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Overview Cost Behavior

1. Tingloy Company has set various goals, and management is now taking appropriate action to 6. Each of Cuta's production managers (annual salary cost, P45,000) can oversee 60,000
ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, machine hours of manufacturing activity. Thus, if the company has 50,000 hours of
which have exceeded budgeted amounts. Which of the following functions best describes this manufacturing activity, one manager is needed; for 75,000 hours, two managers are needed;
process? for 125,000 hours, three managers are needed; and so forth. Cuta's salary cost can best be
A. Controlling. C. Decision making. described as a:
B. Coordinating. D. Planning. A. fixed cost. C. step variable cost.
B. step fixed cost. D. variable cost.
2. Managerial accountants:
A. often work on cross-functional teams. 7. Which of the following costs exhibits both decreasing and increasing marginal costs over a
B. are located throughout an organization. specific range of activity?
C. are found primarily at higher levels of the organizational hierarchy. A. Curvilinear cost. C. Step-fixed cost.
D. are found throughout an organization and work on cross-functional teams. B. Semi-variable cost. D. Step-variable cost.

3. The following characterize management advisory services except 8. A company observed a decrease in the cost per unit. All other things being equal, which of
A. Involve decision for the future the following is probably true?
B. Broader in scope and varied in nature A. The company is studying a fixed cost, and total volume has increased.
C. Utilize more junior staff than senior members of the firm B. The company is studying a fixed cost, and total volume has decreased.
D. Relate to specific problems where expert help is required C. The company is studying a variable cost, and total volume has decreased.
D. The company is studying a variable cost, and total volume h as-m creased.
Product Cost Systems
4. Many traditional costing systems: 9. Alma Corporation has developed the following flexible budget formula for annual indirect
A. combine widely varying elements of overhead into a single cost pool. labor costs:
B. write off manufacturing overhead as an expense of the current period. Total Cost = P180,000 + P4.50 per machine hour
C. trace manufacturing overhead to individual activities and require the development of Operating budgets for the current month are based upon 20,000 machine hours of planned
numerous activity-costing rates. machine time. Indirect labor costs included in this monthly planning budget are:
D. use a host of different cost drivers (e.g., number of production setups, inspection hours, A. P 90,000 C. P180,000
orders processed) to improve the accuracy of product costing. B. P105,000 D. P270,000

5. Companies that engage in mass customization: 10. Baxter Company, which pays a 10% commission to its salespeople, reported sales revenues
A. tend to have a relatively low production volume. of P210,000 for the period just ended. If fixed and variable sales expenses totaled P56,000,
B. tend to have a high production volume that involves highly standardized end-products. what would these expenses total at sales of P168,000?
C. tend to have a high production volume, many standardized components, and customer- A. P16,800. C. P44,800.
specified combinations of components. B. P35,000. D. P51,800.
D. tend to have a high production volume, many unique components, and customer-
specified combinations of components. 11. Song, Inc., uses the high-low method to analyze cost behavior. The company observed that
at 22,000 machine hours of activity, total maintenance costs averaged P33.40 per hour.
When activity jumped to 25,000 machine hours, which was still within the relevant range, the

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average total cost per machine hour was P30.40. On the basis of this information, the D. requires use of direct labor hours as the primary cost driver to ensure proper allocation
variable cost per machine hour was: of overhead.
A. P8.40. C. P25.00.
B. P22.00. D. P30.40. 17. Vanguard combines all manufacturing overhead into a single cost pool and allocates this
overhead to products by using machine hours. Activity-based costing would likely show that
12. Corporation C is a wholesaler that sells a single product. Management has provided the with Vanguard's current procedures
following cost data for two levels of monthly sales volume. The company sells the product for A. all of the company's products are overcosted.
P133.60 per unit. B. the company's low-volume products are overcosted.
Sales volume (units) 4,000 5,000 C. the company's high-volume products are overcosted.
Cost of sales P383,600 P479,500 D. the company's high-volume products are undercosted.
Selling, general, and administrative costs P124,400 P136,000
The best estimate of the total contribution margin when 4,300 units are sold is: 18. Balete manufactures products X and Y, applying overhead on the basis of labor hours. X, a
A. P45,150 C. P112,230 low-volume product, requires a variety of complex manufacturing procedures. Y, on the other
B. P28,380 D. P162,110 hand, is both a high-volume product and relatively simplistic m nature. What would an
activity-based costing system likely disclose about products X and Y as a result of Balete's
13. In regression analysis, the variable that is being predicted is known as the: current accounting procedures?
A. dependent variable. C. independent variable. A. B. C. D.
B. explanatory variable. D. interdependent variable. Product X Overcosted Overcosted Undercosted Undercosted
Product Y Overcosted Undercosted Overcosted Undercosted
14. A management accountant performs a linear regression of maintenance cost vs. production
using a computer spreadsheet. The regression output shows an "intercept" value of 19. Stanley Corporation takes eight hours to complete the setup process for a certain electrical
P322,897. How should the accountant interpret this information? component, with the setup cost averaging P150 per hour. If the company's competitor can
A. Y has a value of P322,897 when X equals zero. accomplish the same process in six hours, Stanley's non-value-added cost would be:
B. X has a value of P322,897 when Y equals zero. A. P0. C. P900.
C. The residual error of the regression is P322,897. B. P300. D. P1,200
D. Maintenance cost has an average value of P322,897.
Questions 20 & 21 are based on the following information.
Activity-Based Costing HiTech Products manufactures three types of remote-control devices: Economy, Standard, and
15. Kumintang, Inc., an appliance manufacturer, is developing a new line of ovens that uses Deluxe. The company, which uses activity-based costing, has identified five activities (and related
controlled-laser technology. The research and testing costs associated with the new ovens is cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
said to arise from a: Activity Cost Cost Driver
A. batch-level activity. C. product-sustaining activity. Material handling P225,000 Number of parts
B. facility-level activity. D. unit-level activity. Material insertion 2,475,000 Number of parts
Automated machinery 840,000 Machine hours
16. As compared to a high-volume product, a low-volume product Finishing 170,000 Direct labor hours
A. usually requires less special handling. Packaging 170,000 Orders shipped
B. requires relatively fewer machine setups. Total P3,880,000
C. is usually responsible for more overhead costs per unit.

