ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 45  May 2023 CPALE  11 Feb 2023  8:00 - 11:00 AM

MANAGEMENT SERVICES FIRST PRE-BOARD EXAMINATION

INSTRUCTIONS: Select the correct answer for each of the questions. Mark only one
answer for each item by shading the box corresponding to the letter of your choice on
the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only.
Set A
1. The person MOST likely to use management accounting information is a(n):
B a. Governmental taxing authority
b. Assembly department supervisor
c. Banker evaluating a credit application
d. Shareholder evaluating a stock investment

Items 2 and 3 are based on the following information

The Moba Branch of Legend Company presents the following July information for
assessment:
Sales P 2,400,000
Current Assets 560,000
Noncurrent Assets 720,000
Current Liabilities 280,000
Noncurrent Liabilities 350,000
Moba Branch’s target RoI for the month is set by the head office at 12%.

2. If Moba Branch’s July expenses are P 2,144,000, then what is the ROI?
A a. 20.0%
b. 35.6%
c. 39.4%
d. 45.7%

3. If residual income for July is P 64,000, then what is the profit margin?
B a. 6.78%
b. 9.07%
c. 11.25%
d. 17.00%

4. A credit balance in the materials quantity variance means that the standard
quantity allowed for actual production is
B a. Lower than actual quantity used
b. Higher than actual quantity used
c. Lower than actual quantity purchased
d. Higher than actual quantity purchased

5. Kaja Company analyzed three months of its cost of operation:

Sum of the units: 60 units
Sum of the costs: P 420
Sum of the units x costs: 8,800
Sum of the hours squared: 1,400
Using the least-squares technique, how much is the estimated variable cost of
producing 10 units?
B a. P 12
b. P 20
c. P 100
d. P 120

6. A cost not relevant to deciding whether to purchase a new machine is:

A a. The cost of the old machine
b. The cost of the new machine
c. Lower maintenance costs for the new machine
d. Additional training required for operating the new machine

7. Which of the following is a mixed cost?

C a. A cost is P 20.00 per unit when production is 50,000, and P 20.00 per
unit when production is 80,000.
b. A cost is P 20.00 per unit when production is 50,000, and P 12.50 per
unit when production is 80,000.
c. A cost is P 20.00 per unit when production is 50,000, and P 16.25 per
unit when production is 80,000.
d. A cost is P 40.00 per unit when production is 50,000, and P 40.00 per
unit when production is 80,000.

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
8. In business organizations implementing a responsibility accounting system, the
Human Resource (HR) department is appropriately classified as a (an)
A a. Cost center
b. Profit center
c. Revenue center
d. Investment center

9. 100% - safety margin ratio =

B a. CM ratio
b. Breakeven ratio
c. Variable cost ratio
d. No meaningful ratio

Items 10 to 12 are based on the following information

Gusion Company has the following information for its first year of operations:
Units produced 10,000
Units sold 7,000
Variable costs per unit
Direct materials P 8
Direct labor 9
Factory overhead 3
SG&A 4
Fixed costs
Manufacturing overhead P 70,000
SG&A 30,000

10. Based on full costing, what amount of period costs will Gusion deduct?
B a. P 30,000
b. P 58,000
c. P 70,000
d. P 100,000

11. Based on variable costing, income will be

A a. P 21,000 lower than it would be under absorption costing
b. P 30,000 lower than it would be under absorption costing
c. P 70,000 lower than it would be under absorption costing
d. lower than it would be under absorption costing but the exact
difference cannot be determined from given information

12. Based on absorption costing, the Cost of Goods Manufactured would be

B a. P 300,000
b. P 270,000
c. P 210,000
d. P 200,000

13. Which quantitative technique is most useful when a company has multiple
constraints in its production inputs (i.e., direct materials and direct labor)
that are required in the manufacture of its lone product?
B a. Learning Curve
b. Linear Programming
c. Regression Analysis
d. Probability Analysis

14. Nana Shop is preparing its cash budget for the month of May. Nana pays 60% of
purchases in the month of purchase and the remainder the next month. Operational
information follows:
Beginning inventory, May 1 P 20,000
Estimated May cost of goods sold 100,000
Estimated May ending inventory 35,000
April purchases 90,000

What are Nana’s estimated cash payments for shoes in May?

