CPAR, CPA REVIEW SCHOOL OF THE PHILIPPINES, Manita MANAGEMENT ADVISORY SERVICES. APRIL 17, 2016 Final Pre-board Examination Sunday, 8:00am to 11:00am Sete: Instructions. Choose the BEST answer for 2ach of the following items. Mark only one answer for each litem on the Special Answer Sheet provided. Strictly no erasure allowed. Use Pencil No. 2 only. 1. Which of the following statements most likely represents a disadvantage for an entity that keeps microcomputer-prepared data files rather than manually prepared files? a. Random error associated with processiig similar transactions in different ways is usually greater, b. It is usually more difficult to compare recorded accountability with physical count of assets. c. Attention is focused on the accuracy of the programming process rather than errors in individuat transactions. 4d. It is usually easier for unauthorized persons to access and alter files. 2. Which of the following statements is correct regarding the Internet as a commercially viable network? ‘a. Organizations must use firewalls If they wish to maintain security over internal data. b. Companies must apply to the Intemet 10 gain permission to create a homepage to engage in electronic commerce. ©. Companies that wish to engage in electronic commerce on the Internet must meet required security standards established bv the coalition of Internet providers. d. Allof the’above. 3. A manufacturer is considering using bar-code identification for recording information on parts used by the manufacturer, A reason to use bar codes rather than other means of identification is to ensure that a. The movement of all parts is recorded. b. The movement of parts is easily and quiciy recorded. . Vendors use the same part numbers. d. Vendors use the same identification methods. 4. As a business owner you have determined that the demand for your product is inelastic, Based upon this assessment, you understand that a. Increasing the price of your product will icrease total revenue. b. Decreasing the price of your product will ncrease total revenue. . Increasing the price of your product will Have no effect on total revenue. d. Increasing the price of your product will i crease competition. 5. Which of the following is not an important aspect of supply chain management? a. Information technology ¢. Customer relations b. Accurate forecasts d. Communications It Isa tool to achieve large, quicic gains in effectiveness or éfficiency through redesigning the "execution of specific business functions. It is a method of examining processes to identify and then eliminate, reduce, or replace functions and processes that add litte customer value to products or services. 1. is designed to bring radical changes to an organization's operations. a. Process Identification c, Business Process Reengineering b. Downsizing d, Enterprise Resource Planning System o y, and/or improve production 7. Ongoing’ efforts to reduce costs, ‘Increase product quai process once manufacturing has begun is known as a, cost management ¢. target costing b. kaizen costing 4. lifecycle costingCPAR MANAGEMENT ADVISORY SERVICES. Final Pro-board Examination ~ APRIL 17, 2016 79 Page 2 of 12 pages 8. The projected sales price for a new product (which is still in the development stage of the product life cycle) is P50. The company has estimated the life-cycle cost to be P30 and the first-year cost to be P6O. On this type of product, the company requires a P12 per unit profit. What is the target cost of the new product? a. P30 c. Pa b. P38 . P60 9. A company annually consumes 10,000 units of Part C. The carrying cost of this part is P2 per year and the ordering costs are P100. The company uses an order quantity of 500 units. By how much could the company reduce its total costs if it purchased the economic order quantity instead of 500 units? a. P50 c. 2,500 b. 2,000 . PO 10. The optimal size of the safety stock is defined by the point where the a. costs of carrying the safety stock equal stockout costs. b. setup costs equal stockout costs. . ordering costs equal stockout costs. d. reorder point equals safety stock. 