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P1 – Management Accounting

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Showing 4–6 of 10 questions

Question 4

EFG is a small business making raspberry jam to sell at local markets. It has recently been approached by a major supermarket to produce a special order for the supply of lemon curd.

Two of the ingredients required are sugar and preservatives, both of which are in inventory.

The sugar has a historic cost of $4 per kg and a replacement cost of $5. It is in regular use for the production of the raspberry jam.

The factory has switched to organic processes and the preservatives are no longer required.

The historic cost of the preservatives was $3 per kg and the replacement cost is $2.50 per kg.

The preservatives can be re-sold to a local competitor for $1 per kg if they are not used in this order.

Which TWO of the following should be included in determining the relevant cost of the special order?

Select all that apply, then click Submit answer.

  • ○

    Sugar at $4 per kg
  • ○

    Sugar at $5 per kg
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    Preservatives at $3 per kg
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    Preservatives at $1 per kg
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    Preservatives at $2.50 per kg
Question 5

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?

Select all that apply, then click Submit answer.

  • ○

    SV = TS - T
  • ○

    SV = TS / T
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    SV = TS + T
  • ○

    SV = T / TS
  • ○

    SV = T - TS
Question 6

A company develops computer software programs to meet each client's specific requirements. The management accountant is considering introducing a standard costing system.

Which THREE of the following are reasons that support the case for the company's introduction of a standard costing system?

Select all that apply, then click Submit answer.

  • ○

    It will enable the company to make a direct comparison of costs for each program developed.
  • ○

    It will enable the company to better focus on the quality of its service.
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    It will provide a system of control.
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    It will aid the budget setting process.
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    It will simplify the work-in-progress valuation.