B a. P 115,000
b. P 105,000
c. P 87,000
d. P 70,000

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
15. When actual production is higher than normal capacity,
A a. Capacity or volume variance is favorable
b. Capacity or volume variance is unfavorable
c. Absorption costing profit is lower than variable costing profit
d. Absorption costing profit is higher than variable costing profit

16. Rafaela Company, a manufacturer of quality handmade pipes, has experienced a

steady growth in its sales for the past five years. Increased competition,
however, has led the president, Mr. Zilong, to believe that an aggressive
advertising campaign will be necessary next year to maintain the company’s
present growth. To prepare for next year’s advertising campaign, the company’s
accountant presents the following data for the current year, 2023:
Variable costs (per pipe):
Direct labor P 8.00
Direct materials 3.25
Variable overhead 2.50
Total variable costs P 13.75
Fixed costs:
Manufacturing P 25,000
Selling 40,000
Administrative 70,000
Total fixed costs P 135,000
Sales price per pipe P 25
Expected sales, 2023 (20,000 pipes) P 500,000
Income tax rate 40%
Rafaela has a sales target of P 550,000 or 22,000 pipes in 2024. If a post-tax
income of P 60,000 is desired, what is the maximum amount that can be spent on
advertising at a sales level of 22,000 pipes?
A a. P 12,500
b. P 15,000
c. P 52,500
d. P 55,000

17. The balanced scorecard perspective which focuses on all the operations that lead
to value-creation process for customers is classified as
D a. Customer perspective
b. Financial perspective
c. Learning and growth perspective
d. Internal business process perspective

18. Aulus uses a standard costing system in the manufacture of its single product.
The 35,000 units of raw material in inventory were purchased for P 105,000, and
two units of raw material are required to produce one unit of final product. In
November, the company produced 12,000 units of product. The standard cost for
material allowed for the output was P 60,000, and there was an unfavorable
quantity variance of P 2,500. What was the materials price variance for the
units used in November?
A a. P 12,500 unfavorable
b. P 12,000 unfavorable
c. P 6,000 unfavorable
d. P 2,500 favorable

19. An advantage of using a flexible budget compared to a static budget is that in

a flexible budget:
D a. Fixed cost variances are more clearly presented
b. Shortfalls in planned production are clearly presented
c. Standards can easily be charged to adjust to changing circumstances
d. Budgeted costs for a given output level can be compared with actual
costs for the same level of output

20. What information should a company take into consideration when making a decision
on whether to add or drop a product line?
C a. Revenue and all expenses
b. Revenue and variable expenses only
c. Revenue, variable expenses and avoidable fixed expenses
d. Revenue, variable expenses and unavoidable fixed expenses

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
21. Uranus Manufacturing has 31,000 labor hours available for producing A1 and B2.
Consider the following information:
Product A1 Product B2
Required labor time per unit (hours) 2 3
Maximum demand (units) 6,500 8,000
Contribution margin per unit P 5.00 P 5.70
Contribution margin per labor hour P 2.50 P 1.90
If Uranus follows proper managerial accounting practices in terms of setting a
production schedule, how much contribution margin would the company expect to
generate?
C a. P 31,450
b. P 63,100
c. P 66,700
d. P 78,100

22. Tigreal Industries uses segment reporting for all of its decentralized divisions.
It has several products that are transferred from one division to other divisions.
Tigreal wants to motivate the manager of the selling division to produce
efficiently. The optimal transfer pricing method should be a:
A a. Market-based transfer price
b. Cost-based transfer price that uses actual amounts
c. Cost-based transfer price that uses budgeted amounts
d. Variable cost-based transfer price that uses actual amounts

