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MANAGEMENT ADVISORY SERVICES 1.

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver? a. Gasoline consumed; number of miles driven b. Manufacturing overhead incurred in a heavily automated facility; direct labor hours c. Sales commissions; gross sales revenue d. Building maintenance cost; building square footage. 2. An analysis of a companys planned equity financing using the capital asset pricing model (or security market line) would incorporate only the a. Expected market earnings, the current liability bond yield, and the beta coefficient b. Expected market earnings and the price-earnings ratio c. Current treasury bond yield, the price-earnings ratio, and the beta coefficient d. Current treasury bond yield, and the dividend payout ratio 3. A technique that is useful in exploring what would happen if a key decision prediction or assumption proved wrong is termed: a. Sensitivity analysis b. Uncertainty analysis c. project analysis d. linear programming 4. A firm has data relating total production costs to volume for each quarter during the past five years. During this period, production volume has varied substantially, the method of production has been relatively unchanged, and the cost behavior has been complex. What is the most appropriate method for estimating future production costs? a. Cost-volume-earnings analysis b. Cross-sectional analysis c. PERT d. Time-series or trend-regression analysis 5. A segment contribution margin would reflect the impact of: a. Variable operating expenses b. Fixed expenses controllable by the segment manager c. Fixed expenses traceable to the segment but controllable by others d. common fixed expenses 6. The MAS practice standards include the following specific attributes of practice, except: a. Personal characteristics, competence, and due care b. Client benefit, understanding with the client, and planning, supervision, and control c. Sufficient relevant data and communication results. d. Competence, confidentiality and integrity

7. A Corp. Has estimated its after-tax cost of capital is 7.8%. It has the following capital structure: Common Stock 50% Preferred Stock 20% Long-term debt 30% Assuming the companys cost of common equity is 10%, the cost of preferred equity is 8%, and the firms tax rate is 40%. What is the pre-tax cost of long-term debt? a. 4.00% b. 6.67% c. 8.00% d. 10.05 8. Z Mfg. CO. Is attempting to determine its common equity capital, it has assembled the following information: Current book value of common stock per share P60 Current market price of common stock per share 80 Current annual dividend 4 Current earnings per share 5 Flotation cost 4% Expected average growth rate for dividends and earnings 7% Based on the dividend growth model, what is the estimated cost of common equity capital for Z Mfg. Co.? a. 12.57% b. 7.50% c. 12% d. 13.67 9. An information system (IS) project manager is currently in the process of adding a system analyst to the IS staff. The new systems analyst will be involved with the testing the new computerized system. At which stage of the systems development life cycle will the analyst be primarily used? a. Requirements definition b. Flowcharting c. Implementation d. Cost-benefit analysis 10. Which of the following methods explicitly recognizes a firms risk when determining the estimated cost of equity? a. Capital asset pricing model b. Dividend-yield-plus-growth model c. Bond-yield-plus model d. Return on equity 11. Breakeven analysis assumes that over the relevant range a. Unit revenues are nonlinear b. Unit variable costs are unchanged c. Total costs are unchanged d. total fixed costs are nonlinear

