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Free P1 Management Accounting Exam Braindumps (page: 23)

Page 22 of 66
PDF with 260 Questions

LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled 120,960 kilometers. Total costs were $194,400.

LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled.

LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates:

· All costs will be 3% higher than the previous year due to inflation

· Efficiency will remain unchanged

· A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled.

Calculate the following costs to be included in the forthcoming year's budget:

(i) the total variable costs related to the number of parcels delivered.

(ii) the total variable costs related to the distance travelled.

  1. Parcel related cost for next year = $112,308; Distance related costs for next year = $79,590
  2. Parcel related cost for next year = $109,118; Distance related costs for next year = $89,699
  3. Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699
  4. Parcel related cost for next year = $105,306; Distance related costs for next year = $30,590
  5. Parcel related cost for next year = $115,306; Distance related costs for next year = $31,590

Answer(s): C



Which THREE of the following are purposes of all budgets?

  1. Co-ordination
  2. Communication
  3. Profit maximisation
  4. Diversification
  5. Authorization
  6. Consolidation

Answer(s): A,B,E



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?

  1. $0.39 per unit
  2. $0.56 per unit
  3. $0.37 per unit
  4. $0.48 per unit

Answer(s): D


Reference:

https://www.vrelearnonline.com/cima-p1-104-2/



A company manufactures a single product. The cost card for a unit of this product is as follows:

During month 6, finished goods inventory increased by 350 units.



By how much would the profit differ in month 6 if finished goods inventory was valued at standard marginal cost rather than standard absorption cost?

  1. $1,050 lower
  2. $1,050 higher
  3. $2,450 lower
  4. $2,450 higher

Answer(s): A






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