35   Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires further

processing into product HH before it is in a saleable condition. There are no opening inventories and no work in

progress of products G, H or HH. The following data are available for last period:

$

Total joint production costs                     350,000

Further processing costs of product H             66,000

Product             Production                     Closing

units                      inventory

G                    420,000                      20,000

HH                   330,000                      30,000

Using the physical unit method for apportioning joint production costs, what was the cost value of the closing

inventory of product HH for last period?

A    $16,640

B    $18,625

C    $20,000

D    $21,600

36   Which TWO of the following are true for flexible budgets?

(1)  A budget which is continually updated to reflect actual results

(2)  A budget which has built in contingency to allow for unforeseen events

(3)  A budget which identifies the cost behaviour of different cost items

(4)  A budget which allows comparison of like with like

A    1 and 2

B    1 and 4

C    2 and 3

D    3 and 4

37   A company manufactures and sells a single product. In two consecutive months the following levels of production and

sales (in units) occurred:

Month 1              Month 2

Sales               3,800                4,400

Production          3,900                4,200

The opening inventory for Month 1 was 400 units. Profits or losses have been calculated for each month using both

absorption and marginal costing principles.

Which of the following combination of profits and losses for the two months is consistent with the above data?

Absorption costing profit/(loss)    Marginal costing profit/(loss)

Month 1         Month 2              Month 1              Month 2

$              $                    $                     $

A     200           4,400                (400)                3,200

B    (400)          4,400                 200                 3,200

C     200           3,200                (400)                4,400

D    (400)          3,200                 200                 4,400