CRC-ACE REVIEW SCHOOL, INC. MAS-SUMMARY QUIZZER Suggested Answers aA 2B sc 7A 101 B 26 B 1s. B 1778 201 B 225 C. 2A 27 sc 7D 2 27 B 1s2D 178 B 202 C 226 C 3c 2B s3C wC 103A zs D a3 D 179 C 203 D 227A aA 2A' SHA 7A 0a C 13D asa A 180 C 204 A 228 C sD 320A ssC eB wsA 130D ass A 181 B 205 D 229 6C ac soC 2B 106 C BiA ass B 182 C 206 C 230 C 7¢ 2D s7€ aD 07 C a2 A 17 B 183 D 207 € 2B 3B ssB 3D 108 BA isa A 184 C 208 D aC 4A s9C 4B i9D 14B asa C 185 C 209 B 10 C 35 B oD aD 10B us D 160 B 186 C 210 € uB 36B aD aA 1B 36D 161 B 187 C 28 nB av oA wD wD 37D 162 C 188 B 228 BB 38D eC 3D 3B 1388 163 B 19D 23D uc 3B oA 3B 14D BoA 14 A 190 C 224A sA 0B oA oC usD 10 165 D 191 A 2s C is D aA «6 D aD u6eC aa C 166 A 192 B 216 B vC aD 7B 2C uC 12 B 167 C 193 B 27 £ wA 3B 6 B 3A 8B 10D 168 C 194 D 218 D wA 4B oD 4B 9B 1a C 169 A 195 A 219 B 20 6B 7 sA 1208 us B 170 C 196 A 220A uD 44D nB 9A in uc A iu D 197 € 221D 2B 7B 72D 7C 128 ur A inc 198 D 222 B 3B al 3B 3B 1238 as C 173 C 199 D 223D us as A aD 9C 14D 9A wa 200A 224D 2A so B 3c 10D 1s C 150 B 175 C : 176 Aeg The Professional CPA Review School ain: 3F C. Villaroman Bldg. 873 P, Campa St. cor Espana, Sampatoc, Manila (02) 735 6901 / 735 9031 Branch: Ruel Bla, V, Lower Mabini cor Diego Silang, Baguio City (074) 422-1440 ‘email add: crc_ace@yahoo,com MANAGEMENT ADVISORY SERVICES: OCTOBER 2014 BATCH SUMMARY NOTES OF CONCENTS Management Consultancy ¥ Advises = improve the client’s use of capabilities and resources Y Consultation (answering queries based on existing knowledge) versus Engagement (Scientific Process) ¥ Areas of Consultancy : (© Asto nature (corrective, progressive, oF opportunistic) (© Asto field (Accounting and Finance versts non-acco © Traditional versus Emerging, ¥ Analytical process (identifying objectives, definition of the problem, Gathering Data, Evaluation, and Findings and Recommenclation) Professional Attributes (Technical, Inter-personal, and Consulting Process Skills) MAS Practice Standards (Personal Characteristics, Competence, Due Professional Care, Client Benefit, Understanding with Clients, Planning and Supervision, Sufficient Relevant Data, and Communication of Results) ‘Steps in MAS Engagements (Negotiation, Planning, Conducting, Eval Engagement Follow-up) ing and non-finance) tion of the Engagement, and Post- Management Accounting Concepts. “Manager's Activities (planning, executing, and controlling) Financial versus Managerial (Users of Information) Controller (Financial information) versus Treasurer (Financial transactions) Line (provides goods and services to customers) and Staff (Support group) Code of Ethies (Integrity, Credibility, Competence, Confidentiality) SA S45 Cost Concepts and Analysis Sacrifices to acitieve the objective (versus Expense versus Expenditures) As to FS Presentation (Cost of Sales, Operating Expenses, Financing Costs)- As to purpose (Product and Period) As to traceability (Direct and Indirect) As to behavior (Variable and Fixed) As to effects of decisions (Controllable and Non-Controtlable) As to role in decision making (Differential, Opportunity and Sunk) Cost Analy: (© Qualitative Approach (Account Analysis and Engineering) © Quantitative Approach [y =a + bx] (High-Low Metiod, Seattergraph, Least-Square) CVP Analysis : ¥ Objective: To determine the level of sales that will maximize profit with respect to the current cost structure (ratio between variable and fixed costs) Contribution Approach income Statement (Sales - VC = CM ~ FC = Profit) Contribution Margin (Per unit, In total, and As 2 % of Sales) BEP (Graphical Approach, Formula, and