[2022] Practice with these P1 dumps Certification Sample Questions [Q14-Q37]

Q14. A special contract requires 640 units of component T.
The inventory of 280 units of component T cost $0.20 per unit but the component is not currently used by the company.
The current market price of component T is $0.24 per unit but the inventory could be sold for $0.15 per unit.
The relevant cost of the units of component T required for the special contract is:

Q15. GP is launching a new product. The annual forecast costs are as follows:

What is the expected value of the total costs?
Give your answer to the nearest whole $.

Q16. XY can choose from four mutually exclusive projects. The projects will each last for one year and their net cash inflows will be determined by market conditions. The forecast net cash inflows for each of the possible outcomes are shown below.

If the company applies the maximax criterion the project chosen would be:

Q17. A medium-sized manufacturing company, which operates in the electronics industry, has employed a firm of consultants to carry out a review of the company’s planning and control systems. The company presently uses a traditional incremental budgeting system and the inventory management system is based on economic order quantities (EOQ) and reorder levels. The company’s normal production patterns have changed significantly over the previous few years as a result of increasing demand for customized products. This has resulted in shorter production runs and difficulties with production and resource planning.
The consultants have recommended the implementation of activity based budgeting and a manufacturing resource planning system to improve planning and resource management.
How will a manufacturing resource planning system improve the planning of purchases and production for the company?
Select ALL the correct answers.

Q18. A time series (TS) is made up of two main components i.e. trend (T) and the seasonal variation (SV).
Which TWO of the following could be used to find the seasonal component of a trend?

Q19. A completed unit of Product A requires 9 kg of material and 10% of material is wasted in the production process.
Material has a standard cost of $5 per kg.
Product A also requires 4 labour hours at a standard cost of $10 per labour hour and variable overheads at a standard cost of $2 per labour hour What is the standard variable production cost per unit of Product A?

Q20. The following information is available about direct material T for the last period.

A JIT purchasing system is in operation.
Calculate the actual price paid per kg of material T.
Give your answer to 2 decimal places.

Q21. JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

* Refer to your answer in the previous question.
The optimal solution to the previous question shows that the shadow prices of skilled labour and direct material A are as follows:
Skilled labour $ Nil Direct Material A $11.70
Explain the relevance of these values to the management of JRL.
Select ALL the true statements.

Q22. A manager has not yet used all oh his budget. He is worried that his budget maybe reduced next year if he is not seen to have needed all the funds. He decides to spend the remaining £1,580 on another team building exercise as well as a catered lunch for his department.
This example falls under which behavioural aspect of budgetary control?

Q23. Some of the movements in a time series follow a pattern over time.
Which type of movement does NOT follow a pattern over time?

Q24. A time series (TS) is made up of two main components i.e. trend (T) and the seasonal variation (SV).
The equation that represents the seasonal variation under the additive model is:

Q25. QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

The total budgeted cost of setting up the machines is $74,400.
What was the budgeted machine set up cost per unit of product Q?

Q26. TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers’ specific requirements. The standard cost per unit of its most popular cake is as follows:

The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and
$20 per kg respectively.
TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no inventory during the period.
Prepare a statement which reconciles the flexed budget material cost and the actual material cost. Your statement should include the material price planning variances, and the operational variances including material price, material mix and material yield.
What was the material price planning variance for ingredient A?

Q27. A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:
y = a + bx where
y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1
= quarter 1 of year 1
Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:
Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

Q28. Which THREE of the following are purposes of all budgets?

Q29. Demand for two products, A and B is 1,000 units and 2,000 units respectively. Each unit of Product A requires 8 kg of material and each unit of Product B requires 5 kg of material. The maximum availability of material is 17,200 kg. Contribution per unit of A is $10 and per unit of B is $9.
Place the production volumes of Product A and Product B, that will maximize contribution, in the table.

Q30. A bakery manager is deciding how many batches of birthday cakes to decorate each day.
Demand for the birthday cakes varies from 12 to 15 batches per day. Each batch decorated and sold earns a contribution of $40 but each batch unsold leads to loss of contribution of $15.
The payoff table below shows the total $ contribution from each of the possibilities:

Based on expected values, the number of batches of birthday cakes the bakery manager should decorate each day is:

Q31.

Select the benefits to a company of using sensitivity analysis in investment appraisal.
(Select all the true statements.)

Q32. 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 company’s existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department’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 company’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.

Q33. Explain the advantages of management participation in budget setting and the potential problems that may arise in the use of the resulting budget as a control mechanism.
Select all the correct answers.

Q34. A manufacturing company sells 5 different products.
The company holds no inventories and has a high level of fixed cost.
Place against the statements below the comment “needed” or “not needed” to select ALL of the information required to calcuate the total number of units to break-even.

Q35. Which ONE of the following describes full cost-plus pricing?

Q36. Christian the management accountant at a car manufacturer has been given a list of costs that have been incurred due to accidents and errors either occurring or being prevented.
Which of the following are examples of non-conformance costs? Select ALL that apply.

Q37. 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?