23. Roger Press is considering publishing a new textbook. The publisher has developed
the following cost data related a production run of 6,000, the minimum possible
production run. Roger will sell the textbook for P 45 per copy.
Development (reviews, class testing, editing) P 35,000
Typesetting 18,500
Depreciation on equipment 9,320
General and administrative 7,500
Miscellaneous fixed costs 4,400
Printing and binding 30,000
Sales staff commissions (2% of selling price) 5,400
Bookstore commissions (25% of selling price) 67,500
Author’s royalties (10% of selling price) 27,000
Total costs at production of 6,000 copies P 204,620
How many textbooks (rounded to the nearest whole amount) must Roger sell in order
to generate operating earnings of 20% of sales?
C a. 2,076 copies
b. 5,207 copies
c. 5,412 copies
d. 6,199 copies

24. The purpose of identifying manufacturing variances and assigning their

responsibility to a person/department should be to:
D a. Pinpoint fault for operating problems in the organization
b. Trace the variances to finished goods so that the inventory can be
properly valued at year-end
c. Determine the proper cost of the products so that selling prices can
be adjusted accordingly
d. Use the knowledge about the variances to promote learning and
continuous improvement in the manufacturing operations

25. Hanabi, Inc. manufactures and sells one product which requires 8 kilograms of
raw material in its manufacture. The budgeted data for the next period follows:
Unit sales: 19,000 units
Opening inventory of finished goods: 4,000 units
Closing inventory of finished goods: 3,000 units
Opening inventory of raw materials: 50,000 kilograms
Closing inventory of raw materials: 53,000 kilograms
What is the budgeted raw material purchase for the next period?
B a. 141,000
b. 147,000
c. 157,000
d. 163,000

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
26. Management accounting:
C a. Is PFRS-based
b. Does not utilize cost accounting information
c. Is optional yet vital for managerial decisions
d. Focuses on meeting external reportorial requirements

27. Harley Products wants to use cost-based pricing for its only product, a unique
new video game. Harley expects to sell 10,000 units in the upcoming year.
Variable costs will be P 65 per unit and annual fixed operating costs (including
depreciation) amount to P 80,000. Harley’s balance sheet is as follows:
Assets Liabilities and Equity
Current assets P 100,000 Accounts payable P 25,000
Plant and equipment 425,000 Debt 200,000
Equity 300,000
If Harley wants to earn a 20% return on equity, at what price should it sell the
new product?
B a. P 81.00 per unit
b. P 79.00 per unit
c. P 78.60 per unit
d. P 75.00 per unit

28. The variance under absorption costing system that measures the departure from
the denominator level of activity that was used to set the fixed overhead rate
is the:
D a. Spending variance
b. Efficiency variance
c. Flexible budget variance
d. Production volume variance

29. Leslie Company is considering to continue Department B, one of the three

departments it currently maintains. The following information has been gathered
for the three departments:
Dept. A Dept. B Dept. C
Sales P 60,000 P 50,000 P 80,000
Cost of sales P 40,000 P 42,000 P 60,000
Operating expenses:
Salaries 8,000 6,400 12,000
Rent 2,000 2,000 3,000
Utilities 1,000 2,700 2,000
Total costs P 51,000 P 53,100 P 77,000
Net income P 9,000 (P 3,100) P 3,000
If Department B is eliminated, the space it occupies will be divided equally
among Departments A and C. Utilities are allocated based on floor space occupied.
70% of the salaries in Department B would be eliminated; the other 30 % would be
split equally between Department A and C. If Department B is eliminated, income:
A a. Decreases by P 3,520
b. Decreases by P 1,520
c. Increases by P 1,180
d. Increases by P 1,520

30. A company has a raw material price variance that is unfavorable. An analysis of
this variance indicates that the company’s only available supplier of one of its
raw materials unexpectedly raised its price of the material. The action
management should take regarding this situation should be to: LITERALLY
A a. Change the raw material price standard
b. Negatively evaluate the performance of the production manager
c. Negatively evaluate the performance of the purchasing manager
d. Ask the production manager to lower the material usage standard to
compensate for higher materials costs

31. The predicted rate of response of the dependent variable to changes in independent
variable is called:
B a. Error
b. Slope dependent -> independent : SLOPE
c. Intercept
d. Regression equation

