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P1 Premium Exam Questions

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Question 32

The standard output from a joint process is 4,000 litres of Product K, 6,000 litres of Product L and 3,000 litres of Product M.

The total cost of the joint process is $147,000.

The company is now deciding if it should further process Product L.

In the further processing decision the best way to apportion the joint costs to the products is:

Options:

A.

in the ratio of 4:6:3.

B.

in the ratio of the sales value at the split-off point.

C.

in the ratio of the sales value after further processing.

D.

it is not necessary to allocate joint costs in a further processing decision.

Question 33

A decision tree is being evaluated back to a decision point.

There are two alternatives at this point:

1. To abandon the project and generate a return of $435,000;

2. To continue with the project and generate the following possible returns:

What value should be included at the decision point?

Options:

A.

$435,000

B.

$451,000

C.

$443,000

D.

$720,000

Question 34

A company produces a product that requires two materials, Material A and Material B. Details of the material quantities and costs for August are given in the table below.

Budgeted and actual output of the product for August was 12,000 units.

The material yield variance for August is:

Options:

A.

$1,340 A

B.

$1,590 A

C.

$1,740 A

D.

$1,340 F

E.

$1,840 A

Question 35

A pharmaceutical company manufactures pesticides which contain highly toxic chemicals.

In the context of environmental costing, which of the following would be classified as an external failure cost?

Options:

A.

Legal cost incurred in a case relating to river pollution caused by use of the company's products in nearby fields.

B.

Cost incurred in a product trial, carried out prior to product launch, as a consequence of the product failing to meet environmental standards.

C.

Clean-up cost resulting from leakage of a toxic chemical at one of the company's production plants.

D.

Cost of employing an outsourcing company to dispose of toxic waste caused by a quality failure during routine production.

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Exam Code: P1
Exam Name: Management Accounting
Last Update: May 18, 2024
Questions: 260
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