11. Hooper Corporation operates its factory 300 days per year. Its annual consumption of Material Y Is 1,200,000 gallons. It carries a 10,000 gallon safety stock of Material Y and its lead time is 12 business days. What is the order point for Material Y? a. 10,000 gallons . 48,000 gallons b. 38,000 gallons > ¢. 58,000 gallons 12. Productivity is measured by the a. total quantity of output generated from 2 limited amount of input during a time period. b. quantity of good output generated from a specific amount of input during a time period. quantity of good output generated from the quantity of good input used during a time period. d, total quantity of input-used to generate total quantity of cutout for a time period. 13. Business, Solutions Corporation is a manufacturer of a versatile statistical calculator. The following information is a sumnvary of defective’and returned units for the previous year. Total defective units 1,000 Number of units reworked 750 Number of customer: units returned 150 Profit for 2 good unit P40 Profit for a defective unit! 2s Cost. to rework a defective unit PLO Cost of a returned unit: PIS Total prevention cost P10,060 Tota! appraisal cost “ 5,000 The total quality cost is a. 15,000 . P28,500 b, 15,750 de P1L,250 14, A small manufacturing company recentiy stated its sales gea! for a period was P100,000. At this level of activity, its budgeted expenses were P8C,000. Irs actual sales were P100,000, but its actual expenses were P8',000. This company o: a. effectively and efficiently c.sfiectively but not efficiently b, neither effectively nor efficiently G._ efficiently but not effectivelyCPAR MANAGEMENT ADVISORY SERVICES Final Pre-board Examination - APRIL 17,2016 7@™BATCH Page 3 of 12 pages 15. The weighted average cost of capital that is used to evaluate a specific project should be based on the ‘2. mix of capital components that was used to finance a project from last year. b. overail capital structure of the corporation cost of capital for other corporations with similar investments. d. mix of capital components for ali capital acquired in the most recent fiscal year. 16. All other factors equal, a large number is preferred to a smaller number for all capital project evaluation measures except a. net present value » c, internal rate of return b. payback period d. profitability index 17. Which of the following statements is true regarcling capital budgeting methods? a. The Fisher rate can never exceed a compeny's cost of capital. b. The internal rate of return measure used for capital project evaluation has more conservative assumptions than the net p‘esent value method, especially for projects that generate a positive net present value c. The net present value method of project evaluation will always provide the same ranking of projects as.the profitability index method. d. The net present value method assumes tat all cash inflows can be reinvested at the project's cost of capital. 18. Strawser Corporation bought a plece of machinery. Selected data is presented below: Useful life 6 years Yearly net cash inflow 245,100. Salvage value -0- Internal rate of return 18% Cost of capital 15% The Initial cost of the machinery was a. P157,392. c. P165,812. b. 174,992. d. P170,303. 19. For the next two years, a lease is estimated to have an operating net cash inflow of P7,500 Per annum, before adjusting for P5,000 per aniium tax basis lease amortization, and a 40% tax rate. The present value of an ordinary annuity of P1 per year for two years is 1.74. What is the lease’s after tax present value using a 10% discount factor? a. P2,610 c. P9,570 b. P4,350 d. P11,310 ITEMS 20 TO 23 ARE BASED ON THE FOLLOWING: ‘An organization has four investment proposals with the following costs and cash inflows: Project A FrojectB Project -—~Project D Cost ? 920,000 ——-P25,000 ~~ P30,000 Expected cash inflows at end of the year: Year 1 10,000 5,000 15,000 20,000 Year 2 10,000 10,000 10,000 2 Year 3 10,000 15,000 5,000 20,000 Note: Round off present value factors to four (4) decimal places. 