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
32. At 40% capacity, overhead cost is P 1,450; at 75% capacity, overhead cost
increases to P 2,150. How much is the fixed overhead cost at 80%?
B a. P 20
b. P 650
c. P 1,600
d. P 2,250

33. The opportunity cost of making a component part in a factory with no excess
capacity is the:
D a. Fixed manufacturing cost of the component
b. Variable manufacturing cost of the component
c. Cost of the production given up in order to manufacture the component
d. Net benefit foregone from the best alternative use of the capacity
required

Items 34 and 35 are based on the following information

Guinevere makes and sells two types of shoes, Mage and Fighter. Data
concerning these products are as follows:
Mage Fighter
Unit selling price P 20.00 P 35.00
Variable cost per unit 12.00 24.50

60% of the unit sales are Mage and annual fixed expenses are P 45,000.

34. What is the weighted-average unit contribution margin?

B a. P 4.80
b. P 9.00 EXACT divisible by 45
c. P 9.25
d. P 17.00

35. Assuming that the sales mix remains constant, what is the number of units of
Fighter that the company must sell to break even?
A a. 2,000 edi even number
b. 3,000
c. 3,375
d. 5,000

36. A company allocates a part of factory overhead among products based on labor
hours (the cost driver). Based on this allocation, the allocated overhead most
likely pertains to:
D a. Machine depreciation not specific
b. Square feet occupied
c. Electricity usage
d. Manual processes

37. Alucard Company is now making a small part used in one of its products. The unit
costs of producing the part internally are:

Direct materials: P 15.00

Direct labor: P 10.00
Variable manufacturing overhead: P 2.00
Fixed manufacturing overhead, traceable: P 4.00
Fixed manufacturing overhead, allocated: P 5.00

Depreciation of special equipment represents 75% of the traceable fixed

manufacturing overhead cost with supervisory salaries representing the balance.
The supervisory salaries could be avoided if production of the part were
discontinued. An outside supplier has offered to sell the part to Alucard Company
for P 30 each, based on an order of 5,000 parts per year.

Should Alucard Company accept this offer?

A a. No, loss will be P 10,000
b. No, profit will be P 10,000 no loss
c. Yes, loss will be P 10,000
d. Yes, profit will be P 10,000

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
38. A simple regression analysis does not assume that
C a. There is a linear relationship between variables
b. Past relationships will continue in the future
c. There may be several dependent variables
d. There is only one independent variable

39. Layla Corporation has several divisions that operate as decentralized profit
centers. At the present time, the Elite Division has excess capacity of 5,000
units with respect to the Moba-Bangbang circuit board, a popular item in many
digital applications. Information about the circuit broad follows:
Market price P 48
Variable selling costs on external sales 5
Variable manufacturing cost 21
Fixed manufacturing cost 10
Layla’s Master Division wants to purchase 4,500 circuit either internally, or
else use a similar board in the market place that sells for P 46. The Master
Division’s management feels that if the first alternative is pursued, a price
concession is justified, given that both divisions are part of the same firm.

To optimize the overall goals of Layla Corporation, the minimum price to be

charged for the board from the Elite Division to the Master Division shall be
A a. P 21
b. P 26 bday ni mets nasa given
c. P 31
d. P 46

40. A decrease in the margin of safety would be caused by a (an):

A a. Increase in the total fixed costs
b. Increase in total revenues or sales
c. Decrease in the variable cost per unit
d. Decrease in the break-even point in units

41. Kadita, Inc. manufactures water pumps and uses a standard cost system. The
standard factory overhead costs per water pump are based on direct labor hours
and are as follows:
Variable overhead (4 hours at P 8/hour): P 32
Fixed overhead (4 hours at P 5/hour*): P 20
Total overhead cost per unit P 52
*Based on a capacity of 100,000 direct labor hours per month.

The following additional information is available for the month of November:

22,000 pumps were produced although 25,000 had been planned for production.
94,000 direct labor hours were worked at a total cost of P 940,000.
The standard direct labor rate is P 9 per hour
The standard direct labor time per unit is 4 hours
Variable overhead costs were P 740,000.
Fixed overhead costs were P 540,000.