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The following information pertains to the three product lines for next year: 23. The overhead cost allocated to Beta by using activity-based costing procedures would be:
Economy Standard Deluxe A. B. C. D.
Units to be produced 10,0000 5,000 2,000 Beta P240,000 P356,000 P444,000 P560,000
Orders to be shipped 1,000 500 200 Zeta P560,000 P444,000 P356,000 P240,000
Number of parts per unit 10 15 25
Machine hours per unit 1 3 5 Business Process Performance
Labor hours per unit 2 2 2 24. Palindan Corporation recently implemented a just-in-time (JIT) production system along with
a series of continuous improvement programs. If the firm is now considering adopting a total
20. Assume that HiTech is using a volume-based costing system, and the preceding quality management (TQM) program, it would likely find that TQM is:
manufacturing costs are applied to all products based on direct labor hours. How much of the A. consistent with both JIT and continuous improvement.
preceding cost would be assigned to Deluxe? B. inconsistent with both JIT and continuous improvement.
A. P456,471 C. P961,176 C. consistent with JIT but inconsistent with continuous improvement.
B. P646,471 D. P1,141,176 D. consistent with continuous improvement but inconsistent with JIT.

21. Under an activity-based costing system what is the per-unit cost of Standard? 25. Which of the following is not a key feature of a JIT system?
A. P164 C. P272 A. Total quality control.
B. P228 D. P282 B. A smooth, uniform production rate.
C. Multi-skilled workers and flexible production facilities.
Questions 22 & 23 are based on the following information. D. Purchases of materials in relatively large amounts (i.e., lot sizes).
St. James, Inc., currently uses traditional costing procedures, applying P800,000 of overhead to
products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to 26. A firm that uses a JIT purchasing philosophy probably:
activity-based costing and the creation of individual cost pools that will use direct labor hours A. has relatively few suppliers.
(DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the B. has extensive inspection of purchased items at the receiving point.
cost pools and respective driver volumes follow. C. has deliveries of purchased items made in small lot sizes immediately before the goods
Pool No. 1 Pool No. 2 Pool No. 3 are needed in production.
Product (Driver: DLH) (Driver: SU) (Driver: PC) D. has relatively few suppliers and has deliveries of purchased items made in small lot sizes
Beta 1,200 45 2,250 immediately before the goods are needed in production.
Zeta 2,800 55 750
Pool Cost P160,000 P280,000 P360,000 27. A tool that compares how tasks are performed internally with the best practices of industry
leaders is
22. The overhead cost allocated to Beta and Zeta by using traditional costing procedures would A. benchmarking C. process value analysis
be: B. caveat analysis D. re-engineering
A. B. C. D.
Beta P240,000 P356,000 P444,000 P560,000 28. Under the contemporary view of product quality, companies should strive to:
Zeta P560,000 P444,000 P356,000 P240,000 A. increase total quality costs.
B. achieve zero defects in manufacturing.
C. balance failure costs with the sum of prevention and appraisal costs.
D. inspect after-the-fact rather than install a series of preventative manufacturing controls.
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29. The quality costs that are incurred to determine whether particular units produced meet Manufacturing overhead 300,000 40%
quality standards are Selling and administrative 200,000 25%
A. appraisal costs. C. internal failure costs. What unit selling price will yield a 10 percent profit from sales of 40,000 units?
B. external failure costs. D. prevention costs. A. P30.00 per unit C. P35.00 per unit
B. P33.50 per unit D. P40.00 per unit
Cost-Volume-Profit Analysis
30. Sanderson sells a single product for P50 that has a variable cost of P30. Fixed costs amount 34. Gleason sells a single product at P14 per unit. The firm's most recent income statement
to P5 per unit when anticipated sales targets arc met. If the company sells one unit in excess revealed unit sales of 80,000, variable costs of P800,000, and fixed costs of P560,000.
of its break-even volume, the bottom-line profit will be: Management believes that a P3 drop in selling price will boost unit sales volume by 20%.
A. P15. Which of the following correctly depicts how these two changes will affect the company's
B. P20. break-even point?
C. P50. A. B. C. D.
D. an amount other than those in choices "A," "B," and "C" but one that can be derived Drop in sales price Increase Increase Increase Decrease
based on the information presented. Increase in sale volume Increase No effect Decrease Increase

31. Gina's Apparel, Inc. sells handwoven sweaters at P1,000 apiece. Gina's buys sweaters from 35. Grimes is studying the profitability of a change in operation and has gathered the following
Karen Company at P300 apiece, but the agreement also requires an extra fee of 10 percent information:
of sales of sweaters. Gina's monthly fixed costs are P60,000. Current Anticipated
How many pieces of sweaters must Gina's sell in order to earn a profit of P60,000? Operation Operation
A. 100 C. 300 Fixed costs P38,000 P48,000
B. 200 D. 450 Selling price P16 P22
Variable cost P10 P12
32. The manager of Lucky Eleven Store reviewed the following data: Unit sales 9,000 6,000
Fruits Meat Canned Products Should Grimes make the change?
Contribution margin ratio 40% 50% 40% A. No, because sales will drop by 3,000 units.
Sales mix in pesos 20% 30% 50% B. Yes, the company will be better off by P6,000.
Fixed costs, P1,290,000 per month. C. No, because the company will be worse off by P4,000.
The breakeven sales for each month is D. No, because the company will be worse off by P22,000.
A. P1,677,000 C. P4,500,000
B. P3,000,000 D. P6,000,000 Questions 36 & 37 are based on the following information.
Montemayor Co. had the following economic information for the year 2014:
33. The management Edna Company has performed cost studies and projected the following Sales(50,000 units @ P20) P1,000,000
annual costs based on 40,000 units of sales: Variable costs 400,000
Total Annual Variable Portion of Fixed costs 250,000
Cost Total Annual Cost Income tax rate 40 percent
Direct material 400,000 100% Montemayor budgets its 2015 sales at 60,000 units or P1,200,000. The company anticipates an
Direct labor 360,000 75% increased competition; hence, an additional P75,000 advertising costs is budgeted in order to
maintain its sales target for 2015.
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36. How many units are required as sales in 2015 in order to equal the 2014 after-tax profit? 42. McAfee, which began business at the start of the current year, had the following data:
A. 6,250 C. 56,250 Planned and actual production: 40,000 units
B. 10,417 D. 66,250 Sales: 37,000 units at P15 per unit
Production costs:
37. Assuming the company can sell 60,000 units, what is the required selling price in 2015 in Variable: P4 per unit
order to equal the 2014 net income? Fixed: P260,000
A. P18.75 C. P20.00 Selling and administrative costs:
B. P19.25 D. P21.50 Variable: P1 per unit
Fixed: P32,000
38. Obama Company is a manufacturer of its only one product line. It had sales of P500,000 for The contribution margin that the company would disclose on an absorption-costing income
2013 with a contribution margin ratio of 20 percent. Its margin of safety ratio was 25 percent. statement is:
What are the company's fixed costs? A. P0. C. P166,500.
A. P75,000 C. P100,000 B. P147,000. D. P370,000,
B. P80,000 D. P125,000
43. The following information has been extracted from the financial records of Clinton
Absorption Costing, Variable Costing & Throughput Costing Corporation for its first year of operations:
39. Which of the following methods defines product cost as the unit-level cost incurred each time Units produced 10,000
a unit is manufactured? Units sold 7,000
A. Absorption costing. C. Process costing. Variable costs per unit:
B. Back-flush costing. D. Throughput costing. Direct material P8
Direct labor 9
40. Absorption costing differs from variable costing in all of the following except Manufacturing overhead 3
A. acceptability for external reporting. Selling expenses 4
B. treatment of variable production costs. Fixed costs:
C. arrangement of the income statement. Manufacturing overhead P70,000
D. treatment of fixed manufacturing overhead. Selling & general expenses 30,000
Based on absorption costing, what amount of period costs will Clinton Corporation deduct?
41. Lone Star has computed the following unit costs for the year just ended: A. P30,000 C. P70,000
Direct material used PI2 B. P58,000 D. P79,000
Direct labor 18
Fixed manufacturing overhead 29 44. Cantovoys Company began business at the start of the current year. The company planned
Variable manufacturing overhead 25 to produce 25,000 units, and actual production conformed to expectations. Sales totaled
Fixed selling & administrative cost 17 22,000 units at P30 each. Costs incurred were:
Variable selling & administrative cost 10 Fixed manufacturing overhead P150,000
Under variable costing, each unit of the company's inventory would be carried at: Fixed selling & administrative cost 100,000
A. P55. C. P65. Variable manufacturing cost per unit 8
B. P59. D. P84. Variable selling & administrative cost 2