20, If Project A has an internal rate of return (IRR) of 15%, then it has a cost of a. P8696 c. P24,869CPAR MANAGEMENT ADVISORY SERVICES. Final Pre-poerd Examination - APRIL 17,2016 72 BATCH 7 Page 4of12 pages _ b. 22,832 d. 27,232 21. If the discount rate is 10%, the net present value (NPV) of Project B is a. P4,079 c. P.9,869 b, P6,789 . P39,204 22. The payback period of Project C is a. O years c. 2 years b. Lyear d. 3 years 23. If the discount rate is 5% and the discounted payback period of Project D is exactly two (2) years, then the Year two cash inflow of Project. D is a. P 5,890 ©. P12,075 b. P10,000 d. P14,301 24. A company enters into an agreement with. a firm who will factor the company’s accounts receivable. The factor agrees to buy the company’s receivables, which average P100,000 per month and have an average collection period of 30 days. The factor will advance up to 80% of the face value of receivables at an annual rate of 10% and charge a fee of 2% on all receivables purchased. The controller of the company estimates that the company would save P18,000-in collection expenses over the year. Fees and interest are not deducted in advance. Assuming a 360-day year, what is the cost of engaging in this arrangement? a. 10.0% c. 16.0% b. 14.0% d. 17.5% 25.A company with P4.80 million in credit sales per year plans to relax its credit standards, projecting that this will increase credit sales by P720,000.The company's average collection period for new customers is expected to be 75 days, and the payment behavior of the existing customers is not expected to change. Variable costs are 80% of sales. The firm's opportunity cost is 20% before taxes. Assuming a 360-day year, what is the company's benefit (loss) from the planned change in credit terms? * a. PO c. 144,000 b. P28,800 4. 120,000 26. firm is attempting to estimate its cost of equity capital. Assuming that the firm has a constant growth rate of 5%, a forecasted dividend of P2.11, and a stock price of P23.12, what is the estimated cost of common equity using the dividend-yield-plus-growth approach? a. 9.1% c. 15.6% b. 14.1% d. 12.3% 27. A company has determined that it cari minimize its weighted average cost of capital (WACC) by using a debt/equity ratio of 2/3. If the firm's cost of debt is 9% before taxes, the cost of equity is estimated to be 12% before taxes, and the tax rate is 40%, what is the firm’s WaACc? a. 6.48% c. 9.36% b. 7.92% d, 10.80% ITEMS 28 AND 29 ARE BASED ON THE FOLLOWING INFORMATION: ‘The following is selected data for the Consumer Products Division of a company for 2016: Sales 50,000,000 Average invested capital (assets) 20,000,000 Net income 2,000,000 Cost of capital 8%CPAR MANAGEMENT ADVISORY SERVICES Final Pre-board Examination - APRIL 17, 2016 79™ BATCH Page 5 of 12 pages 28. What is the amount of residual income for the civision? a. P2,000,000 ¢. P1,000,000 b, P1,600,000 d. P 400,000 29, What is the amount of interest rate spread for the division? a, 8% c. 2% b. 10% d. 20% ITEMS 30 AND 31 ARE BASED ON THE FOLLOWING INFORMATION: ‘The following are selected data from Nyam Corporation for the year ended 2016: Net operating profit before taxes 31,250,000 Inventory 5,000,000 Long term debit 40,000,000 Depreciation expense 9,000,000 Change in net working capital 5,000,000 Capital expenditures 8,000,000 Invested capital (net assets) 80,000,000 Weighted average cost of capital 10% Tax rate 20% 30. Which of the following measures economic valu2 added for Nyam Corporation for the year? a. P3 million ¢. P15 million b, P7 million d. P17 million 31. Which of the following measures the amount of free cash flow for Nyam Corporation for the year? a. P7 million c. P21 million b. P8 million . P25 million 32. Spikey, Inc. produces a single product that sells: for P150 per unit. The product is processed through the Cutting and Finishing Departments. Additional data for these departments are as follows: cutis ane Annual capacity (36,000 direct labor hours available in each department) 180,000 units 135,000 units Current production rate (annualized) 108,000 units 108,000 units Fixed manufacturing overhead P1,296,000 P1,944,000 Fixed non-manufacturing expenses 864,000 1,296,000 Direct materials costs per unit Pas P15 The current production rate is the budgeted rate for the entire year. Direct labor employees earn P20 per direct labor hour and the company has a “no layoff” policy in effect. What is the amount of the throughput contribution per unit as computed using the theory of constraints? a. 90.00 c. P46.67 b. P76.67 d. P26.67 33. Which of the following is used to describe the practice of adding resources to shorten selected activity time on the critical path of a project? a. Making adjustments c. Slack time b. Project crashing d. ReengineeringCPAR MANAGEMENT ADVISORY SERVICES Final Pre-bosrd Examination ~ APRIL. 