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Management Advisory Services

by Franklin T. Agamata, MBA, CPA
Suggested Key Answers Multiple Choice Questionnaires
2007 Edition

Chapter 1 Chapter 2 Chapter 3 Chapter 4

Multiple Choice Multiple Choice Multiple Choice Multiple Choice 48. C
Costs
Basic Concepts 1. B classification Basic Concepts 49. D
1. C 2. D 1. D 1. A 50. D
2. D 3. D 2. D 2. A 51. D
3. D 4. B 3. D 3. B 42. C
4. A 5. D 4. C 4. A 43. D
5. C 6. A 5. D 5. B 44. A
6. A 7. A 6. A 6. D 45. D
7. A 8. A 7. C 7. B 46. D
8. A 9. D 8. D 8. D 47. A
9. C 10. A 9. B 9. B 48. A
10. C 11. D 10. D 10. A 49. D
11. D 12. D 11. D 11. B 50. B
12. D 13. C 12. B 12. C 51. C
13. A 14. C 13. A 13. C 52. C
14. B 15. C 14. B 14. B 53. D
15. D 16. B 15. B 15. D 54. C
MAS Practice 17. C 16. A 16. B 55. D
Standards 18. D 17. C Operating income 56. A
16. D 19. A 18. B 17. A 57. C
17. D 20. C 19. A 18. B 58. D
18. D 21. C 20. A 19. B 59. B
19. A 22. C 21. A 20. A Scattergraph
20. B 23. C 22. D 21. A 60. A
21. A 24. C 23. C 22. C 61. A
22. D 25. B 24. B 23. D 62. D
23. A 26. A 25. C 24. B 63. A
24. C True or False 26. D 25. A 64. A
25. C 27. T 27. B 26. A 65. B
26. A 28. F 28. D 27. C 66. C
27. C 29. T 29. A 28. D Coefficient of
28. A 30. F 29. A Correlation
31. T 30. A 67. A
32. T 31. B 68. B
33. T 32. B 69. D
34. F 33. A 70. C
35. F 34. B 71. C
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36. T Income with 72. B

variances 73. D
35. B 74. D
High-low method 75. B
36. A 76. C
37. B 77. D
38. B 78. C
39. D 79. A
40. D 80. A
41. A 81. D
42. A
43. D
44. C
45. D
46. A
47. B
Chapter 5 Chapter 6
Multiple Choice 55. D Multiple Choice 54. C 101. C
Basic Concepts 56. C Basic Concepts 55. B 102. D
Multi-product
1. C sales 1. D 56. D 103. D
2. A 57. D 2. D 57. A 104. D
3. B 58. C 3. C 58. B 105 D
4. C 59. D 4. D 59. A 106. A
5. D 60. B (200,000) 5. A 60. A 107. B
Direct labor
6. C 61. D 6. C budget Other budgeting
7. D 62. A 7. C 61. D techniques
8. D 63. B 8. D 62. B 108. D
9. B 64. B 9. C 63. C 109. B
10. B 65. C 10. B 64. B 110. B
11. D 66. D 11. No question Factory overhead 111. B
Breakeven and
12. C CVP graphs 12. A budget 112. A
13. C 67. B 13. C 65. C 113. A
Breakeven
Point 68. C 14. B 66. B 114. A
14. B 69. C 15. D 67. B 115. A
Operating
15. D 70. A 16. D expenses 116. C
16. D 71. A 17. B budget 117. C
17. B 72. C 18. B 68. C 118. A
18. B 73. A 19. D Cash budget 119. D
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19. B 74. A 20. D 69. C 120. A