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If there were no variances, the company's absorption-costing net income would be: The net income (loss) under absorption costing and variable costing are:
A. P190,000 C. 208,000 A. B. C. D.
B. P202,000 D. P220,000 Absorption costing P(7,500) P 9,000 P15,000 P18,000
Variable costing P15,000 P18,000 P(7,500) P 9,000
45. Which of the following situations would cause variable-costing net income to be lower than
absorption-costing net income? Static Budget & Variance Analysis
A. Units sold and units produced were both 42,000. 49. Interstate Merchandising anticipated selling 29,000 units of a major product and paying sales
B. Units sold equaled 39,000 and units produced equaled 42,000. commissions of P6 per unit. Actual sales and sales commissions totaled 31,500 units and
C. Units sold equaled 55,000 and units produced equaled 49,000. P182,700, respectively. If the company used a static budget for performance evaluations,
D. Sales prices decreased by P7 per unit during the accounting period. Interstate would report a cost variance of:
A. P6,300 F. C. P8,700 F.
46. What factor, related to manufacturing costs, causes the difference in net earnings computed B. P6,300 U. D. P8,700 U.
using absorption costing and net earnings computed using variable costing?
A. Absorption costing "inventories" all direct costs, but variable costing considers direct Standard Costing & Variance Analysis
costs to be period costs. 50. With respect to overhead, what is the difference between normal costing and standard
B. Absorption costing considers all costs in the determination of net earnings, whereas costing?
variable costing considers fixed costs to be period costs. A. The choice of an activity measure.
C. Absorption costing "inventories" all fixed costs for the period in ending finished goods B. Use of a predetermined overhead rate.
inventory, but variable costing expenses all fixed costs. C. Use of standard hours versus actual hours.
D. Absorption costing allocates fixed overhead costs between cost of goods sold and D. Use of a standard rate versus an actual rate.
inventories, and variable costing considers all fixed costs to be period costs.
51. Assume that it takes 15 minutes of labor time to crush enough garlic to fill one container of
47. Monex reported P65,000 of net income for the year by using absorption costing. The yogurt. Because the smell of the garlic can be unbearable, workers are given (and they take
company had no beginning inventory, planned and actual production of 20,000 units, and it!) 10 minutes of break time every hour (i.e., 50 minutes of work, 10 minutes of break). How
sales of 18,000 units. Standard variable manufacturing costs were P20 per unit, and total many minutes should Stench use as a standard quantity of labor time per container of
budgeted fixed manufacturing overhead was P100,000. If there were no variances, net yogurt?
income under variable costing would be: A. 16.2 C. 17.5
A. P15,000. C. P65,000. B. 17.0 D. 18.0
B. P55,000. D. P75,000.
52. Solo Corporation recently purchased 25,000 gallons of direct material at P5.60 per gallon.
48. Franz began business at the start of this year and had the following costs: variable Usage by the end of the period amounted to 23,000 gallons. If the standard cost is P6.00 per
manufacturing cost per unit, P9; fixed manufacturing costs, P60,000; variable selling and gallon and the company believes in computing variances at the earliest point possible, the
administrative costs per unit, P2; and fixed selling and administrative costs, P220,000. The direct-material price variance would be calculated as:
company sells its units for P45 each. Additional data follow. A. P9,200 F. C. P10,000 F
Planned production in units 10,000 B. P9,200 U. D. P10,000 U.
Actual production in units 10,000
Number of units sold 8,500
There were no variances.

