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P1 Valid and Updated Management Accounting Q&A Dumps

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P1 Questions and Answers

Question # 1

RT produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below:Â

Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified: Direct labour hours 7,500 hoursÂ

Material A 8,500 kgs

Material B 3,000 litres

Machine hours 7,500 hours

Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.Â

The contribution per unit for R and T will be...?

R = $47 per unit. T = $61 per unit

R = $51 per unit. T = $61 per unit

R = $47 per unit. T = $65 per unit

R = $45 per unit. T = $66 per unit

Question # 2

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine.

The companyâ€™s existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Departmentâ€™s support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The companyâ€™s accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department:

Calculate the annual profit per machine for each of the three sizes of machine using activity-based costing.

Profit Per Machine using ABC: Small $1076, Medium $1041, Large $1946

Profit Per Machine using ABC: Small $186, Medium $1441, Large $2046

Profit Per Machine using ABC: Small $196, Medium $1191, Large $1046

Profit Per Machine using ABC: Small $376, Medium $2341, Large $986

Profit Per Machine using ABC: Small $166, Medium $1241, Large $746

Profit Per Machine using ABC: Small $176, Medium $1341, Large $946

Question # 3

A company operates a customer complaints department.

How will the cost of the customer complaints department be classified in a system focussed on quality related costs?

External failure cost

Internal failure cost

Prevention cost

Appraisal cost

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