MAS PROBLEMS 2018.doc

# Present value of p1 due at end of n periods n 12 14

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Present Value of P1 Due at End of “N” Periods N 12% 14% 15% 16% 18% 20% 22% 4 0.6355 0.5921 0.5718 0.5523 0.5158 0.4823 0.4230 5 0.5674 0.5194 0.4972 0.4761 0.4371 0.4019 0.3411 6 0.5066 0.4556 0.4323 0.4104 0.3704 0.3349 0.2751 57. Using the net present value method, Project A’s net present value is A. 316,920 B. 0 C. (265,460) D. ( 316,920) 58. Project B’s internal rate of return is closest to A. 15% B. 18% C. 20% D. 22% Number 59 (OPERATING & FINANCIAL BUDGETING) Hazel, Inc. plans to sell 80,000 bags of potato chips in June, and each of these bags requires five potatoes. Pertinent data includes: Bags of potato chips Potatoes Actual June 1 inventory 15,000 bags 27,000 potatoes Desired June 30 inventory 18,000 bags 23,000 potatoes What number of units of raw material should Hazel plan to purchase?

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MANAGEMENT ADVISORY SERVICES Page 19 A. 381,000 B. 389,000 C. 411,000 D. 419,000 Number 60 (OPERATING & FINANCIAL BUDGETING) After careful planning, Change Style, Inc. has decided to switch to a just-in-time inventory system effective on July 1 of the current year. As of July 1, the corporation has 70 units of product in inventory. It has 1,000 labor hours available for the month of July. These hours could produce 250 units of product. Customer demand for July is 200 units. If just-in-time principles are correctly followed, how many units should Change Style Inc. plan to produce in July? A. 200 B. 130 C. 180 D. 250 Number 61 (OPERATING & FINANCIAL BUDGETING) 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 P60. On this type of product, the company requires a P12 per unit profit. What is the target cost of the new product? A. 60 B. 30 C. 38 D. 43 Number 62 (OPERATING & FINANCIAL BUDGETING) Ivory Company has the following expected pattern of collections on credit sales: 70 percent collected in the month of sale, 15 percent in the month after the month of sale, and 14 percent in the second month after the month of sale. The remaining 1 percent is never collected. At the end of May, Ivory Company has the following accounts receivable balances: From April sales P21,000 From May sales 48,000 Ivory's expected sales for June are P150,000. What were total sales for April? A. 150,000 B. 72,414 C. 70,000 D. 140,000 Number 63 (OPERATING & FINANCIAL BUDGETING) Bali Company has a policy of maintaining an inventory of finished goods equal to 30 percent of the following month's sales. For the forthcoming month of March, Bali has budgeted the beginning inventory at 30,000 units and the ending inventory at 33,000 units. This suggests that A. February sales are budgeted at 10,000 units less than March sales. B. March sales are budgeted at 10,000 units less than April sales. C. February sales are budgeted at 3,000 units less than March sales. D. March sales are budgeted at 3,000 units less than April sales.
MANAGEMENT ADVISORY SERVICES Page 20 Numbers 64, 65, 66, 67 and 68 (OPERATING & FINANCIAL BUDGETING) The cost of goods sold section of Dale Corporation’s operating budget for 2018 is presented below: Materials: Inventory, January 1 (16,000 units) P 960,000 Purchases 9,120,000 Available for use P10,080,000 Inventory, December 31 (18,500 units) 1,184,000 P 8,896,000 Labor 784,000 Factory overhead: Variable P 2,009,600 Fixed 1,120,000 3,129,600 Cost of goods manufactured (140,000 units) P12,809,600 Add finished goods inventory, January 1 (9,300 units) 744,000 Cost of goods available for sale P13,553,600 Less finished goods inventory, December 31 (3,300 units) 301,600

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