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53. Virgil Corp. uses a standard cost system. In May, Virgil purchased and used 17,500 pounds What was the variable overhead spending variance for the month?
of materials at a cost of P70,000. The materials usage variance was P2,500 unfavorable and A. P590 unfavorable C. P1,000 unfavorable
the standard materials allowed for May production was 17,000 pounds. What was the B. P910 favorable D. P1,500 favorable
materials price variance for May?
A. P15,000 favorable. C. P17,500 favorable. 57. Martin Company, which applies overhead to production on the basis of machine hours,
B. P15,000 unfavorable. D. P17,500 unfavorable. reported the following data for the period just ended:
Actual units produced: 9,000
54. Lucky Corporation's purchasing manager obtained a special price on an aluminum alloy from Actual variable overhead incurred: P54,400
a new supplier, resulting in a direct-material price variance of P9,500 F. The alloy produced Actual machine hours worked: 16,000
more waste than normal, as evidenced by a direct-material quantity variance of P2,000U, and Standard variable overhead cost per machine hour: P3.50
was also difficult to use. This slowed worker efficiency, generating a P2,500U labor efficiency If Martin estimates two hours to manufacture a completed unit, the company's variable-
variance. To help remedy the situation, the production manager used senior line employees, overhead efficiency variance is:
which gave rise to a P900U labor rate variance. If overall product quality did not suffer, what A. P1,600 favorable. C. P7,000 favorable.
variance amount is best used in judging the appropriateness of the purchasing manager's B. P1,600 unfavorable. D. P7,000 unfavorable.
decision to acquire substandard material?
A. P4,100 F. C. P7,500 F. 58. Ferro Enterprises, Inc., uses a standard cost system in which it applies manufacturing
B. P5,000 F. D. P9,500 F. overhead to units of product on the basis of standard direct labor-hours. During the month of
September, the company applied P52,000 in fixed manufacturing overhead cost to units of
55. Robert Company, which applies overhead to production on the basis of machine hours, product. At the end of the month, manufacturing overhead was over-applied by P3,000. If
reported the following data for the period just ended: there was no volume variance in September, then the budgeted fixed manufacturing
Actual units produced: 12,000 overhead cost for the month was:
Actual variable overhead incurred: P77,700 A. P49,000 C. P55,000
Actual machine hours worked: 18,800 B. P52,000 D. P58,000
Standard variable overhead cost per machine hour: P4.50
If Robert estimates 1.5 hours to manufacture a completed unit, the company's variable- 59. Tropiano Electronics Corporation has a standard cost system in which it applies
overhead spending variance is: manufacturing overhead to products on the basis of standard machine-hours (MHs). The
A. P3,600 favorable. C. P6,900 favorable. company had budgeted its fixed manufacturing overhead cost at P62,100 for the month and
B. P3,600 unfavorable. D. P6,900 unfavorable. its level of activity at 3,200 MHs. The actual total fixed manufacturing overhead was P61,600
for the month and the actual level of activity was 3,000 MHs.
56. Suski Corporation has a standard cost system in which it applies manufacturing overhead to What was the fixed overhead budget variance for the month to the nearest peso?
products on the basis of standard machine-hours (MHs). The company has provided the A. P500 favorable C. P3,381 favorable
following data for the most recent month: B. P500 unfavorable D. P3,381 unfavorable
Budgeted level of activity 7,400 MHs
Actual level of activity 7,500 MHs 60. Enberg Company, which applies overhead to production on the basis of machine hours,
Cost formula for variable overhead cost per MH P5.90 reported the following data for the period just ended:
Budgeted fixed overhead cost P60,000 Actual units produced: 14,800
Actual total variable overhead P42,750 Actual fixed overhead incurred: P791,000
Actual total fixed overhead P61,000 Standard fixed overhead rate: P13 per hour

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Budgeted fixed overhead: P780,000 64. What is Holiday's labor rate variance for November?
Planned level of machine-hour activity: 60,000 A. P1,473 favorable C. P13,047 unfavorable
If Enberg estimates four hours to manufacture a completed unit, the company's fixed- B. P8,855 favorable D. P14,520 unfavorable
overhead volume variance would be:
A. P10,400 favorable. C. P11,000 favorable, 65. What is Holiday's labor efficiency variance for November?
B. P10,400 unfavorable. D. P11,000 unfavorable. A. P8,855 favorable C. P13,047 unfavorable
B. P10,328 favorable D. P14,520 unfavorable
61. When considering whether to investigate a variance, managers should consider all of the
following except the variance's: Questions 66 & 67 are based on the following information.
A. size. Baby Frames, Inc. evaluates manufacturing overhead by using variance analysis. The following
B. trends over time. information applies to the month of May:
C. pattern of recurrence. Actual Budgeted
D. nature, namely, whether it is favorable or unfavorable. Units manufactured 19,000 20,000
Variable OH costs P 4,100 P 2 per DLH
62. Rowe Corporation reported the following variances for the period just ended: Fixed OH costs P22,000 P20,000; P1 per unit
Variable-overhead spending variance: P50,000 U Direct labor hours 2,100 0.1 hour per frame
Variable-overhead efficiency variance: P28,000 U
Fixed-overhead budget variance: P70,000 U 66. What is the variable overhead efficiency variance?
Fixed-overhead volume variance: P30,000 U A. P200 favorable. C. P400 favorable.
If Rowe desires to analyze variances that arose primarily from managers' expenditures in B. P200 unfavorable. D. P400 unfavorable.
excess of anticipated amounts, the company should focus on variances that total:
A. P50,000 U. C. P120,000 U. 67. What is the fixed overhead spending variance?
B. P70,000 U. D. P178,000 U. A. P1,000 favorable. C. P2,000 favorable.
B. P1,000 unfavorable. D. P2,000 unfavorable.
Questions 63 thru 65 are based on the following information.
Holiday Chemical Company uses a standard cost system to collect costs related to the production Comprehensive Budgeting
of its "bowling ball" fruitcakes. The direct labor standard for each fruitcake is 1.25 hours at a 68. Which of the following outcomes is (are) sometimes associated with participative budgeting?
standard cost of P11.00 per hour. During the month of November, Holiday's fruitcake production A. The problem of budget padding may arise.
used 9,820 direct labor hours at a total direct labor cost of P106,547. This resulted in production of B. Budget preparation time can be somewhat lengthy.
8,500 fruitcakes for November. C. Financial modeling becomes much more difficult to undertake.
D. Budget preparation time can be somewhat lengthy and budget padding may arise.
63. Assume that 7 ounces of pecans are included in each bowling ball fruitcake. Because Holiday
wants only the best pecans in its fruitcakes, the pecans they buy are inspected and some are 69. The following events took place when Managers A, B, and C were preparing budgets for the
discarded as unacceptable for fruitcake production. The loss rate is expected to be 1 ounce upcoming period:
of pecans for every 5 ounces inspected. Under traditional standard costing, how many I. Manager A increased property tax expenditures by 2% when she was informed of a
ounces of pecans should Holiday use as a standard quantity per fruitcake? recent rate hike by local authorities.
A. 7.20 C. 8.40 II. Manager B reduced sales revenues by 4% when informed of recent aggressive actions
B. 7.80 D. 8.75 by a new competitor.

