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a. Rework
b. Material moves
c. Filing tax returns
d. Operating production equipment
24. GMA-Kamuning Company is considering a change in collection procedures that would result in an increase of the average
collection period from 28 to 36 days. GMA-Kamuning anticipates that next years sales to be P 9 million and that 80 % of the
sales will be on credit. GMA-Kamuning estimates short-term interest rates at 6% and uses a 360-day year for decision making.
What minimum savings in collection costs would the procedure change have to generate to offset the increased investment in
accounts receivable?
a. P 1,200
b. P 9,600
c. P 12,000
d. P 33,600
26. Pedro Gil Company must maintain a compensating balance of P 50,000 in its checking account as one of the conditions of its
short-term 6% bank loan of P 500,000. Pedro Gils checking account earns 2% interest. Ordinarily, Pedro Gil would maintain a
P 20,000 balance in the account for transaction purposes. What is the loans approximate effective interest rate?
a. 5.88%
b. 6.17%
c. 6.25%
d. 6.38%
27. When would a retailer tend to decrease the safety stock of inventory?
28. United Nations (UN) Company uses a predetermined factory overhead application rate based on direct labor cost. UNs
budgeted factory overhead was P 300,000, based on a budgeted volume of P 25,000 direct labor hours, at a standard direct
labor rate of P 6.00 per hour. Actual factory overhead amounted to P 310,000, with actual direct labor cost of P 162,500.
Factory overhead was
a. P 12,500 over-applied
b. P 15,000 over-applied
c. P 12,500 under-applied
d. P 15,000 under-applied
29. Which working capital policy has the greatest likelihood that a firm will be unable to meet obligations as they become due?
a. Perfect information
b. High customer loyalty
c. Few entry or exit barrier
d. Many independent producers
31. Pureza Company sells a single product for P 40 per unit, which it purchases for P 20. The salespeople receive a salary plus a
commission of 5% of sales. Last year the organizations net income (after) taxes was P 100,800. The organization is subjected
to an income tax rate of 30%. The fixed costs of the organization are
Advertising P 124,000
Rent 60,000
Salaries 180,000
Total P 396,000
The organization is considering changing the compensation plan for sales personnel. If the organization increases the
commission to 10 % of sales and reduces salaries by P 80,000, what peso sales volume must the organization have in order to earn
the same net income as last year?
a. P 1,042,000
b. P 1,100,000
c. P 1,150,000
d. P 1, 630,000
32. Net present value as used in investment decision-making is stated in terms of which of the following options?
33. R. Papa Company uses a standard cost system. For April, total overhead is budgeted at P 80,000 based on the normal capacity
of 10,000 direct-labor hours. At standard, each unit of finished product requires two direct-labor hours. The following data are
available for April production activity:
What amount should R. Papa credit to applied factory overhead account for April?
a. P 76,000
b. P 78,000
c. P 79,500
d. P 80,000
34. Recto Corporation is learning how its current system functions, determining users need, and developing its objectives for a
future system.
In what stage in the system development life cycle is Rectos software project?
a. Analysis
b. Design
c. Implementation
d. Maintenance
35. Which of the following shall most likely not form part of inventory costs under variable costing?
Vito Cruz Company provides the following information based on accounting records:
The carrying amounts and market values of above amounts do not differ significantly.
36. What is Vito Cruz Companys weighted average cost of capital (WACC)?
a. 6%
b. 9%
c. 10%
d. Cannot be determined from the given information
a. P 180,000
b. P 120,000
c. P 90,000
d. P0
38. Gil Puyat Companys average cost is decreasing over a range of increased output. What is Gil Puyat experiencing?
a. Economies of scale
b. Diminishing returns
c. Technological efficiency
d. Decreasing fixed charges
39. Muoz Company plans to sell 80,000 bags of potato chips in June and each of these bags requires five potatoes. Pertinent data
include:
a. 381,000 potatoes
b. 389,000 potatoes
c. 411,000 potatoes
d. 419,000 potatoes
40. The internal rate of return (IRR) is the discount rate at which
41. Anonas Company produces and sells three products with the following data:
Assuming that the total fixed costs are P 18,600 and the sales mix is proportional to peso sales, how much should be the sale of
product L to break-even?
a. P 6,000
b. P 18,000
c. P 36,000
d. P 60,000
42. Which of the following is generally considered as a cash outflow and classified as a financing activity?
43. Gilmore Avenue wants to determine the optimism safety stock level for drug LRT-2. The annual carrying cost of LRT-2 is 25%
of the inventory management. The inventory investment averages P 10 per unit. The stock out cost is estimated at P 2 per unit.
Gilmore orders LRT-2 20 times annually. Gilmore defines the total costs. With 100 units of safety stock, there is a 15%
probability of a 30-unit stock out per order cycle.
What is the total annual cost of the 100 units of LRT-2 safety stock?
a. P 250
b. P 259
c. P 277
d. P 430
44. What is the primary reason for nations for devalue their currencies?
45. Bambang Company expects next years net income to be P 2 million. Bambangs current capital structure is 30% debt, 30%
preferred equity, and 40% common equity. Next year, Bambangs 10,000 4%, P 1,000 par value bonds are current. Bambang can
issue up to P 1 million more 4% bonds at face value. Bambangs marginal tax rate is 30%. There are no dividends in arrears on
Bambangs 10,000 shares 6%, P 1,000 par value cumulative preferred stock. Optimal capital spending for next year is estimated
at P 1.4 million.
