Polytechnic University of the Philippines – Bataan

Management Services – Part 1

Final Exam

Name _________________________________________________________________________________________

1. Management accounting
a. Is governed by generally accepted accounting principles
b. Draws from discipline other than accounting
c. Is geared primarily to the past rather than the future
d. Places more emphasis on precision of data compared with financial accounting which does not

2. Management accounting is an integral part of the management process. As such it provides essential information
for the following objectives, :
a. Maintaining the current level of resource utilization, as well as internal and external communication
b. Measuring and evaluation performance
c. Planning strategies and controlling current activities of the organization
d. Enhancing objectivity on decision-making

3. Which of the following characteristics relate to Financial Accounting?

a. Reports are promptly prepared and submitted to preserve its usefulness
b. Data may be both historical and estimates
c. It must adhere to the generally accepted accounting principles
d. It provides information needed by management in making decisions

4. It is a measure of adequacy of working capital. It is the primary test of solvency to meet current obligations from
current assets.
a. Normal operating cycle ratio c. Rate of return on average current assets
b. Capital Intensity Ratio d. Current ratio

5. An analysis that involves comparison of figures shown in the financial statements of two or more consecutive
periods. The difference of the amount between two periods is calculated, and the percentage change from one
period to the next is computed using the earlier period as the base.
a. Vertical analysis c. Horizontal analysis
b. Financial ratio analysis d. Turn-over analysis

6. It is an analysis of the profit variance that constitutes the departure between actual profit and the previous year's
income or the budgeted figure. The primary goal is to improve performance and profitability.
a. Sales price analysis c. Gross Profit analysis
b. Cost price analysis d. Net income after tax analysis

7. The formula for the price variance is

a. (AQ x BP) – (BQ x BP) c. (AQ x AP) – (BQ x BP)
b. (AQ x AP) – (AQ x BP) d. (AQ x BP) – (BQ x AP)

8. Define: Manufacturing Costs ________________________________________________________________

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9. Define: Opportunity Costs __________________________________________________________________

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10. Define: Variable Costs _____________________________________________________________________

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11. Define: Fixed Costs ________________________________________________________________________

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12. Define: Sunk Costs ________________________________________________________________________

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13. Net income under absorption costing is higher than the net income under variable costing when:
a. Units produced exceed unites sold
b. Units produced equal units sold
c. Units produced are less than units sold
d. Regardless of the relationship between units produced and units sold

14. What is the basic difference between variable costing and absorption costing?
a. Variable costing always produce less taxable income that absorption costing
b. Variable costing recognizes fixed costs as a period cost and absorption costing recognizes fixed costs as
product cost
c. Variable costing cannot use standards, whereas standards may be used with absorption costing
d. Variable costing may be used only in situations were production is essentially homogenous but absorption
costing may be used under any manufacturing condition

15. A company incurred an increase in its level of activity. What are the effects of this increase on units for variable
and fixed costs?
a. Decrease in unit variable cost and a constant unit fixed cost
b. Both variable and fixed costs per unit increase
c. Increase in unit fixed cost and a constant unit variable cost
d. A constant unit variable cost and decrease in unit fixed cost

16. In evaluating its margin of safety. Which one of the following is true?
a. The break-even point is not relevant
b. The higher the ratio, the greater the margin of safety
c. The higher the peso amount, the lower the margin of safety
d. The higher the ration, the lower the fixed costs

17. Which of the following is ?

a. Developing a budget is useful only to profit oriented business but not in a “not-for-profit organizations”
b. Budget data are only prepared by top management and distributed downward in an organization
c. The principal reason for using budgets is to avoid running out of cash or borrowing too much money
d. Budgeting is the process of stating in quantitative terms their operations, usually in units and pesos and
planned their organizational objectives for a given period

18. Which of the following is ?

a. Setting standard costs is relatively simple because it is done entirely by accountants
b. All significant variance between standard cost and actual cost should be given attention by management
c. Once set, normal standards should not be changed during the year
d. Ideal standards allow for machine breakdown time and other normal inefficiencies

19. Which of the following measures appropriate as cost driver for personnel administration costs?
a. Number of setups c. Number of employees
b. Number of machine hours d. Number of engineering changes

20. It is the numerical measurement of the likelihood that an event will occur. It is a number between 0 and 1 and it
may express as a percentage or as a fraction.
a. Expected value c. Estimated value
b. Probability d. Deviation

21. Financial records of a company reveal the following:

Net sales 180,000
Cost of goods sold 120,000
Ending inventory 25,000
Beginning inventory 35,000
Assuming a 360 day year, what was the average days to sell inventory?
a. 60 days b. 80 days c. 90 days d. 100 days