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III. Manager C, who supervises employees with widely varying skill levels, used the highest units in inventory on March 31. On the basis of this information, how many units does York
wage rate in the department when preparing the labor budget. plan to produce during March?
Assuming that the percentage amounts given are reasonable, which of the preceding cases A. 40,600. C. 43,800.
is (are) an example of building slack in budgets? B. 41,400. D. 46,200.
A. I only. C. Ill only.
B. II only. D. I and II. 75. Orion Corporation is preparing a cash budget for the six months beginning January 1, 2014.
Shown below are the company's historical collection pattern and the budgeted credit sales for
70. A major disadvantage of static budgets is: the
A. their length and complexity. • 65 percent collected in month of sale
B. the cost behavior pattern of manufacturing overhead, which is primarily fixed. • 20 percent collected in the first month after sale
C. the difficulty in developing such budgets due to the high cost of gathering the necessary • 10 percent collected in the second month after sale
information. • 4 percent collected in the third month after sale
D. that the variances between actual and budget on a static budget result from comparing • 1 percent uncollectible
actual costs at one level of activity to budgeted costs at a different level of activity. January P160,000
February 185,000
71. The budgeting technique that focuses on different phases of a product such as planning and March 190,000
concept design, testing, manufacturing, and distribution and customer service is known as: April 170,000
A. base budgeting. C. integrative budgeting. May 200,000
B. comprehensive budgeting. D. life-cycle budgeting. June 180,000
The estimated total cash collections during April from accounts receivable would be:
72. Bolbok Production Company, which uses activity-based budgeting, is in the process of A. P154,900 C. P173,400
preparing a manufacturing overhead budget. Which of the following would likely appear on B. P167,000 D. P176,200
that budget?
A. Unit-level costs: Depreciation. 76. Drago makes all sales on account, subject to the following collection pattern:30% are
B. Unit-level costs: Maintenance. collected in the month of sale; 60% are collected in the first month after sale; and 10% are
C. Batch-level costs: Production setup. collected in the second month after sale. If sales for June, July, and August were P120,000,
D. Product-level costs: Insurance and property taxes. P160,000, and P220,000, respectively, what were the firm's budgeted collections for August
and the company's budgeted receivables balance on August 31?
73. A systematic approach known as zero-based budgeting (ZBB) A. B. C. D.
A. commences with either the current level of spending or projected whichever is lower August collections P162,000 174,000 P190,000 P262,000
B. presents planned activities for a period of time but does not present a firm commitment August 31 receivables balance P182,000 P170,000 P154,000 P 82,000
C. classifies the budget by the prior year's activity and estimates the benefits arising from
each activity
77. A 2016 cash budget is being prepared for the purchase of Toyi, a merchandise item.
D. divides the activities of individual responsibility centers into a series of packages that are Budgeted data are:
prioritized Cost of goods sold for 2016 P300,000
Accounts payable 12/31/15 P20,000
74. York Corporation plans to sell 41,000 units of its single product in March. The company has Inventory - 13/31/15 P 30,000
2,800 units in its March 1 finished-goods inventory and anticipates having 2,400 completed
- 12/31/16 P42,000
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Purchases will be made in 12 equal monthly amounts and paid for in the following month. 80. The budgeted gross margin for the month ending December 31 would be:
What is the 2016 budgeted cash payment for purchases of Toyi? A. P104,000. C. P416,000.
A. P295,000 C. P306,000 B. P134,000. D. P536,000.
B. P300,000 D. P312,000
Performance Management & Measurement
Questions 78 through 80 are based on the following information. 81. Advantages of decentralization in a multinational corporation include all of the following
Super Drive is a computer hard drive manufacturer. The company's balance sheet for the fiscal except
year ended on November 30 appears below: A. motivating local managers
Super Drive, Inc. B. providing training for local managers
Statement of Financial Position For the year ended November 30 C. affording the opportunity to respond quickly
Assets: D. freeing up local management from day-to-day operations so that they can spend more
Cash P 52,000 time on long-range activities
Accounts receivable 150,000
Inventory 315,000 82. A responsibility center in which the manager is held accountable for the profitable use of
Property, plant, and equipment 1,000,000 assets and capital is commonly known as a(n):
Total assets P1,517,000 A. cost center. C. profit center.
Liabilities and stockholders' equity: B. investment center. D. revenue center.
Accounts payable P175,000
Common stock 900,000 83. Responsibility accounting systems strive to:
Retained earnings 442,000 A. identify unfavorable variances.
Total liabilities and stockholders' equity P1,517,000 B. provide information to managers.
Additional information regarding Super Drive's operations appear below: C. hold managers accountable for both controllable and noncontrollable costs.
* Sales are budgeted at P520,000 for December and P500,000 for the upcoming year. D. provide information so that managers can make decisions that are in the best interest of
* Collections are expected to be 60% in the month of sale and 40% in the month following sale. their individual centers rather than in the best interests of the firm as a whole.
There are no bad debts.
* 80% of the disk drive components are purchased in the month prior to the month of the sale, 84. Controllable costs are
and 20% are purchased in the month of the sale. Purchased components comprise 40% of A. Costs that will be unaffected by current managerial decisions.
the cost of goods sold. B. Costs that fluctuate in total in response to small change in the rate of utilization of
* Payment for components purchased is made in the month following the purchase. capacity.
* Assume that the cost of goods sold is 80% of sales. C. Costs that are likely to respond to the amount of attention devoted to them by a specified
manager.
78. The budgeted cash collections for the upcoming December should be: D. Costs that are governed mainly by past decisions that established the present levels of
A. P208,000. C. P462,000. operating and organizational capacity and that only change slowly in response to small
B. P402,000. D. P520,000. changes in capacity.

79. The balance in accounts payable on the budgeted balance sheet for December 31 should be:
A. P161,280. C. P326,400.
B. P165,120. D. P403,200.

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85. The Little Rock Division of Clinton Companies currently reports a profit of P3.6 million. 90. McKenna's Florida Division is currently purchasing a part from an outside supplier. The
Divisional invested capital totals P9.5 million; the imputed interest rate is 12%. On the basis company's Alabama Division, which has excess capacity, makes and sells this part for
of this information, Little Rock's residual income is: external customers at a variable cost of P22 and a selling price of P34. If Alabama begins
A. P432,000. C. P1,140,000. sales to Florida, it (1) will use the general transfer-pricing rule and (2) will be able to reduce
B. P708,000. D. P2,460,000. variable cost on internal transfers by P4. If sales to outsiders will not be affected, Alabama
would establish a transfer price of:
86. Sunrise Corporation has a return on investment of 15%. A Sunrise division, which A. P18. C. P30.
currently has a13% ROI and P750,000 of residual income, is contemplating a massive new B. P22. D. P34.
investment that will (1) reduce divisional ROI and (2) produce P120,000 of residual income.
If Sunrise strives for goal congruence, the investment should 91. Bounous Company has two divisions, Division X and Division Y. Division X has a production
A. not be acquired because it reduces divisional ROI. capacity of 6,000 units of a particular part per month. Division X sells 4,600 units of the part
B. not be acquired because it produces P120,000 of residual income. each month to outside customers at a contribution margin of P36 per unit. Division Y would
C. be acquired because it produces P120,000 of residual income for the division. like to buy 2,000 units of the part each month from Division X. In computing the lowest
D. not be acquired because the division's ROI is less than the corporate ROI before the acceptable transfer price from the perspective of the selling division, the lost contribution
investment is considered. margin per unit portion of the transfer price computation would be:
A. P5.40 C. P25.20
87. Zig Corp. provides the following information: B. P10.80 D. P36.00
Pretax operating profit, P 300,000,000
Tax rate, 40% 92. A target in the balanced scorecard framework is
Capital used to generate profits 50% debt, 50% equity, P1,200,000,000 A. a key action program required to achieve strategic objectives.
Cost of equity, 15% B. a diagram of the cause-and-effect relationships between strategic objectives.
Cost of debt, 5% C. a statement of what the strategy must achieve and what is critical to its success.
Which of the following represents Zig's annual economic value-added amount? D. the level of performance or rate of improvement needed in the performance measure.
A. P0 C. P120,000,000
B. P60,000,000 D. P180,000,000 93. A manager would like to see a decreasing trend in all of the following operating measures
except:
88. The worst transfer-pricing method is to base the prices on A. Setup time.
A. actual total costs. C. budgeted variable costs. B. Manufacturing cycle efficiency.
B. budgeted total costs. D. market prices. C. Scrap as a percentage of total cost.
D. Customer complaints as a percentage of units sold.
89. The minimum transfer price equals:
A. incremental costs plus opportunity costs 94. Jackson Company has a highly automated manufacturing process. During the most recent
B. opportunity costs less the additional outlay costs month, the company gathered the following production data:
C. opportunity costs divided by the additional outlay costs Wait time during the production process 2 hours
D. opportunity costs times 125% plus the additional outlay costs Process time 6 hours
Inspection time 3 hours
Wait time prior to starting production 4 hours
Move time 1 hour