20. B 75. A 21. D 70. A 121. C
21. C 76. A 22. A 71. C True or False
22. C 77. A 23. D 72. C 1. T
23. B 78. C 24. D 73. C 2. T
24. D 79. D 25. D 74. A 3. T
25. C 80. C 26. A 75. D 4. T
26. A 81. A 27. E 76. C 5. F
27. C 82. D 28. B 77. C 6. T
28. C 83. B 29. B 78. B 7. F
29. B 84. C 30. B 79. D 8. T
30. A 85. D 31. C 80. B 9. F
31. C 86. B 32. A 81. C 10. F
32. A 87. A 33. C 82. D
33. B 34. B 83. D
34. D 35. D 84. D
35. A 36. B 85. C
36. A 37. A 86. B
37. B 38. C 87. C
38. B 39. B 88. D
Income
39. D 40. B statement
40. A 41. D 89. D
41. A 42. D 90. A
42. B 43. D 91. A
43. B 44. D 92. A
Production
44. D budget 93. C
45. A 45. B 94. D
46. A 46. C 95. B
47. A 47. C 96. C
48. A 48. D 97. C
Materials
49. B budget Flexible budget
50. A 49. C 98. D
51. D 50. D 99. B
52. C 51. B 100. B
53. B 52. D Comprehensive
54. C 53. D problems
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Chapter 7 Chapter 8 Chapter 9

Multiple Choice 52. D Multiple Choice 53. D Multiple Choice
Basic Concepts 53. D Basic Concepts 54. D Basic Concepts
1. C 54. B 1.. B 55. B 1. B
2. B 55. D 2. C 56. B 2. C
3. B 56. D 3. D 57. D 3. D
4. B 57. A 4. B 58. C 4. B
5. D 58. A 5. A 59. D 5. B
6. D 59. D 6. B 60. B 6. D
Factory
7. A overhead 7. D 61. B 7. C
8. C cost variances 8. C 62. C 8. D
9. D 60. A 9. B 63. C 9. B
10. B 61. D 10. A 64. B 10. D
11. A 62. A 11. D 65. B 11. B
12. D 63. C 12. C 66. D 12. C
13. C 64. A 13. B 67. C 13. D
14. D 65. B 14. A Transfer pricing 14. D
15. D 66. D 15. C 68. C 15. A
16. D 67. A 16. D 69. D 16. C
17. D 68. B 17. A 70. A 17. B
18. B 69. B 18. A 71. B 18. B
19. A 70. B 19. B 72. B 19. D
20. D 71. A 20. A 73. A 20. A
21. C 72. E 21. A 74. A 21. D
22. B 73. E 22. A 75. D 22. B
23. A 74. A 23. D 76. C 23. B
Material cost 75. B 24. D 77. C 24. A
Variances 76. A 25. C 78. B 25. B
24. A 77. B 26. C 79. D 26. D
25. C 78. D 27. D 80. B 27. B
26. C 79. A 28. A 81. B 28. B
27. D 80. B 29. D 82. D 29. C
28. C 81. A 30. D 83. A 30. A
29. B 82. B Controllability 84. D 31. C
30. A 83. D 31. C 85. D 32. A
31. D 84. D 32. A 33. C
32. C 85. D 33. B 34. D
33. B 86. D 34. B 35. D
34. C 87. C 35. D Accept or reject a
35. B 88. A 36. A special sales order
36. A 89. C 37. A 36. C
37. D 90. D 38. A 37. A
38. D 91. A Investment 38. D
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center
performance
39. D 92. A models 39. A
Direct labor cost 93. C 39. C 40. A
Variances Miscellaneous 40. B 41. B
40. A Topics 41. D 42. C
41. D 94. B 42. B 43. B
42. B 95. C 43. C 44. A
43. D 96. A 44. C 45. B
44. B 97. B 45. D 46. C
45. B 46. B 47. D
46. A 47. A 48. B
47. D 48. D 49. C
48. D 49. D 50. A
49. A 50. C 51. B
50. D 51. B 52. C
51. A 52. A 53. A
Drop or continue a
division, department,
process, project or
activity
54. B
Ch. 9 (Cont.) Chapter 10 Chapter 11
55. C 99. D Multiple Choice 1. A 59. B
56. A 100. B Basic Concepts 2. B 60. D
57. D 101.D 1. A 3. A 61. C
58. B 2. D 4. A 62. A
59. D 3. B 5. C 63. D
60. A 4. D 6. D 64. B
61. B 5. E 7. C
62. B 6. D 8. C
Maximization of 7. C 9. C
scarce 10 .C
resources 8. B
63. A 9. A 11 .D
64. C 10. C 12 .B
65. D 11. B 13 .C
66. B 12. C 14. A
67. A 13. A 15. B
68. B 14. C 16. A
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69. A 15. C 17. D