Using a strict residual dividend policy, what is the approximate estimated common stock dividend payout ratio for the next year?
a. 16%
b. 30%
c. 35%
d. 70%
46. Blumentritt Company is considering discontinuing Department Z5, one of the three departments it currently maintains. The
following information has been gathered for the three departments:
Operating expenses:
If Department Z5 is eliminated, the space it occupies will be divided equally among Departments Z5 and Z8. Utilities are
allocated on the basis of floor space occupied. 70 percent of the salaries in Department Z5 would be eliminated; the other
30 percent would be split equally between Departments Z2 and Z5.
47. Which of the following allows customers to pay for goods or services from a web site while maintaining financial privacy?
a. E-cash
b. Site draft
c. Credit card
d. Electronic check
48. Abad Santos provides the following information for its standard material cost for one unit of its finished product:
STANDARD: 4 meters @ P 2.00 per meter = P 8 per unit
How many finished units were produced if materials quantity variance is computed as P 30,000 unfavorable?
a. 50,000 units
b. 50,750 units
c. 51,250 units
d. 52,000 units
49. Which of the following non-value-added costs associated with manufactured work in process inventory is most significant?
50.The normal operating cycle is 150 days while payable turnover is a 6 times. How many cash conversion cycles are there within
a 300-days year?
a. 3 cycles
b. 4 cycles
c. 5 cycles
d. 6 cycles
51. Simple regression analysis provides the same to evaluate a line of regression which is fitted to a plot of data and represents
52. Legarda Company presented the following data for the year 2014:
Assuming Legarda sells 6,000 units in 2014 and closes any volume variance to the cost of goods sold account, what is the
difference in profit under absorption and variable costing?
a. P 20,000
b. P 40,000
c. P 50,000
d. P 90,000
53. Taft Company is concerned about the companys account receivable turnover ratio. The company currently offers customers
terms of 3/10, net 30. Which of the following strategies would most likely improve the companys accounts receivable
turnover ratio?
54. Ayala Avenue invested in a four-year project. Ayalas cost of capital is 8 percent. Additional information on the project is as
follows:
1 P 2,000 0.926
2 2,200 0.857
3 2,400 0.794
4 2,600 0.735
Assuming a net present value of P 2,500, what is the projects payback period?
55. The first order of 500 units incurred P 120,000 of labor costs; the next order of 500 units required an additional P 72,000 of
labor costs. What percentage of learning occurred?
a. 80%
b. 85%
c. 90%
d. 95%
56. Which of the following factors is inherent in a firms operations if it utilizes only equity financing?
a. Marginal risk
b. Business risk
c. Financial risk
d. Interest rate risk
57. Balintawak Company was analyzing variances for one of its operations. The initial budget forecast production of 20,000 units
during the year with a variable manufacturing overhead rate of P 10 per unit. Balintawak produced 19,000 units during the
year. Actual variable manufacturing costs were P 210,000. What amount would be Balintawaks flexible budget variance for
the year?
a. P 10,000 favorable
b. P 20,000 favorable
c. P 10,000 unfavorable
d. P 20,000 unfavorable
58. Train Company produces two automotive parts, carburetors and air filters. Both producers are made in the same
manufacturing facilities but are produced under different processes. To accomplish an accurate allocation of production costs,
the company uses activity-based costing. The cost accountant for the company provided information about the activities used
to produce the companys products. The activities were organized into the following overhead products. The activities were
organized into the following overhead cost categories. The most appropriate cost driver for each category is also provided.
If carburetors and air filters require the same amount of direct labor, what will be effect if labor hours are used as the
allocation base for product-level costs?
59. What is the average number of tennis balls does Edsa maintain?
a. Every 4 days
b. Every 5 days
c. Every 6 days
d. Every week
61.Magallanes Company Manufactures part no. 007 for use in its production cycle. The cost per unit for a 5,000-unit quantity
follows:
Direct materials P2
Direct labor 12
Variable overhead 5
TOTAL P 26
Guadalupe Company offered to sell Magallanes 5,000 units of part no.007 for P 27 per unit. If Magallanes accepts the
offer, some of the facilities presently used to manufacture part 007 can be used to help with the manufacture of part no.
123, and P 3 per unit of the fixed overhead applied to part no. 007 would be totally eliminated.
By what amount would net relevant costs be increased or decreased if Magallanes accepts Guadalupes offer?
a. P 5,000 increase
b. P 15,000 decrease
c. P 20,000 decrease
d. P 35,000 decrease
62. Dividend yield is 12% while price-earnings ratio is set 5 times. Determine the retention or plowback ratio.
a. 2.4%
b. 40.0%
c. 41.7%
d. 60%
63. V. Mapa Company has two decentralized divisions, PG-12 and R-18. Division PG-13 has always purchased certain units from
Division R-18 at P 75 per unit. Because Division R-18 plans to raise to price to P 100 per unit, Division PG-13 desires to
purchase these units from outside suppliers for P 75 per unit. Division R-18s costs follow:
If Division PG-13 buys from an outside supplier, the facilities Division R-18uses to manufacture these units will remain
idle.
Would it be more profitable for V. Mapa Company to enforce the P 100 transfer price?
64. The method of least squares was used to develop a cost equation to predict the cost of purchasing goods. Eighty points were
used for the regression. The following output was received:
Internet P 30,500
Slope 8.0
The driver used was number of purchase orders. What is the cost of purchasing if 2,500 orders are processed?
a. P 52,000
b. P 50,500
c. P 45,500
d. P 42,875