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What was Jackson's delivery cycle time? 99. Lido manufactures A and B from a joint process (cost = P80,000). Five thousand pounds of
A. 12 hours. C. 15 hours. A can be sold at split-off for P20 per pound or processed further at an additional cost of
B. 13 hours. D. 16 hours. P20,000 and then sold for P25. Ten thousand pounds of B can be sold at split-off for P15 per
pound or processed further at an additional cost of P20,000 and later sold for P16. If Lido
95. The manufacturing cycle efficiency for PQR Company when the processing time is six hours decides to process B beyond the split-off point, operating income will:
and inspection, waiting, and move time are one hour each is: A. decrease by P10,000. C. decrease by P20,000.
A. 0.67. C. 0.78. B. increase by P10,000. D. increase by P20,000.
B. 0.75. D. 0.88.
100. Snow Clean Corporation produces cleaning compounds and solutions for industrial and
Gross Profit Variation Analysis household use. While most of its products are processed independently, a few are related.
96. Central Winery manufactured two products, A and B. Estimated demand for product A was Grit 337, a coarse cleaning powder with many industrial uses, costs P16 a pound to make
10,000 bottles and for product B was 30,000 bottles. The estimated sales price per bottle for and sells for P20 a pound. A small portion of the annual production of this product is retained
A was P6.00 and for B was P8.00. Actual demand for product A was 8,000 bottles and for for further processing in the Mixing Department, where it is combined with several other
product B was 33,000 bottles. The actual price per bottle for A was P6.20 and for B was ingredients to form a paste, which is marketed as a silver polish selling for P40 per jar. This
P7.70. What amount would be the total selling price variance for Central Winery? further processing requires 'A pound of Grit 337 per jar. Costs of other ingredients, labor, and
A. P3,700 favorable. C. P14,100 favorable. variable overhead associated with this further processing amount to P25 per jar. Variable
B. P3,700 unfavorable. D. P8,300 unfavorable. selling costs are P3 per jar. If the decision were made to cease production of the silver polish,
P56,000 of Mixing Department fixed costs could be avoided. Super Clean has limited
97. When actual variable cost per unit equals standard variable cost per unit, the difference production capacity for Grit 337, but unlimited demand for the cleaning powder.
between actual and budgeted contribution margin is explained by a combination of which two What is the minimum number of jars of silver polish that would have to be sold to justify
variances? further processing of Grit 337.
A. The sales-price variance and sales-volume variance. A. 4,667 C. 7,000
B. The sales-price variance and the fixed-overhead volume variance. B. 5,600 D. 8,000
C. The sales-volume variance and the fixed-overhead budget variance.
D. The sales-volume variance and the fixed-overhead volume variance. 101. A company that is operating at full capacity should emphasize those products and services
that have the:
Relevant Costing A. highest operating income.
98. Which of the following statements is true when making a decision between two alternatives? B. lowest total per-unit costs.
A. Fixed costs are never relevant. C. highest contribution margin per unit.
B. Sunk costs are always relevant. D. highest contribution margin per unit of scarce resource.
C. Variable costs are not relevant when the decision alternatives have different activity
levels. 102. When a scarce resource, such as space, exists in an organization, the criterion that should
D. Variable costs may not be relevant when the decision alternatives have the same activity be used to determine production is
levels. A. selling price per unit
B. contribution margin per unit
C. total variable costs of production
D. contribution margin per unit of scarce resource

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103. Assume a company produces three products: A, B, and C. It can only sell up to 3,000 units Rhythm Company has offered to purchase 3,000 IT-54s at P16 each. Sound has available
of each product. Production capacity is unlimited. The company should produce the product capacity, and the president is in favor of accepting the order. She feels it would be profitable
(or products) that has (have) the highest because no variable selling costs will be incurred. The plant manager is opposed because
A. sales price per unit the "full cost" of production is P17. Which of the following correctly notes the change in
B. gross margin per unit income if the special order is accepted?
C. contribution margin per unit A. P3,000 decrease. C. P12,000 decrease.
D. contribution margin per hour of machine time B. P3,000 increase. D. P12,000 increase