12. The M Corporation finds that it is necessary to determine its cost of capital. Ms current capital structure calls for 45% debt, 15% preferred stock, and 40% common equity. The cost of the various sources of financing are as follows: debt after-tax, 5.6%; preferred stock, 9%; retained earnings, 12%; new common stock, 13.2%. If the firm has P12 million retained earnings, M has an opportunity to invest in an attractive project that costs P45 million, what is the marginal cost of capital of M corporation? a. 8.83% b. 8.93% c. 9.95% d. 12.40% 13. When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts? a. Raw-material Inventory, Manufacturing overhead, and Direct Labor b. Cost of goods sold, Work-in-Process Inventory, and finished goods inventory c. Work in process inventory, Raw-material inventory, and cost of goods sold d. Raw material inventory, Finished goods Inventory, and cost of goods sold 14. G Corporation has P8 million in current assets and P3.5 million are considered permanent current assets. In addition, the firm has P6 million invested in fixed assets. G Corporation wishes to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing costing 15%. Short-term financing currently costs 10%. G corporations earning before interest and taxes under this financing plan? a. P232500 b. P127500 c. P225000 d. P85000 15. Davao City Company has fixed costs of P100 000 and breakeven sales of P800 000. What is its projected profit at 1.2M sales? a. P50 000 b. P150 000 c. P200 000 d. P400 000 16. Y Corp. Plans to sell 41 000 units of its single product in March. The company has 2 800 units in its March 1 finished goods inventory and anticipates having 2 400 completed units in inventory on March 31. On the basis of this information, how many units does York plan to produce during March? a. 40 600 b. 41 400 c. 43 600 d. 46 200 17. The following data are related to XY stock: Required rate of return on XY common 15% Beta coefficient 1.5 Risk-free rate 9% The required market return is: a. 13% b. 18% c. 25%

d. 16%

18. A typical firm doing business nationally cannot expect to accelerate its cash inflow by: a. Employing a lockbox arrangement b. Initiating controls to accelerate the deposit and collection of large checks c. Maintaining compensating balance rather than paying cash for bank services d. Establishing multiple collection centers throughout the country. 19. R Company will pay a dividend of P1.50 per share at the end of next month. The required rate of return for Rs share is 10% and the constant growth is 5%. The approximate current market price per common share of Rs stock is: a. P30.00 b. P10.00 c. P15.00 d. P26.63 20. What does a credit balance in a direct labor efficiency variance account balance? a. The number of units produced was less than the number of units budgeted for the period. b. The average wage rate paid to direct labor employees was less than the standard rate. c. actual total direct labor costs incurred were less than standard direct labor costs allowed for the units produced d. the standard hours allowed for the units produced were greater than actual direct labor hours used 21. Which of the following is not a function of financial management? a. Financing b. Risk-management c. Internal Control d. Capital budgeting 22. A quantitative technique used to discover and evaluate possible cause-and-effect relationship is a. linear programming b. PERT c. Poisson distribution models d. Correlation analysis 23. A quantitative technique used to make predictions or estimates of the value of a dependent variable from given values of an independent variable(s) is a. Linear programming b. Regression analysis c. Scattergraph approach d. PERT 24. Given actual amounts of a semivariable cost for various levels of output, which of the following will give the most precise measure of the fixed and variable components? a. Bayesian statistics b. Linear Programming c. PERT

d. Least squares method 25. The cash budget may be prepared before you can complete the: a. Budgeted balance sheet b. Raw materials purchases budget c. Schedule of cash disbursements d. production budget 26. If Company A has a higher degree of operating leverage than company B, then: a. The Company A has higher variable expenses b. the company A is more profitable c. The company A is less risky d. The company As profits are more sensitive to percentage changes in sales 27. V makes all sales on account, subject to the following collection pattern: 20% are collected in the month of sale; 70% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for October, November and December were P70 000, P60 000, and P50 000 respectively, what was the budgeted receivables balance on December 31? a. 40 000 b. 46 000 c. 49 000 d. 59 000 28. Which of the following would depict the logical order for preparing (1) production budget, (2) cash budget, (3) sales budget and (4) direct-labor budget? a. 1, 2, 3, 4 b. 2, 3, 1, 4 c. 2, 1, 3, 4 d. 3, 1, 4, 2 29. A client has plagued with excessive number of defective units of standard machine parts that are purchased from vendors on a regular basis. The most relevant quantitative technique for designing a forma inspection system for incoming parts is: a. CVP analysis b. Queuing theory c. Standard cost variable analysis d. statistical quality control 30. G expects earnings of P30 million next year. Its dividend payout ratio is 40%, and its equity/assets ratio is 40%. G uses no preferred stock. At what amount of financing will there be a breakeven point in Gs marginal cost of capital? a. P45M b. P30M c. P20M d. 18M

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