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CIMAPRA17-BA2-1 Exam - Topic 1 Question 24 Discussion

A company operates an integrated standard cost accounting system. The standard price of raw material A is $20 per litre. At the start of period 1, the inventory of 500 litres of raw material A was valued at $20 per litre. During period 1, 100 litres of raw material A were purchased at an actual price of $21 per litre. During period 2, 550 litres of raw material A were issued to Job 789.In respect of the above events, which TWO of the following statements are correct? (Choose two.)
D) An adverse material price variance should be recorded in the statement of profit or loss for period 2. and E) The first 500 litres of raw material A issued should be debited to the Job 789 account at $20 per litre, and the remaining 50 litres at $21 per litre.
A) The raw material inventory at the end of period 1 should include 100 litres valued at $21 per litre.
B) An adverse material price variance should be recorded in the statement of profit or loss for period 1.
C) The raw material inventory at the end of period 2 should be valued at $20 per litre.

CIMAPRA17-BA2-1 Exam - Topic 1 Question 24 Discussion

Actual exam question for CIMA's CIMAPRA17-BA2-1 exam
Question #: 24
Topic #: 1
[All CIMAPRA17-BA2-1 Questions]

A company operates an integrated standard cost accounting system. The standard price of raw material A is $20 per litre. At the start of period 1, the inventory of 500 litres of raw material A was valued at $20 per litre. During period 1, 100 litres of raw material A were purchased at an actual price of $21 per litre. During period 2, 550 litres of raw material A were issued to Job 789.

In respect of the above events, which TWO of the following statements are correct? (Choose two.)

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Suggested Answer: D, E

by Lashaunda at May 05, 2022, 08:59 AM

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Jamal
9 months ago
The first 500 litres should definitely be at $20, makes sense!
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Annelle
9 months ago
I think the inventory should still be valued at the standard price.
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Karina
9 months ago
Wait, why would the inventory at the end of period 1 include the $21 litres?
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Filiberto
9 months ago
Totally agree, there should be a price variance recorded!
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Shayne
9 months ago
The standard price is $20, but they bought some at $21.
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Reita
10 months ago
This seems like a straightforward question about supply chain benchmarking. I'll focus on identifying the key criteria that make a firm an appropriate benchmark.
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Tamesha
10 months ago
Okay, I've read through the question a few times now. I'm pretty confident the answer is C - the new $500 order should be processed since it comes before the existing open orders, and the system will put a credit hold on the order with the latest request date.
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Noah
10 months ago
I think it might be under Wireless Health? There was a practice question about checking AP performance there.
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Tresa
10 months ago
I've practiced questions like this before, and I lean toward option A, but I can't help but second-guess myself after seeing the other choices.
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