18.C internal failure
70. A 16. A cost
Retain or 19. B
Replace 17. D
an old asset 18. B 20. D
71. C 19. A 21. A
72. D 20. D 22. A
73. A 21. C 23. D
74. B 22. B 24. B
Sell-as-is or 25. C
process further a
product 23. C
24. B 26. A
75. B 25. E 27. B
76. A 26. D 28. A
29. B
77. B 27. D P122,600
78. C 28. B 30. A
79. B 29. D 31. D
Bid price 30. B 32. A
80. D Sales variation 33. A
81. D analysis 34. B
82. B 31. A 35. D
83. D 32. C 36. D
Shut down or 37. B
not 33. D
84. B 34. A 38. D
Scrap or 39.C
rework 35. D
defective units 36. A 40. A
85. D 37. C 41. C
86. A 42. C
87. A 43. D
Indifference 44. D
point
88. C 45. A
89. C 46. B
90. C 47. A
91. D 48. B
Miscellaneous 49. C
Topics 50. C
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92. D 51. B
93.A 52. A
94. C 53. C
95. B 54. A
96. A 55. D
97. D 56. A
98. C 57. D
58 D.
Chapter 12 Chapter 13 Chapter 14
1. A Multiple Choice 50. D 106. D Multiple Choice
2. B Basic Concepts 51. C Miscellaneous Basic Concepts
3. B 1. D 52. C problems 1. D
4. A 2. C 53. D 107. A 2. C
5. C Horizontal &
trend analysis 54. B 108. B 3. B
6. B 3. C 55. C 109. C 4. D
7. B 4. A 56. B 110. B 5. C
8. D 5. D 57. C 111. C 6.. C
9. C 6. C 58. B 112. D 7. B
10 D 7. B 59. C 113. A 8. B
11.B 8. A 60. C 114. A 9. D
12. B 9. A 61. D 115. C 10. B
13. A Vertical
Analysis 62. C 116. A 11. C
14. B 10. C 63. C 117. B Net Cost of
15. D 11. D 64. A 118. D Investment
16. C 12. A Liquidity ratios 119. C 12. B
17. D 13. C 65. A 120. A 13. B
18.A Leverage ratios 66. B Comprehensive 14. C
19. A (Financing
ratios) 67. B questions 15. B
20. A (P95.90) 14. C 68. B 121. D 16. C
21. A 15. B 69. B 122. C Net returns
22. C 16. B 70. B 123. C 17. D
23. B 17. C 71. B 124. D 18. B
24. B 18. B 72. C 125. A 19. B
25. C 19. D 73. B 126. A 20. B
26. A 20. A 74. A 127. C 21. B
27. B 21. B 75. D 128. B Cost of capital
28. D 22. D 76. C 129. C 22. A
29.C 23. C 77. C 130. C 23. D
30. B 24. B 78. D 131. A 24. D
31. C 25. C 79. C 132. B 25. D
32. A Profitability
ratios 80. A 133. C 26. B
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33. D 26. D 81. A 134. C 27. D