104. Two months ago, Victory purchased 4,500 pounds of Hydrol, paying P15,300. The demand 108. Crispin manufactures parts that are used in the production of washers and dryers. The
for this product has been very strong since the acquisition, with the market price jumping to following costs are associated with part no. 65:
P4.05 per pound. (Victory can buy or sell Hydrol at this price.) The company recently Direct materials P50
received a special-order inquiry, one that would require the use of 4,200 pounds of Hydrol. Direct labor 19
Which of the following is (are) relevant in deciding whether to accept the special order? Variable OH 22
A. 4,500 pounds of Hydrol. Fixed OH 15
B. The P4.05 market price. Variable selling costs 11
C. The P3.40 purchase price. The company has received a special-order inquiry from an appliance manufacturer in Korea
D. The 300-pound remaining inventory of Hydrol. for 15,000 units of part no. 65. Twenty percent of Crispin's fixed manufacturing overhead can
be avoided on the order, and the variable selling costs per unit will amount to only P5. The
105. If a firm is at full capacity, the minimum special order price must cover minimum price that Crispin should charge the Korean manufacturer is:
A. variable costs associated with the special order. A. P96. C. P105.
B. variable and incremental fixed costs associated with the special order. B. P99. D. P108.
C. variable and fixed manufacturing costs associated with the special order.
D. variable costs and incremental fixed costs associated with the special order plus Make-or-buy decisions
foregone contribution margin on regular units not produced 109. For the past 12 years, the Blue Company has produced the small electric motors that fit into
its main product line of dental drilling equipment. As material costs have steadily increased,
106. Mueller has been approached about providing a new service to its clients. The company will the controller of the Blue Company is reviewing the decision to continue to make the small
bill clients P140 per hour; the related hourly variable and fixed operating costs: will be P75 motors and has identified the following facts:
and P18, respectively. If all employees are currently working at full capacity on other client 1. The equipment used to manufacture the electric motors has a book value of P150,000.
matters, the per-hour opportunity cost of being unable to provide this new service is: 2. The space now occupied by the electric motor manufacturing department could be used
A. P47 C. P93 to eliminate the need for storage space now being rented.
B. P65 D. P140 3. Comparable units can be purchased from an outside supplier for P59.75.
4. Four of the persons who work in the electric motor manufacturing department would be
107. Sound, Inc., reported the following results from the sale of 24,000 units of IT-54: terminated and given eight weeks' severance pay.
Sales P528,000 5. A P10,000 unsecured note is still outstanding on the equipment used in the
Variable manufacturing costs 288,000 manufacturing process.
Fixed manufacturing costs 120,000 Which of the items above are relevant to the decision that the controller has to make?
Variable selling costs 52,800 A. 1, 3, and 4 C. 1, 2, 4, and 5
Fixed administrative costs 35,200 B. 2, 3, and 4 D. 2, 3, 4, and 5

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110. Song, a division of Carolina Enterprises, currently makes 100,000 units of a product that has Question No. 113 through 115 are based on the following:
created a number of manufacturing problems. Song's costs follow. The Ibaan Sweater Company produces sweaters under the "Alaeh" label. The company buys raw
Manufacturing costs: wool on the market and processes it into wool yarn from which the sweaters are woven. One
Variable P540,000 spindle of wool yarn is required to produce one sweater. The costs and revenues associated with
Fixed 180,000 the sweaters are given below:
Allocated corporate admin cost 60,000 Per Sweater
If Song were to discontinue production, fixed manufacturing costs would be reduced by 70%. Selling price P300.00
The relevant cost of deciding whether the division should purchase the product from an Cost to manufacture:
outside supplier is: Raw materials:
A. P540,000 C. P666,000 Buttons, thread, lining P20.00
B. P594,000 D. P720,000 Wool yarn 160.00
Total raw materials 180.00
111. The Shoe Department at the Baton Rouge Department Store is being considered for closure. Direct labor 58.00
The following information relates to shoe activity: Manufacturing overhead 87.00 325.00
Sales revenue P350,000 Manufacturing profit (loss) P(25.00)
Variable costs: Originally, all of the wool yarn was used to produce sweaters, but in recent years a market has
Cost of goods sold 280,000 developed for the wool yarn itself. The yarn is purchased by other companies for use in production
Sales Commission 30,000 of wool blankets and other wool products. Since the development of the market for the wool yarn, a
Fixed operations costs 90,000 continuing dispute has existed in the Ibaan Sweater Company as to whether the yarn should be
If 70% of the fixed operating costs are avoidable, should the Shoe Department be closed? sold simply as yarn or processed into sweaters. Current cost and revenue data on the yarn are
A. No, Baton Rouge would be worse off by P13,000. given below:
B. No, Baton Rouge would be worse off by P40,000. Per Spindle of Yarn
C. Yes, Baton Rouge would be better off by P23,000. Selling price P200.00
D. Yes, Baton Rouge would be better off by P50,000. Cost to manufacture:
Raw materials (raw wool) P70.00
112. Big City Motors is trying to decide whether it should keep its existing car washing machine or
Direct labor 36.00
purchase a new one that has technological advantages (which translate into cost savings)
Manufacturing overhead 54.00 160.00
over the existing machine. Information on each machine follows:
Manufacturing profit P 40.00
Old Machine New Machine
The market for sweaters is temporarily depressed, due to unusually warm weather in the western
Original cost P9,000 P20,000
countries where the sweaters are sold. This has made it necessary for the company to discount
Accumulated depreciation 5,000 0
the selling price of the sweaters to P300 from the normal P400 price. Since the market for wool
Annual cash operating costs 9,000 4,000
yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold
Current salvage value of old machine 2,000
outright rather than processed into sweaters. The sales manager thinks that the production of
Salvage value in 10 years 500 1,000
sweaters should be discontinued. She is upset about having to sell sweaters at a P25.00 loss
Remaining life 10 years 10 years
when the yarn could be sold for a P40 profit. However, the production superintendent is equally
The P4,000 of annual operating costs that are common to both the old and the new machine
upset at the suggestion that he close down a large portion of the factory. He argues that the
are an example of
company is in the sweater business, not the yarn business, and that the company should focus on
A. future avoidable costs C. opportunity costs
its core strength. Due to the nature of the production process, virtually all of the manufacturing
B. irrelevant costs D. sunk costs
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overhead costs are fixed and would not be affected even if sweaters were discontinued. 119. Kern Co. is planning to invest in a two-year project that is expected to yield cash flows' from
Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. operations, net of income taxes, of P50,000 in the first year and P80,000 in the second year.
Kern requires an internal rate of return of 15%. The present value of PI for one period at 15%
113. Would you recommend that the wool yarn be sold outright or processed into sweaters? is 0.870 and for two periods at 15% is 0.756. The future value of P1 for one period at15% is
A. No, profit to decrease by P15. C. Yes, profit to increase by P22. 1.150 and for two periods at 15% is 1.323.
B. No, profit to decrease by P25. D. Yes, profit to increase by P29. The maximum that Kern should invest immediately is
A. P 81,670 C. P130,000
114. What is the lowest price that the company should accept for a unit of sweaters? B. P103,980 D. P163,340
A. P271 C. P315
B. P278 D. P325 Financial Statement Analysis
120. The times interest earned ratio of Mikoto Company is 4.5 times. The interest expense for the
115. What is the amount of incremental cost per unit if the company produces sweaters? year was P20,000, and the company's tax rate is 40%. The company's net income is:
A. P 78 C. P184 A. P22,000 C. P54,000
B. P148 D. P238 B. P42,000 D. P66,000

