CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 111:

  CORRECT TEXT

  PQR has recently introduced an activity-based costing system.

  It manufactures three products, details of which are given below.

  The budgeted production overhead costs for the year are shown in table below:

  

  What is budgeted machine set-up cost per unit of Product J?

  Give your answer to the nearest cent.

  $0.15

• Question 112:

  A company has budgeted to produce 5,000 units of Product B per month. The opening and closing inventories of Product B for next month are budgeted to be 400 units and 900 units respectively. The budgeted selling price and variable production costs per unit for Product B are as follows:

  

  Total budgeted fixed production overheads are $29,500 per month.

  The company absorbs fixed production overheads on the basis of the budgeted number of units produced. The budgeted profit for Product B for next month, using absorption costing, is $20,700.

  Prepare a marginal costing statement which shows the budgeted profit for Product B for next month.

  What was the marginal costing profit for the next month?

  A. $17 750
  B. $18 600
  C. $17 890
  D. $18 750
  A. $17 750

• Question 113:

  The budgetary control report of XYZ for the latest period is shown below. Variances in brackets are adverse.

  

  What is the sales volume profit variance?

  A. $18,700 favorable
  B. $78,900 adverse
  C. $38,200 adverse
  D. $37,200 adverse
  A. $18,700 favorable

• Question 114:

  A snowboard manufacturer is considering investing in technology that will give a good indication of how heavy snowfall will be in the future. The predictions tend to be reasonably accurate.

  The current budgeted profit for the year is £2,560,000 but if they invest in this technology and it works, the expected profit will be £2,640,000. The manufacturer is willing to invest a maximum of £40,000 into the venture.

  What is the expected profit if the investment is NOT made?

  A. £2,560,000
  B. £2,640,000
  C. £2,520,000
  D. £2,600,000
  D. £2,600,000

• Question 115:

  A company produces a product that requires two materials, Material A and Material

  B. Details of the material quantities and costs for August are given in the table below.

  

  Budgeted and actual output of the product for August was 12,000 units. The material mix variance for August is:

  A. $ 1, 540 Favourable
  B. $ 1, 540 Adverse
  C. $ 1, 288 Favourable
  D. $ 1, 540 Adverse
  A. $ 1, 540 Favourable

• Question 116:

  A small manufacturing company makes a single product. Direct labour costs and factory rent account for 80% and 15% of total cost respectively. Activity levels have not varied by more than 5% for a number of years and there is no evidence of operational inefficiency.

  Which of the following is the most appropriate approach to budgeting for this company?

  A. Incremental budgeting
  B. Zero based budgeting (ZBB)
  C. Activity based budgeting (ABB)
  D. Rolling budgeting
  A. Incremental budgeting

• Question 117:

  A pharmaceutical company manufactures pesticides which contain highly toxic chemicals.

  In the context of environmental costing, which of the following would be classified as an external failure cost?

  A. Legal cost incurred in a case relating to river pollution caused by use of the company's products in nearby fields.
  B. Cost incurred in a product trial, carried out prior to product launch, as a consequence of the product failing to meet environmental standards.
  C. Clean-up cost resulting from leakage of a toxic chemical at one of the company's production plants.
  D. Cost of employing an outsourcing company to dispose of toxic waste caused by a quality failure during routine production.
  A. Legal cost incurred in a case relating to river pollution caused by use of the company's products in nearby fields.

• Question 118:

  The maximum availability of a material is 8,000 kg.

  Product A requires 5 kg of this material and Product B requires 7 kg of this material which is in short supply.

  The correct constraint to include for the material when formulating the linear programming problem is:

  A. 5B + 7A 8,000
  B. 5A + 7B 8,000
  C. 5A + 7B = 8,000
  D. 5B + 7A 8,000
  B. 5A + 7B 8,000

• Question 119:

  Which of the following is an example of a sunk cost?

  A. Depreciation of a machine purchased last year
  B. Opportunity cost of using a spare machine
  C. Cost of raw materials to be purchased
  D. Cost of replacing obsolete inventory
  A. Depreciation of a machine purchased last year

• Question 120:

  CORRECT TEXT

  A company has only 10,100 hours of skilled labour available next period.

  Data for its three products for next period are as follows.

  

  At least 500 units of each product must be sold each period.

  No inventories are held.

  How many units of Product X should be manufactured next period in order to maximise profit?

  1200 units