The fixed overhead spending variance for November was:

A a. P 40,000 unfavorable
b. P 70,000 unfavorable
c. P 240,000 unfavorable
d. P 460,000 unfavorable

42. Which of the following are benefits of budgeting?

1) It establishes a system of control
2) It fulfills legal reporting obligations
3) It is a starting point for strategic planning
4) It helps coordinate the activities of different departments
D a. 1 and 2
b. 2 and 3 benefits = fist and last
c. 3 and 4
d. 4 and 1

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
43. Roger is going to sell Ad-hoc Disks for P 40 a box; one box is considered to be
one unit. The disks cost Roger P 10 a unit. He is planning to rent a booth at
the upcoming Area Computer Show. He has three options for attending the show:
➢ Option 1: Paying a fixed fee of P 3,000
➢ Option 2: Paying a P 1,000 fee plus 10% of his revenue made at the convention,
or
➢ Option 3: Paying 25% of his revenue made at the convention.

What would the indifference point be between option 1 and option 2?

A a. 500 units
b. 400 units
.5 = 500 units
c. 300 units
d. 200 units

44. Mobile Legends Company has two divisions, Household Appliances and Construction
Equipment. The manager of the Household Appliance Division is evaluated on the
basis of Return on Investment (RoI) while the manager of Construction Equipment
Division is evaluated on the basis of residual income. The cost of capital has
been 12% and the return on investment has been 16% for the two divisions.

According to the current evaluation system for managers, which manager(s) would
have incentive to undertake a project that offers a 14% rate of return?
D a. Both managers would have incentive to undertake the project
b. Neither manager would have incentive to undertake the project
c. The manager of Household Appliances Division would have incentive to
undertake the project while the manager of the Construction Equipment
Division would not have incentive to undertake the project
d. The manager of Construction Equipment Division would have incentive
to undertake the project while the manager of the Household Appliances
Division would not have incentive to undertake the project

45. Vexana Company began operations on January 1 of the current year with a P 12,000
cash balance. 40% percent of sales are collected in the month of sale; 60% are
collected in the month following sale. Similarly, 20% of purchases are paid in
the month of purchase, and 80% are paid in the month following purchase. The
following data apply to January and February:
January February
Sales P 35,000 P 55,000
Purchases 30,000 40,000
Operating expenses 7,000 9,000

If operating expenses are paid in the month incurred and include monthly
depreciation charges of P 2,500, then what is the change in Vexana's cash balance
during February?
B a. P 2,000 increase 2500 DOUBLE FIRST NUM ONLY
b. P 4,500 increase
c. P 5,000 increase
d. P 7,500 increase

46. Which one of the following statements about a balanced scorecard is incorrect?
B a. It relies on the perception of the users regarding service provided
b. It is directly derived from scientific management and technical
engineering theories
c. The notion of value chain analysis plays a major role in the drawing
up of a balanced scorecard
d. It seeks to address the problems associated with traditional
financial measures used to assess performance

47. Fanny Company produced 4,000 units of product. Each unit requires 30 minutes to
produce. The standard labor rate is P 12 per hour. The direct labor payroll
for the period was P 22,000, based on an hourly rate of P 10. What is the direct
labor rate variance?
A a. P 4,400 favorable double 4 O
b. P 3,750 unfavorable
c. P 2,000 unfavorable
d. P 2,400 unfavorable

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
48. Which of the following best describes target costing? cost na mahaba
A a. Setting a cost by subtracting a desired profit margin from a
competitive market price
b. Setting a selling price by adding a desired profit margin to a
production cost
c. Setting a selling price for the company to aim for in the long run
d. Setting a cost for the use in the calculation of variances

49. Savage Products has the following information for the year just ended:
BUDGET ACTUAL
Sales in units 15,000 14,000
Sales P 150,000 P 147,000
Less: Variable expenses 90,000 82,600
Contribution margin P 60,000 P 64,400
Less: Fixed expenses 35,000 40,000
Operating income P 25,000 P 24,400

What is Savage's sales-price variance?

