000
February
100,000
March
110,000
CHARMANDER wants to maintain a finished goods inventory of 40% of
the next month’s sales requirements. In addition, CHARMANDER is
maintaining raw materials inventory of 30% of the next month’s needs.
The following standard amounts per unit were predetermined for the
year 2020:
Direct materials (2.5 feet @ P2.00)
Direct labor (1.50 hours @ P2.50)
Factory overhead (1.50 hours @ P1.50)
P5.00
3.75
2.25
The budgeted variable selling and administrative expense is P2.10 per
unit. The budgeted fixed selling and administrative expense is P30,000
per quarter, which includes depreciation of P3,000 per month.
50. What are the total manufacturing costs for the month of January?
A.
P1,220,000
C.
P1,320,000
B.
P1,232,000
D.
P1,332,000
51. What is the total amount of operating expense for the month of January?
A.
P245,200
C.
P262,000
B.
P282,000
D.
P259,000
52.
Which of the following costs is relevant in a scrap or
rework decision on a defective product?
Variable Manufacturing Cost
Applied Fixed Rework Cost
A.
Yes
No
B.
No
Yes
C.
Yes
Yes
D.
No
No
53.
In relation to opportunity cost, which of the statements below is
incorrect?
S1:
S2:
S3:
A.
B.
54.
Opportunity cost is recorded in the accounts of an
organization whether the company is using variable or full
costing.
If a potential benefit was not given up since there is no other
alternative, opportunity cost is zero.
Opportunity costs are costs irrevocably incurred by past
actions.
S1 and S2
S2 and S3
D.
E.
S1 and S3
S3 only
A make or buy cost analysis involves all of the following considerations
except (M2)
A.
comparison of incremental revenue with incremental costs.
B.
consideration of opportunity costs.
C.
comparison of relevant internal costs with the cost to purchase
externally.
D.
evaluation of an external supplier.
NUMBERS 55 AND 56 ARE BASED ON THE FOLLOWING:
YUGI CORP. manufactures three types of playing cards. Because of a
recent lack of skilled wood machine operators, the corporation has had
a shortage of available direct labor hours. The following per unit data
relates to the three products of the corporation:
Sales price
Variable costs
Labor hours required
Regular
P30
20
1
Standard
P80
56
3
Deluxe
P90
45
5
YUGI only has 9,000 labor hours available next month.
55. Assuming that YUGI has no limit as to the production of any products,
what is the total contribution margin YUGI has to report on its CVP
income statement?
A.
P90,000
C.
P86,400
B.
56.
P80,400
D.
P78,200
Assuming that YUGI can only sell 1,200 units of each product, what is
the total contribution margin YUGI has to report on its CVP income
statement?
A.
P90,000
C.
P86,400
B.
P80,400
D.
P78,200
57. EXODIA CORP. is considering dropping its MAGIC CARD toy
due to continuing losses. Revenue and cost data on the toy
for the past year follow:
Sales of 15,000 units
Variable expenses
Contribution margin
Fixed expenses
Net operating loss
P150,000
120,000
30,000
40,000
(P10,000)
If the toy were discontinued, then EXODIA could avoid P8,000 per year
in fixed costs. if the MAGIC CARD toy is dropped, the production and
sale of other EXODIA toys would increase so as to generate a P16,000
increase in the contribution margin received from these other toys. At
what selling price per MAGIC CARD should EXODIA be indifferent (on
economic grounds) between dropping the MAGIC CARD or continuing
its production and sale? (All other conditions remain the same,
including annual sales of 15,000 units of the MAGIC CARD toy.)
A.
P8.33
C.
P9.60
B.
P9.25
D.
P10.70
NUMBERS 58 AND 59 ARE BASED ON THE FOLLOWING:
The next year’s budgeted sales of BALMOND CORP is P1,000,000, 90%
would be credit sales. The current credit term of the company is 30
days which is also its average collection period. The company estimates
that a proposed relaxation of credit standards would increase credit
sales by 30% and increase the average collection period form 30 days
to 45 days. However, bad debts losses on the incremental sales would
be 3%. The following information relates to BALMOND CORP.:
Selling price
Variable cost per unit
Carrying cost
Fixed costs
Assume 360 days a year and a tax rate of 30%.
P50
30
10%
P250,000
58. What is the incremental carrying cost resulting from relaxation of the credit policy?
A.
P 4,275
C.
P 3,700
B.
P 4,750
D.
P 5,675
59. What would be the effect of those changes in net income?
A.
P 66,605 increase
C.
P 66,937.50 increase
B.
p 65,975 increase
D.