Contribution Margin Approach) ‘Target Profit (the same as BEP except additional target profit that should be before tax) MOS ~ part of actual sales that provides the profit since BEP answers for the fixed costs DOL ~the ratio between contribution margin and profit (profit= |); the number of times net income will change with respect to changes in actual sales, CYP in multiproduct environment = Weighted Average or Composite Contribution Margin ‘© CMY% x Sales Mix based on Peso Sales © CM/unit x Sates Mis based on Unit Sales KR KKK KAS KAN6 4658 < Product Costing ¥ Objective: To determine the amount of inventoriable costs ? ¥ Point of Incurrence of Cost (Production [DM, DL, VOH, FOH] versus Sales [VSA & FSA]) Types of Product Costing ©. Throughput (DM only)j | ee ee ee PAGE 2 © Variable Costing (DM, DL, and VOH) © Absorption Costing (DM, DL,VOH & FO! Y- Reconciliation of Net Income a © FOWunit inventories © EL=COS{:Nit=AC> VC © Bl= COST; Nid =AC< Ve Relevant Costing ¥ Objective: To conduct cost-benefit anal ¥ Types of Costs © Relevant (Differential {incremental versus avoidable] and Opportunity Costs) © _Irelevant (Committed (Future costs} and Sunk [Past]) Make or Buy dessin or outsourcing decision (os! to make versus cost fo purchase) cept or Reject Special Orders (cost to make and sell versus discounted selling price) Drop oF Maintain (Loss CM versus Avoidable and incremental Costs) © Complimentary Products ©. Substitutes Y, Sellor Process Further (incremental income versus incremental costs) Constrained Resources (CM per constrained resources) © Maximum Market Limit and Minimum Required Production lysis with respect a given decision aS Budgeting Objective: To express in financial terms the planned activities of management Y Typesof Budget © Static versus Flexible © Rolling versus Zero Based budgeting (© Short-term versus Long-term ‘© Master Budget (operational and financial budget) versus Capital Budget © Participative versus Imposed Y- Master Budget - Operational © Sales © Production © Purchase © Direct labor and overhead (v ‘© Operating Expenses (variabl YY Master Budget ~ Financial © Cash Budge ‘+ Cash Receipts (Cash Sales and Collection of Credit Sales based collection pattern) + Cash Disbursement (Cash and Non-Cash expenses, Cash and Credit Purchases, Other Disbursement Requirement) + Minimum Cash Balance = treated as the zero balance, any amount below is already considered as a negative balance + Financing (Principal and Interest Payments © Budgeted Balance Sheet (Balances depends on what is left ofthe operational and cash budget) Standard Costing i : Y Objective: To set the expected (standard) performance of personne! within an entity to emphasize ‘management by exception Development of Standard ‘0 Cost = whatever will be recorded as part of costs under financial accounting. ‘© Quantity = aotual content inthe finished produet + provisions for normal spoilage ¥ Computation of Variances (vary) © Cost Variance ‘+ Purchase Price variance, Rat Variance, and Spending Variance * SP vs AP = Difference in Price x Actual Quantity (external transactions) ©. Quantity Variance + Usage Variance and Efficiency Variance = SQ vs AQ= Difference in Quantity x Standard Price (internal transaction) ‘i © Overhead Variance 7 = Two-way (effect of actual production = flexible budget will be based on actual units produced) + Three-way (effect of actual hours used = flexible budget will be based on actual hows sed then the difference in quantity variance is split into variable portion and fixed postion) = Four-way (individual aspect of overhead costs)