C a. P 7,500 favorable
b. P 7,500 unfavorable bts fml
c. P 7,000 favorable
d. P 7,000 unfavorable

50. Measuring the firm’s performance against established objectives is part of which
of the following functions?
C a. Planning
b. Staffing choose the letter na walang
tunog sa PERFORMANCE
c. Controlling
d. Subordinating

51. Maniac Corporation’s controller has decided to use a decision model to cope with
uncertainty. With a particular proposal, currently under consideration, Maniac
has two possible actions: invest or not invest in a joint venture with an
international firm. The controller has determined this information:

ACTION 1: Invest in the Joint Venture

 Probability of success = 60%
 Cost of investment = P 9.5 million
 Cash flow if investment is successful = P 15.0 million
 Cash flow if investment is unsuccessful = P 2.0 million
 Additional costs to be paid = P 0
 Costs incurred up to this point = P 650,000

ACTION 2: Do Not Invest in the Joint Venture

 Costs incurred up to this point = P 650,000
 Additional costs to be paid = P 100,000

Which one of the next alternatives correctly reflects the respective expected
values of investing versus not investing?
C a. P 300,000 and (P 750,000)
b. (P 350,000) and (P 100,000) puro 0 then wo .-> w parenthesis
c. P 300,000 and (P 100,000)
d. (P 350,000) and (P 750,000)

52. A staff authority (rather than line authority) prevails between

C a. VP for Finance and treasurer
b. Controller and accounting clerk
c. VP for Production and controller
d. Controller and assistant controller

53. Inventory cost under direct costing excludes

C a. Supplies used in factory operations
b. Output-based salary of plant workers
c. Annual rental of manufacturing facilities
d. Cost of blueberries used in the producing berry juices

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam
54. Joy Company’s performance report indicated this information for the past month:
Actual total overhead P 1,600,000
Budgeted fixed overhead P 1,500,000
Applied fixed overhead at P 3 per labor hour P 1,200,000
Applied variable overhead at P 0.50 per labor hour P 200,000
Actual labor hours 430,000

Joy’s total overhead spending variance for the month was:

B a. P 100,000 favorable
b. P 115,000 favorable with butal Fackk
c. P 185,000 unfavorable
d. P 200,000 unfavorable

55. A primary objective in measuring productivity is to improve operations either by

using fewer inputs to produce the same output, or to produce:
D a. More effectively
OPPOSITE:
b. With fewer constraints fewer = more
c. More outputs with more inputs inputs = outputs
d. More outputs with the same inputs same output = same inputs

56. Melissa Company manufactures ice makers for installation in refrigerators. The
costs per unit, for 20,000 units of ice makers, are:
Direct materials P 7
Direct labor 12
Variable overhead 5
Fixed overhead 10
Total costs P 34

Beatrix Compartments Inc. has offered to sell 20,000 ice makers to Melissa Company
for P 28 per unit. If Melissa accepts Beatrix’s offer, the plant would be idled
and fixed overhead amounting to P 6 per unit could be eliminated. The total
relevant costs associated with the manufacture of ice makers amount to:
C a. P 480,000
b. P 560,000
c. P 600,000 no butal melissa
d. P 680,000

57. From the standpoint of the selling division, the minimum transfer price is
equivalent to the
B a. Market price when excess capacity exits
b. Market price when idle capacity does not exist si idol empi = idle MP
c. Incremental costs when idle capacity does not exist
d. Opportunity costs when excess capacity does not exist

58. Karrie Company, a cracker and cookie manufacturer, has these unit costs for the
month of June:
Variable Variable Fixed Fixed
Manufacturing Marketing Manufacturing Marketing
Cost Cost Cost Cost
P 5.00 P 3.50 P 2.00 P 4.00