34. C 27. A 82. B 135. C 28. D
35. C 28. A 83. A 136. (1:1) 29. B
36. D 29. C 84. B 137. B 30. A
37. A 30. D 85. A 138. A 31. C
38. D 31. A 86. B 139. B 32. D
39.D 32. D 87. A 140. D 33. B
40. E 33. B 88. C 141. B 34. A
41. E 34. Bonus 89. B 142. D 35. B
42. E 35. C 90. A 143. B 36. B
43. C 36. A 91. D 144. B 37. D
44. D 37. B 92. A 145. (1:1) 38. A
45. M, K, L, J 38. A 93. A 146. C 39. B
46. C 39. C 94. D 147. C 40. B
148.
40. D 95. B (12.5x) 41. A
41. C 96. C 149. D 42. B
42. B 97. C 43. C
43. A 98. A 44. A
44. B 99. C Traditional
45. B 100. A evaluation models
46. C 101. A 45. A
Growth ratios 102. D 46. B
47. C 103. C 47. D
48. D 104. A 48. A
49. D 105. D 49. A
50. B
51. B
52. D
53. D
54. D
55. B
56. C
Ch 14 (Cont.) Chapter 15 Chapter 16
57. B 110. A 159. D Multiple Choice Multiple Choice
58. A 111. A 160. D 1. B Effective discount rate
59. D NPV index 161. C 2. D 1. A
60. C 112. A 162. A 3. C 2. B
61. A Internal rate of 163. B 4. C 3. B
Discounted
cash Return 164. A 5.. B 4. B
flows model 113. B 165. B 6. D 5. B
General 114. D 166. A Effective interest 6. B
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62. D 115. C 167. D Rate 7. C

63. D 116. A 168. C 7. C Credit and
64. B 117. C Comprehensive 8. A collection policy
65. A 118. B Problems 9. D 8. A
66. C 119. A 169. B 10. B 9. C
67. A 120. D 170. C 11.No question 10. B
68. D 121. A 171. D 12. C 11. B
69. D 122. C 172. C 13. C 12. C
70. D 123. A 173. D 14. A 13. D
71. C 124. B 174. D General working 14. A
72. D 125. B 175. A capital concepts 15. C
73. A 126. B 176. D 15. B 16. B
74. C 127. C 177. C 16. B 17. D
75. B 128. D 178. B 17. D 18. D
76. B 129. A 179. D 18. B 19. C
77. A 130. C 180. B 19. C 20. B
78. D 131. B 181. A 20. C 21. A
79. C 132. D 182. C 21. A 22. D
80. C 133. B 183. C 22. B 23. C
184. C (2,3,
81. C 134. C and 4) 23. C 24. D
Profitability
82. A index 185. D 25. D
83. D 135. B 186. D 26. A
84. B 136. D 187. C 27. C
85. A 137. C 188. C Accounts receivable
Net present
value 138. B 189. A portfolio analysis
86. A 139. B 28. A
87. A 140. D 29. B
88. A 141. D 30. D
89. B 142. C 31. B
90. C Other discounted 32. C
cash flows
91. C models 33. A
92. D 143. B
93. D 144. D
94. B 145. B
95. B 146. D
96. B 147. B
97. C Lease or buy
98. A 148. A
99. B 149. A
100. D Others
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101. B 150. C
102. B 151. D
103. C 152. A
104. A 153. B
105. D 154. A
106. B 155. A
107. D 156. A
108. B 157. D
109. D 158. C

Chapter 17
Multiple Choice 55. B
1. B 56. A
2. D 57. C
3. C 58. A
4. A 59. C
5. D 60. C
6. A Safety stock
7. B 61. A
8. B 62. B
9. D 63. D
10. C 64. C
11. C 65. D
EQQ Model 66. D
12. B 67. D
13. B 68. B
14. A 69. C
15. D 70. D
16. C 71. A
17. D 72. D
18. B 73. D
19. A 74. B
20. B 75. B
21. C 76. C
22. A 77. D
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23. D 78. D
24. C 79. C
25. D 80. B
26. D 81. B
27. B JIT, MRP,ERP
28. B FMS, etc.
29. C 82. A
30. C 83. B
31. B 84. A
32. D 85. D
33. C 86. A
34. C 87. A
35. B 88. C
36. D 89. B
37. B 90. D
38. C 91. D
39. B 92. A
40. A Miscellaneous
41. A 93. D
42. A 94. C
43. D 95. B
44. C 96. B
45. C
46. D
47. B
48. D
49. B
50. A
51. A
Reorder point
52. C
53. A
54. A