Pricing Decision 121. The current assets of Bayanan Enterprise consists of cash, accounts receivable, and
116. Swift Company introduced a new product last year for which it is trying to find an optimal inventory. The following information is available:
selling price. Marketing studies suggest that the company can increase sales by 5,000 units Credit sales 75% of total sales
for each P2 reduction in the selling price. The company's present selling price is P70 per Inventory turnover 5 times
unit, and variable expenses are P40 per unit. Fixed expenses are P540,000 per year. The Working capital P1,120,000
present annual sales volume (at the P70 selling price) is 15,000 units. Current ratio 2 to 1
Assuming that the marketing studies are correct, what is the maximum profit that the Quick ratio 1.25 to 1
company can earn yearly? Average Collection period 42 days
A. P 20,000 C. P260,000 Working days 360
B. P110,000 D. P270,000 The estimated cost of goods sold amounts to:
A. P720,000 C. P4,200,000
Capital Budgeting B. P840,000 D. P6,000,000
117. Discounted-cash-flow analysis focuses primarily on the
A. probability of cash flows. C. stability of cash flows. Working Capital Management
B. sensitivity of cash flows. D. timing of cash flows. 122. Jackson Distributors sells to retail stores on credit terms of 2/10, net 30. Daily sales average
150 units at a price of P300 each. Assuming that all sales are on credit and 60 percent of
118. The internal-rate-of-return method assumes that project funds are reinvested at the: customers take the discount and pay on Day 10 while the rest of the customers pay on Day
A. hurdle rate. 30, the amount of Jackson's accounts receivable is:
B. cost of debt capital. A. P450,000 C. P900,000
C. rate of earnings growth (REG). B. P810,000 D. P990,000
D. rate of return earned on the project.

123. Jones Company uses an average of 60 units a day. The lead time is 3 days, and the safety

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stock is 30 units. What is the reorder point? 129. Which of the following characteristics would best explain the use of probabilities and
A. 20 units C. 180 units expected values in a decision analysis?
B. 90 units D. 210 units A. Inflation. C. Production bottlenecks.
B. Limited resources. D. Uncertainty.
124. The Tienes Company obtained a short-term bank loan for P1,000,000 at an annual interest
rate 9%. As a condition of. the loan Tienes required to maintain a compensating balance of 130. A company has a bottleneck operation that slows production. Which of the following tools or
PI50,000 in its checking account. The checking account earns interest at an annual rate of approaches could the firm use to determine the most cost-effective ways to eliminate this
2.5%. Tienes would otherwise maintain only P50,000 in its checking account for problem?
transactional purposes. Tienes' effective interest costs of the loan is A. Decision-tree diagrams. C. Payoff matrices.
A. 9.72% C. 14.25% B. Linear programming. D. Theory of constraints.
B. 10.15% D. 15.86%
131. A staff assistant at Washington Corporation recently determined that the first four units
Cost of Capital completed in a new manufacturing process took 800 hours to complete, or an average of 200
125. The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a hours per unit. The assistant also found that when the cumulative output produced doubles,
beta of 1.5, what is its expected return? the average labor time declines by 20%. On the basis of this information, how many total
A. 12% C. 19.5% hours would Washington use if it produces 16 units?
B. 17% D. 24.5% A. 128 C. 1,280
B. 160 D. 2,048
126. Batangas Sausage just paid a P1.57 dividend and investors expect that dividend to grow by
5% each year forever. If the required return on the stock investment is 14%, what should be Information Systems
the price of the stock today. 132. Which of the following statements is (are) true about automation?
A. P11.21 C. P18.32 A. Automation is inexpensive.
B. P17.44 D. P25.37 B. Automation should be adopted as soon as new technology is available.
C. Automation should be adopted after a company makes the most efficient use of existing
127. The following information relates to the Atlantic Division of Ocean Enterprises: technology.
Interest rate on debt capital 8% D. All of the above are true.
Cost of equity capital: 12%
Market value of debt capital P50 million 133. Which of the following statements is riot a characteristic of a batch processed computer
Market value of equity capital P80 million system?
Income tax rate: 30% A. the production of numerous printouts.
On the basis of this information, Atlantic's weighted-average cost of capital is: B. Keypunching of transactions, followed by machine processing.
A. 7.3%. C. 9.5%. C. The posting of a transaction, as it occurs, to several files, without intermediate printout.
B. 8.3%. D. 10.8%. D. The collection of like transactions which are sorted and processed sequentially against a
master file.
Quantitative Methods
128. A technique that is useful in exploring what would happen if a key decision prediction or 134. The network most frequently used for private operations designed to link computers within a
assumption proved wrong is termed: building in a research park is referred to as a(n)
A. linear programming. C. sensitivity analysis. A. Bulletin board service. C. Wide area network.
B. project analysis. D. uncertainty analysis. B. Local area network. D. Zero base network.
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135. Computer systems are becoming more vulnerable to unauthorized access because Answer Key
A. hardware design consideration have declined 1. 26. 51. 76. 101. 126.
B. software cannot be readily written to control access 2. 27. 52. 77. 102. 127.
C. systems documentation must be available to all users
D. access can be gained electronically without physical entry to the facilities 3. 28. 53. 78. 103. 128.
4. 29. 54. 79. 104. 129.
136. All activity related to a particular application in a manual system is recorded in a journal. The 5. 30. 55. 80. 105. 130.
name of the corresponding item in a computerized system is a 6. 31. 56. 81. 106. 131.
A. current balance file C. transaction file
B. master file D. year-to-date file
7. 32. 57. 82. 107. 132.
8. 33. 58. 83. 108. 133.
137. An integrated group of programs that supervises and support the operations of a computer 9. 34. 59. 84. 109. 134.
system as it executes users’ application programs is called a(n) 10. 35. 60. 85. 110. 135.
A. data base management system C. operating system 11. 36. 61. 86. 111. 136.
B. language program D. utility programs
12. 37. 62. 87. 112. 137.
Economics 13. 38. 63. 88. 113. 138.
138. In a competitive market for labor in which demand is stable, if workers try to increase their 14. 39. 64. 89. 114. 139.
wage 15. 40. 65. 90. 115. 140.
A. employment must fall
B. product supply must decrease
16. 41. 66. 91. 116.
C. firms in the industry must become smaller 17. 42. 67. 92. 117.
D. government must set a maximum wage below the equilibrium wage 18. 43. 68. 93. 118.
19. 44. 69. 94. 119.
139. X and Y are complementary products. If the price of product Y increases, the immediate 20. 45. 70. 95. 120.
impact on product X is that its
A. Price will decrease. 21. 46. 71. 96. 121.
B. Quantity supplied will decrease. 22. 47. 72. 97. 122.
C. Quantity demanded will decrease. 23. 48. 73. 98. 123.
D. Price, quantity demanded and supplies will remain unchanged. 24. 49. 74. 99. 124.
140. A soft drink producer acquiring a bottle manufacturer is an example of a
25. 50. 75. 100. 125.
A. Congeneric merger. C. Horizontal merger.
B. Conglomerate merger. D. Vertical merger.

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