A total of 100,000 units were manufactured during June, of which 10,000 remain
in ending inventory. Karrie uses the FIFO inventory method, and the 10,000 units
are the only finished goods inventory at month‐end. Using the full absorption
costing method, Karrie’s finished goods inventory value would be
B a. P 50,000
b. P 70,000 anong num nanaman wala = 7 = 70,000
c. P 85,000
d. P 145,000

59. Identify the feasible values for the coefficient of correlation (r).
I) 1.40 II) 1.04 III) 0 IV) -94%
C a. 1 and 2 only
b. 2 and 3 only below 0
c. 3 and 4 only
opposite ng feasible sa utak mo
d. 4 and 1 only

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 MANAGEMENT SERVICES
ReSA Batch 45 – May 2023 CPALE Batch
11 February 2023  8:00 AM to 11:00 AM MS First Pre-Board Exam

Items 60 and 61 are based on the following information

The manufacturing capacity of Brody Company’s facilities is 30,000 units of
product a year. A summary of operating results for calendar Year 1 is as follows:

Sales (P 50 per unit) P 900,000

Variable manufacturing and selling costs (495,000)
Contribution margin 405,000
Fixed costs (247,500)
Operating income P 157,500

60. What is Brody’s margin of safety in year 1?

C a. 11,000 units
b. 9,000 units
c. 7,000 units margin of safety = bts = 7
d. 5,000 units

61. Assume a tax rate of 25%, how many more units shall be sold in year 2 to earn an
after-tax profit of P 236,250?
C a. 25,000 units
b. 21,500 units anong num wala, yun sagot
c. 7,000 units
d. 3,500 units

62. The decision to prorate standard cost variances in a manufacturing setting is

based upon
B a. the magnitude of variances during the period.
b. the significance of the impact on operating income.
c. the amount of inventory remaining at the end of the period.
d. the amount of inventory remaining at the beginning of the period.

Items 63 to 66 are based on the following information

Hayabusa Toys currently sells small boats for a price of P 360. It has costs
of P 280. A competitor is bringing a new small boat to market that will sell
for P 300. Management believes that it must lower the price to P 300 to compete
in the market for small boats. Marketing believes that the new price will cause
sales to increase by 10 percent, even with a new competitor in the market.
Hayabusa’s sales are currently 100,000 per year.

63. What is the target cost if target profit is 25% of sales?

C a. P 75
b. P 90
c. P 225
d. P 270

64. What is the target selling price if costs cannot be reduced and target profit is
changed to 20% of sales?
B a. P 336.00
b. P 350.00
c. P 353.33
d. P 360.00

65. What is the change in operating income if marketing is correct and only the sales
price is changed?
D a. P 600,000
b. P 2,200,000
c. (P 2,200,000)
d. (P 5,800,000)

66. What is the target cost if the company wants to maintain its same income level,
and marketing is correct?
B a. P 225.00
b. P 227.27 dalawang 27 = 2 27 27
c. P 246.67
d. P 280.00

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67. Despite being the most common method of splitting variable and fixed cost, the
high-low method is highly criticized for all of the following reasons, EXCEPT
D a. Only two observations are used to develop the cost function
b. The method does not detect if cost behavior is nonlinear
c. The high and low activities may not be representative
d. The mathematical calculations are relatively complex petty reason lol

68. All of the following are considered appropriate goals for measuring a division
manager’s efficiency for a budgeting period, except:
C a. Budgeted operating income
b. A targeted share of the market
c. Earnings per share projections
d. A reduction in the organizational structure (fewer employees doing a
given amount of work)

69. For a given time period, a company had a favorable material quantity variance,
a favorable direct labor efficiency variance, and a favorable fixed overhead
volume variance. Of the following, the one factor that could not have caused
all three variances is:
A a. The use of lower-skilled workers fave fave fave so yung negative yung sagot
b. An increase in production supervision
c. The purchase of higher quality materials
d. The purchase of more efficient machinery

70. Identify the committed cost that is most likely a shutdown cost.
A a. Rental
b. Research pwedeng i-shutdown?
c. Advertisement rental :/
d. Special projects

- END of EXAMINATION –

NOTE: Summary of answers as well as

solutions and clarifications to selected items are found on page 13.

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