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P1 – Management Accounting

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Showing 7–9 of 10 questions

Question 7

The simplex method has been used to determine the optimum output of products P, Q, R and S with constraints on resources J, K and L.

In the final simplex tableau, the figure in the product R row and the column for slack variable K is 80.

Which of the following statements is correct?

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    For each additional unit of resource K available, the contribution would increase by $80.
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    For each additional unit of resource K available, the output of product R would increase by 80 units.
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    For each additional unit of product R produced, 80 additional units of resource K would be required.
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    In the optimum solution, 80 units of resource K are unused.
Question 8

A manager in your organisation says, "I have spare capacity and I need a unit cost as a basis for pricing a special one-off contract. You have provided me with a relevant cost of $6.50 per unit and a full production cost of $8.00 per unit. Please explain which unit cost I should use."

Which cost should be used in this decision and why?

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    The relevant cost because it is the lower unit cost.
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    The full production cost because it will be used in the financial accounting reporting system.
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    The relevant cost because it represents the cash flows that will be affected if the contract is accepted.
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    The full production cost because it is important to ensure that all costs are covered by the selling price.
Question 9

A museum charges a reduced entrance fee for students in full-time education. The budgeted cost per customer is the same regardless of the entrance fee paid.

4,000 customers were budgeted to visit the museum during period 6, with 25% of customers paying the reduced fee.

3,000 customers visited the museum during period 6 and 1,000 of these paid the reduced entrance fee. Costs were as budgeted but the actual full-priced entrance fee was $2 higher than budgeted.

Which of the following statements is true?

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    The sales mix variance is adverse and the sales quantity variance is adverse.
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    The sales mix variance is zero and the sales quantity variance is favourable.
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    The sales mix variance is adverse and the sales quantity variance is favourable.
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    The sales mix variance is zero and the sales quantity variance is adverse.