17, 2016 79™ BACH Page 6 of 12 pages 34, Rover Corporation accumulated the following cost information for its two products, A and B: 4 B Total Production volume 2,500 20,000 Total direct labor hours 5,000 20,000 25,000 Set up cost per batch P1,000 2,000 Batch size ~' 100 50 Total set up costs incurred P20,000 40,000 60,000 Direct labor hours per unit 2 apie A traditional costing system would ailocate costs on the basis of direct labor hours. An ABC System would trace costs by spreading the costs per batch over the units in a batch. What is the set up cost per unit of Product A under each costing system? Traditional ABC a. P4.80 10.00 b. P2.40 10.00 © P40,00 200.00 a. P4.80 20.00 35. In its first year of operations, Blowf Manufacturers had the following costs when it praduced 100,000 and sold 80,000 units for its only product: Fixed manufacturing costs 180,000 Variable manufacturing costs 160,000 Fixed selling and admin. costs 90,000 Variable selling and admin. costs 40,000 How much lower would Blowf’s net’ income be if it used variable costing instead of full absorption costing? a. P36,000 c. P68,000° b. 54,000 a. P94,000 ITEMS 36 AND 37 ARE BASED ON THE FOLLOWING INFORMATION: Operational budgets are used by a rétail company for planning and controlling its business activities. Data regarding the company’s monthly sales for the last six months of the year and its projected collection patterns are shown below. ‘The cost of merchandise averages 40% of the selling price. The company’s policy is to maintain an inventory equal to 25% of the next month's forecasted sales. The inventory balance at cost is P80,000 as of June 30. Forecasted sales: July 775,000 October 800,000 August 750,000 November 850,000 ‘September "825,000 December’ * 900,000 Collection pattern for credit sales: In the month of sale 40% In the first month following the sale 57% Uncollectible 3% Credit sales are 80% of the forecasted sales. 36. The budgeted, cost of the company’s purchases for the month of August would be: a. P302,500 cc. P307,500 b. 305,000 d. P318,750CPAR MANAGEMENT ADVISORY SERVICES Final Pre-bosrd Examination — APRIL. 17, 2016 79" BATCH ie Pago 7 of 12 pages 37. The company’s total cash receipts from sales and collections on account that would be budgeted for the month of September wouid bi: a. P757,500 c. P793,800 b. P771,000 d. P856,500 38. Which of the following best describes tactical profit plans? a, Detailed, short term, broad responsibilities, qualitative. b. Broad, short term, responsibilities at all levels, quantitative. c. Detailed, short term, responsibilities at all levels, quantitative. d. Broad, long term, broad responsibilities, qualitative, 39. A 2017 cash budget 's being prepared for the purchase of Hello Tiki, a merchandise item. Budgeted data for 2017 are: Cost of goods sold 300,000 ‘Accounts payable, January 1 20,000 Inventory, January 1 30,000 Inventory, December 31 42,000 Purchases will be made in twelve equal monthly amounts and paid for in the following month. What is the 2017 budgeted cash payment for purchases of Hello Tiki? a. P295,000 cc. P306,000 b. P300,000 d. 312,000 40. The management of Rover Corporation has decided to implement a transfer pricing system. Rover's MIS department is currently negotiatinc a transfer price for its services with the four producing divisions of the company as weil as the marketing department. Charges will be assessed based on number of reports (assume that all reports require the same amount of time and resources to produce). The cost to orerate the MIS department at its full capacity of 1,000 reports per year is budgeted! at 45,00. The user subunits expect to request 250 reports each this year. The cost of temporery labor and additional facilities used to produce reports beyond capacity is budgeted at P48.00 per report. Rover could purchase the same services from an external Information Services firm for P70,000. What amounts