22. Assuming that the company has an average inventory of P80,000, sales of P560,000 and a cost of sales of
P480,000. What is the inventory turnover ratio?
a. 13 b. 6 c. 7 d. 1

23. A company’s net accounts receivable were P250,000 at December 31, 2006 and P300,000 at December 31, 2007.
Net cash sales for 2007 were P100,000 and the accounts receivable turnover ration for 2007 was 5. What were the
company’s total net sales for 2007?
a. P1,350,000 b. P1,475,000 c. P1,375,000 d. P1,500,000
24. A company which sells a single product, provided the following date from its income statements for the calendar
year (CY) 2008 and 2007.
2008 2007
Units sold 150,000 180,000
Sales P750,000 P720,000
Cost of sales P525,000 P575,000
Gross profit P225,000 P145,000
In an analysis of variation of gross profit between two years, what would be the effects of changes in sales price
and sales volume?

a. P150,000 Fav P120,000 Unfav

b. P150,000 Unfav P120,000 Fav
c. P180,000 Fav P150,000 Unfav
d. P180,000 Unfav P150,000 Fav

25. A company produces a genuine plastic balloon in a highly automated factory with the following costs:
Direct materials P5 per unit
Direct labor P6 per unit
Variable mfg overhead P1 per unit
Fixed mfg overhead P21,000
Variable selling cost 5% of sales
Fixed selling cost P15,000
Selling price P30 per unit
Production was 3,000 and sales were 2,400 units.
Under absorption costing, the cost of a single unit inventory is:
a. P24 b. P20.75 c. P19 d. P13.50

26. Using the problem on No. 25, if the net income under absorption costing was P7,800, net income under variable
costing is:
a. P3,600 b. P4,200 c. P7,800 d. P12,000

27. A company sold 2,000 3D glasses during 2011. Information is provided concerning for the 3D glass product:
Sales P60,000
Variable costs 24,000
Fixed costs 10,000
Net income P26,000
If a company sells 30 more units, by how much will its profit increase?
a. P18 b. P540 c. P390 d. P900

28. How much sales are required to earn a target income of P80,000 if total variable costs are P80,000, total fixed
costs are P100,000, and the contribution margin ratio is P40%?
a. P300,000 b. P200,000 c. P450,000 d. P330,000

29. A company has the following expected pattern of collections on credit sales: 70 percent collected in the month of
sale, 15 percent in the month after the month of sale, and 14 percent in the second month after the month of sale.
The remaining percent is never collected. At the end of May, it has the following accounts receivable balances:
From April sales P21,000
From May sales P48,000
The expected sales for June are P150,000. What are the total sales for the month of April?
a. P150,000 b. P72,414 c. P70,000 d. P140,000

30. Budgeted sales for the first six months of 2011 of a company are listed below:
January February March April May June
Units 6,000 7,000 8,000 7,000 5,000 4,000

It has a policy of maintaining an inventory of finished goods equal to 40% of the next month’s budgeted sales. If
the company plans to produce 6,000 units in June, what are the budgeted sales for July?
a. 3,600 units b. 1,000 units c. 9,000 units d. 8,000

31. The per-unit standards for direct materials are 2 gallons at P4 per gallon. Last month, 11,200 gallons of direct
materials that actually cost P42,400 were used to produce 6,000 units of product. The direct materials quantity
variance for last month was?
a. P3,200 Fav b. P2,400 Fav c. P3,200 Unfav d. P5,600 Unfav
32. Information on a company’s direct labor costs for May is as follows:
Standard direct labor rate P6.00
Actual direct labor rate 5.80
Standard direct labor hours 40,000
Actual direct labor hours 21,000
Direct labor rate variance-unfavorable P4,200

What is the total direct labor payroll for the month of May?
a. P116,000 b. P120,000 c. P117,600 d. P121,800

33. The total variance is P10,000. The total materials variance is P4,000. The total labor variance is twice the total
overhead variance. What is the total overhead variance?
a. P1,000 b. P2,000 c. P3,000 d. P4,000

For question number 34 and 35. A company uses standard cost system for its production process. The company
applies overhead based on direct labor hours. The following is available for July:

Direct labor hours per unit 2.20

Variable overhead per hour P2.50
Fixed overhead per hour, P3.00
(based on 11,990 dlhs)

Units produced 4,400

Direct labor hours 8,800
Variable overhead P29,950
Fixed overhead P42,300

34. Using the four-variance method, what is the variable overhead spending variance?
a. P7,950 Unfav b. P25 Fav c. P7,975 Unfav d. P10,590 Unfav

35. Using the four-variance method, what is the fixed volume variance?
a. P6,930 Unfav b. P13,260 c. P-0- d. P2,640 Fav

First say to yourself what you would be; and then do what you have to do.
Epictetus