CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 121:

  XY, a not-for-profit charity organization which is funded by public donations, is concerned that it is not making the best use of its available funds. It has carried out a review of its budgeting system and is considering replacing the current system with a zero-based budgeting system.

  Select ALL the potential advantages AND disadvantages for the charity of a zero-based budgeting system.

  A. It avoids the complacency inherent in the traditional incremental approach where it is assumed that future activities will be very similar to current ones.
  B. It discourages a questioning approach by focusing attention not only on the cost of the activity but on the benefits it provides. The charity managers will not articulate the benefits encouraging them to think clearly about the activities.
  C. Preparation of the decision packages will normally require the environment of many employees. This environment may produce useful ideas and promote job satisfaction.
  D. The creation of decision packages and their subsequent ranking by top management is very time consuming and costly. The charity will need to assess whether the benefits of the system outweigh the costs involved.
  E. In an organization like a charity, the decision packages are not very disparate and difficult t compare.
  F. In applying traditional budgeting, `activities' may result in functional departments rather than cross functional activities and thus distract attention from the real cost-reduction issues.
  A. It avoids the complacency inherent in the traditional incremental approach where it is assumed that future activities will be very similar to current ones.
  C. Preparation of the decision packages will normally require the environment of many employees. This environment may produce useful ideas and promote job satisfaction.
  D. The creation of decision packages and their subsequent ranking by top management is very time consuming and costly. The charity will need to assess whether the benefits of the system outweigh the costs involved.

• Question 122:

  A company's product has the following standard selling price, variable costs and contribution:

  

  Budgeted sales and production was 20,000 units and actual was 19,500 units.

  Due to a market downturn the production and sales budget should have been 10% lower.

  What is the operational sales volume contribution variance?

  A. $10,000A
  B. $30,000F
  C. $97,500F
  D. $32,500A
  B. $30,000F

• Question 123:

  CORRECT TEXT

  The standard production cost of making a product is as follows:

  

  What is the fixed production overhead efficiency variance?

  Give your answer as a whole number.

  $3000 F

• Question 124:

  CORRECT TEXT

  A company is launching a new product with a selling price of $20.

  Demand and variable cost are both uncertain and possible demand levels and variable costs are given below:

  

  Outcomes for demand and variable cost are independent.

  What is the expected contribution from the product?

  Give your answer as a whole number.

  $6384

• Question 125:

  Which of the following would cause an adverse fixed overhead volume variance?

  A. Actual output was higher than budgeted
  B. Actual output was lower than budgeted
  C. Actual expenditure was higher than budgeted
  D. Actual expenditure was lower than budgeted
  B. Actual output was lower than budgeted

• Question 126:

  A budgetary control report for the latest period is shown below: Which TWO of the following statements are correct?

  

  A. The sales volume contribution variance is $216 favourable.
  B. The sales volume contribution variance is $1,008 adverse.
  C. The sales price variance is $756 favourable.
  D. The standard variable cost per unit is $4.80.
  B. The sales volume contribution variance is $1,008 adverse.
  C. The sales price variance is $756 favourable.

• Question 127:

  Which of the following would lead to a favourable variance?

  A. The standard material price was set too low.
  B. The standard material usage was set too low.
  C. Actual labour cost was higher than standard.
  D. Labour hours worked were lower than standard.
  D. Labour hours worked were lower than standard.

• Question 128:

  A production manager is being evaluated based on efficiency. Which variance is most relevant?

  A. Labour rate variance
  B. Labour efficiency variance
  C. Fixed overhead expenditure variance
  D. Sales margin variance
  B. Labour efficiency variance

• Question 129:

  Which of the following statements about total quality management are incorrect? Select ALL that apply.

  A. The culture of an organisation should be to get things right the first time.
  B. Everyone within an organisation should be involved in improving quality.
  C. All costs relating to quality should be examined, particularly those relating to failure costs.
  D. There is an acceptable quality level that an organisation must try to achieve.
  E. The costs of conformance are more important than the costs of non-conformance.
  F. The organisation should rely on inspection to achieve quality standards.
  D. There is an acceptable quality level that an organisation must try to achieve.
  E. The costs of conformance are more important than the costs of non-conformance.
  F. The organisation should rely on inspection to achieve quality standards.

• Question 130:

  For the past year a manufacturing company has recorded the number of units produced (x) each week and the total production cost (y) for that week. The company intends to use this data to predict future costs. For the circumstance described above, linear regression is more useful and accurate than the high-low method because:

  1.It uses all the sets of data observed to calculate the line of best fit.

  2.The coefficient of variation can estimate what percentage of x is due to a change in y.

  3.Forecasts remain valid for values for x outside of the observed range. Which of the above statements are true?

  A. 1 only
  B. 1 and 2
  C. 2 and 3
  D. 3 only
  A. 1 only