should be Used as the ceiling and the floor in determining the negotiated transfer price? a. Floor, P36.00; Ceiling, P56.00 ¢. Floor, P48,00; Ceiling, P70.00 b. Floor, P45.60; Ceiling, P56.00 d. Floor, P57.00; Ceiling, PB2.00 41. Following are the operating results of Sachi Corporation: Siegment A Total Sales 1°40,000 25,000 Variable cost of goods soid 4,000 12,500 Fixed cost of goods sold 1.500 —4.000 Gross margin P4, P.8,500 Variable selling and administrative P-2;000 P'5,000 Fixed selling and administrative _1,500 3.000 Operating income (loss) Bi.000 P_500 Fixed cost of goods soid are allocated te each sagment based on the number of employees. Fixed selling and administrative expenses are a located equally. If Segment 6 Is eliminated, P1,500 of fixed cost of goods scid would be ellininated. Assuming Segment B is closed,.the effect on operating income would be a. An increase of P50 c. A decrease of P2,000 b. An increase of P2,000 d. A decrease of P2,500CPAR MANAGEMENT ADVISORY SERVICES Final Pre-board Examination ~ APRIL 17, 2016 79 BATCH Page 8 of 12 pages, ITEMS 42 AND 43 ARE ABASED ON THE FOLLOWING INFORMATION: Total production costs of prior periods for a company are listed below. Assume that the same cost behavior pattems can be extended linearly over the range of 3,000 to 35,000 units and that the cost driver for each cost is the number of units produced. Production in units per month 3,000 9,000 16,000 35,000 Cost x 23,700 P52,580 P86,490 —-P178,260 Cost Y 47,280 141,840 252,160 551,600 42. What is the average cost per unit at a production le\ e! of 8,000 units for Cost X? a. P5.98. . P7.90 b. P5.85 d. 4.83 43. Identify the cost curve for the average cost per unit for Cost Y: Curve 1 Curve 2 Curve 3 Curve 4 | | a | So | | Le vA L~ £ L uaty cusaty cunty cuamy a. Cure i c. Curve 3 b. Curve 2 d. Curve 4 44.A company obtaining short term financing with trade credit wil pay a higher percentage financing cost, everything else being equal, when a. the discount percentage is lower. b. ‘The items purchased have a higher price. c. The items purchase have a lower price. d. ‘The supplier offers a longer discount period. 45. A consultant recommends a company hold funds for the following two reasons: Reason, 1: Cash needs may fluctuate substantially throughout the year. Reason 2: Opportunity for buying at a discount may eppear during the year. ‘The cash balances used to acres the reasons given above are correctly classified as Reason 1 a.’ Speculative balences b. Speculative balances ¢. Precautionary balances d. Precautionary balances ‘Reason 2 Speculative balances Precautionary balances Speculative balances Precauttonary balances: 46. What is the relationship between the allowance for doubtful accounts and working capital? @. When bad debt expense is recorded for the period, working capital decreases, b. When bad cebt expense is recorded for the period, cash increases. cc. When an account is writien off against the aliowance, working capital decreases. d,_ When,an account is written off against the allowance, cash decreases. 47.1n a lean accounting envircament, a company accents a special order to make 200 units of @ product each’month for the next two months far 2130 per-anit. The company normallyCPAR MANAGEMENT ADVISORY SERVICES Final Pre-board Examination ~ APRIL 17, 2018 79™ BATCH Page 8 of 12 pages sells the unit for P170 per unit with variable costs per unit at P80. The company plans to use excess capacity. By what amount would this special order increase profit? a. P16,000 c. P36,000 b. 20,000 4. P52,000 48.A company uses a standard costing system. the production budget for Year 1 was based 200,000 units of output. Each unit requires two standard hours of manufacturing labor for completion. Total overhead was budgeted at F'900,000 for the year, and the standard fixed overhead rate was P1.50 per direct manufacturing labor hour. Both variable and fixed overhead costs are allocated to the products based on direct manufacturing labor hours. ‘The actual data for Year 1 are as follows: Production in units 198,000 Direct manufacturing labor hours 425,000 Variable overhead 352,000 Fixed overhead 575,000 What is the amount of unfavorable variable eff ciency variance? a. P21,750 