P 108,062.50 decrease
60. A company using very tight standards in a standard cost
system should expect that
A.
No incentive bonus will be paid
B.
Most variances will be unfavorable
C.
Employees will be strongly motivated to attain the standard
D.
Costs will be controlled better than if lower standards were used
NUMBERS 61 TO 64 ARE BASED ON THE FOLLOWING:
Information about PRODUCT X of KAGURA CORP is as follows:
Annual sales
Ordering cost
Carrying cost per year
500,000 units
P1,125 per order
P500 per unit
Currently, every order or KAGURA from its supplier has a lot size of
1,000 units. Delivery of the supplier is not that stable. The usual
delivery takes three days, however at times, the lead time has gone as
high as eight days. KAGURA uses 200-day work per year.
61. What is economic order quantity?
A.
1,000 units
B.
667 units
C.
D.
1,500 units
800 units
62. Currently what is the total carrying cost of KAGURA?
A.
P6,500,000
C.
P375,000
B.
P250,000
D.
P500,000
63. At economic order quantity, what is the total cost related to its inventories?
A.
P750,000
C.
P7,062,500
B.
P500,000
D.
P7,000,000
64. What is reorder point?
A.
12,500 units
B.
20,000 units
65. EOQ
I.
II.
III.
A.
C.
D.
7,500 units
5,000 units
is unaffected by:
The increase of safety stock.
The increase in the variable costs of placing and receiving an order.
The change of inventory valuation (e.g. FIFO to Average Method).
I and II
D.
I, II and III
B.
II and III
C.
I and III
66. In relation to relevant costing, determine the incorrect statement.
A.
Opportunity cost is a relevant cost but unrecorded on the books
of accounts.
B.
Avoidable cost is a cost that cannot be incurred if an activity is
suspended, thus, relevant cost.
C.
If there is no market limitation in a product mix decision, the
whole scarce resource shall be allocated to the product with the
highest contribution margin per scarce resource in order to
maximize net benefits.
D.
In an accept or reject a special order decision, if the company
has an excess capacity but not enough to cater the special order,
lost units from regular sales is equal to the number of units of
the special order.
67.
Before each transaction takes place, FREYA COMPANY’s current ratio is
greater than 1 to 1 and its acid-test ratio is less than 1 to 1. Which of
the following transactions can improve both ratios?
I.
Bought inventory for cash (use perpetual inventory system)
II.
Sell merchandise for cash
A.
I only
C.
Both I and II
B.
II only
D.
Neither I nor II
NUMBERS 68 AND 69 ARE BASED ON THE FOLLOWING:
HAYABUSA INC. produces two types of samurai swords, NORMAL AND
TOP-OF-THE-LINE types. Currently, overhead are allocated to the two
products on a single cost pool on the basis of direct labor hours.
Reports about competitors’ products show signs of poor cost data. With
these, HAYABUSA’s management is considering to switch to activitybased costing. ABC revealed that there are 3 significant cost pools for
overhead and they are as follows:
Cost Pool
Quality control
Machine set-ups
Others
Amount
P300,000
400,000
100,000
Appropriate cost driver
Number of inspections
Number of set-ups
Direct labor hours
Information about HAYABUSA’s two products are as follows:
Production
Direct labor hours
Direct labor cost per hour
Direct material cost
Set-ups
Inspections
NORMAL
10,000 units
40,000 hrs.
3
50,000
80
100
TOP-OF-THE-LINE
5,000 units
10,000 hrs.
3
60,000
120
400
HAYABUSA determines selling prices by adding 40% to a product's total cost.
68.
What are the selling prices of NORMAL and TOP-OF-THE-LINE
products, respectively under the existing system?
A.
P81.00;P50.00
C.
P64.00;P32.00
B.
P113.40;P70.00
D.
P89.60;P44.80
69.
What are the selling prices of NORMAL and TOP-OF-THE-LINE
products, respectively under the ABC system?
A.
B.
70.
P30.00;P100.00
P65.80;P165.20
C.
D.
P42.00;P140.00
Answer not given
PHARSA COMPANY’s next year annual cash requirement is 4 Million.
The cash requirement is needed uniformly throughout the year.
PHARSA’s strategy to obtain the necessary cash is to periodically sell
its marketable securities and other short term investments, currently
earning at 10% per annum. In converting those securities, the
company will incur P20 per transaction. If PHARSA’s goal is to minimize
its total cost in relation to the above strategy, what is its total cost?
A.
P40,000
C.
P4,000
B.
P20,000
D.
P2,000
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