c. P43,500 b.. P33,250 4. P55,000 49. In Year 1, a company’s cash is 15% of sales, accounts receivable is 10% of sales, inventory Is 20% of sales, accounts payable is 30% of sales, and long term debt is 5% of sales. The company is preparing its forecasts and anticipates that sales will increase from P50,000 in Year i to P55,000 in Year 2. The company uses the percentage-of-sales method. What amount would be the required working capital in Year 2? a. (P2,750) c. P7,500 b. P5,500 i “d. P8,250 '50. At the start of its fiscal year, a company anticipated producing 300,000 units throughout the year. The annual budgeted manufacturing overhead was P150,000 for vartable costs and 600,000 for fixed costs. In April, when there was.2 beginning inventory of finished goods of 5,000 units, the company showed an income: P40,000 using absorption costing. The same month, ending’ inventory for finished goods was 7,000 units; What amount would the company recognize as income for April using variable costing? a. P35,000 c. P44,000 b. 36,000 d. 45,000 51.A company is conducting a risk analysis on a project. One task has a risk probability estimated to be 15%. The task has a budget of P35,000. If the risk occurs, it will cost 6,000 to. correct the problem caused by the risk event. What is the expected monetary value of the risk event? ‘a. P900 <. P5,250 b. P4,350 d. P6,150 52. Internal controls are likely to fail for any of the following reasons, except a. They are not designed and implemented properly at the outset. b. ‘They:are designed and implemented properly as static controls, but the environment in which they operate changes. c. They are designed and implemented properly, but their operation changes in some way. 4. They are designed and: implemented property, and their design changes as processes change. 53. In Year 1, a large domestic manufacturer, produces all of its motors domestically and sells them internationally. The company’s manager tent team is in the process of developing its Year 2 budget, and copper costs represent a significant line item in the budget. In Year 1, the company spent 1,900,000 in purchasing 250,000 kilos of copper. Economic dataCPAR MANAGEMENT ADVISORY SERVICES Final Pre-bosra Examination ~ APRIL"17, 2016 78™ BATCH Page 10 of 12 pages indicate that in Year 1, copper costs had a price index of 120.0, and expectations are that the index will increase to 126.0 in Year 2. Management anticipates a 5% increase in copper usage for Year 2. What amount represents the Year 2 budget for copper purchases? a. P1,000,000 c. P1,102,500 b. P1,050,000 d. P1,300,000 54. In the two following constraint equations, X and Y represent two products (in units) produced by the Majestic Corporation Constraint 1: 3X + SY < 4,200 Constraint 2: 5X + 2Y < 3,000 ‘What is the maximum number of units of Product X that can be produced? a. 4,200 c. 600 b. 3,000 d. 1,400 55, The contribution income statement differs from the traditional income statement in which of the following ways? a. The traditional income statement separates costs into fixed and variable components. . The traditional income statement subtracts all variable costs from sales to obtain the contribution margin. c. Cost-volume-profit relationships can be analyzed more easily from the contribution income statement: 4, The contribution income statement separates costs into product and period categories. 56. When using a graphical solution to a linear programming problem, the optimal solution will lie in an area commonly known as the: a. region of maximization. c, objective region. b. feasible region. 4. constraint region. THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 57 THROUGH 60: Welch Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Welch Manufacturing has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials P 40 Direct labor 20 Manufacturing support 35 Marketing costs 15 Fixed costs: Manufacturing support 45 Marketing costs . 1S Total costs e Pi70 Markup (50%) __85 Targeted selling price 255 57. What is the full cost of the product per unit? a. PL10 c. P255 b. P170 i d. Pas 58, What is the contribution margin per unit? a. PBS c. P145 b. PL1O d. P255CPAR MANAGEMENT ADVISORY SERVICES Final Pre-board Examination — APRIL 17, 2016 79" BATCH Page 11 of 12 pages 59. For Welch Manufacturing, what is the minimum acceptable price of this special order? a. P110 c. P170 b. P145 d. P255 60. What is the change in operating profits if the one-time-only special order for 1,000 units is accepted for P180 a unit by Welch? a. P70,000 increase in operating profits b. P10,000 increase in operating profits €. P10,000 decrease in operating profits d. P75,000 decrease in operating profits 61. Costs that cannot be changed by any decision rr ade now or in the future are: a. fixed costs c. avoidable costs b. indirect costs d. sunk costs 62. Which of the following statements does not apply to decision tree analysis? a. The sum of the probabilities of the events ‘s less than one (1). b. All of the events are mutually exclusive. . All of the events are included in the decisicin. d. The branches emanate from a node from iaft to right. 63. Yak Yachts, Inc. manufactures and sells luxury yachts. From the time an order is placed til the time the yacht reaches the customer averages 200 days. These 200 days are spent as follows: Wait time .. 50 days Move time 10 days Process time 90 days Queue time 30 days Inspection time 20 days What is Yak's manufacturing cycle efficiency (MCE) for its yachts? a. 0.55 0.60 b., 0.50 d. 0.65 64. Which of the following performance measures is nonfinancial? a. Percentage of defective products. c. Gross profit margin. b. Return.gn investment. d. Economic value-added. 65. The following information relates to the break-even point at Rover Corporation: Sales P:.20,000 Total fixed expenses 30,000 If Rover wants to generate net aperating incorre of P12,000, what will its sales pesos have to be? a. P132,000 <. 168,000 b. 136,000 d. 176,000 66. Isabel Industries is bidding on a contract to mske eight batches of landing gear assemblies for an aircraft company. Isabel's engineers expect direct labor and variable overhead for the first batch to be P80,000. Variable overheac Is related to direct labor. Isabel usually achieves an 80% learning curve. They also expect the cost of materials and purchased components to be P25,000 per batch. The price that Isabel mist bid to earn P15,000 average contribution margin per batch for eight batches is: a. P120,000 c. P80,960 b. P 68,760 d. 65,960CPAR MANAGEMENT ADVISORY SERVICES. Final Pre-bosrd Examination - APRIL 17, 2016 79" BATCH Page 12 of 12 pages 67. At Key Enterprises, the controller is responsible for directing the budgeting process. In this role, the controller has significant influence with executive management as individual department budgets are modified and approved. For the current year, the controller was instrumental in the approval of a particular line manager’s budget without modification , even though significant reductions were made to the budgets submitted by other line managers. As a token-of appreciation, the line manager has given the controller a gift certificate for a popular local restaurant. In considering whether or not to accept the certificate, the controller should refer to which section of IMA’s Statement of Ethical Professional Practice? a. Competence c. integrity b. Confidentiality d. Credibility 68. A company's controller is adjusting next year's budijet to reflect the impact of an expected 5% inflation rate. Listed below are selected items from next year’s budget before the adjustment: Total salaries expense 250,000 Health costs 100,000 Depreciation expense 65,000. Interest expense on 10-year fixed-rate notes 37,750 After adjusting for the 5% inflation rate, what is the company's tota! budget for the selected items before taxes for next year? a, P470,250 c. P473,500 b. P472,138 d. P475,388 69. Which of the following is one of the four perspectives of a balanced scorecard? a. Just in time, c. Benchmarking. b. Innovation. d. Activity-based costing. 70. Which of the following is not a characteristic of MAS? ‘a. In MAS engagements, the nature of work involved requires a lesser need for junior ~ assistance. b, A wider variety of assignments are encountered in MAS than in audit engagements. ‘c. MAS engagements are recurring. d. In MAS, actions to be taken are identified, the benefits of which will be received in the future. end -