CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 141:

  A company uses an activity based costing system. The company manufactures three products, details of which are given below:

  

  A. $0.23
  B. $0.27
  C. $0.31
  D. $0.35
  B. $0.27

• Question 142:

  How would the cost of recycling scrap be classified in an environmental costing system?

  A. Environmental internal failure cost
  B. Environmental appraisal cost
  C. Environmental prevention cost
  D. Environmental external failure cost
  A. Environmental internal failure cost

• Question 143:

  Budgeted sales and production for Product X for this period are 12,000 units. The standard cost and selling price for a single unit of the product are:

  

  The fixed production overhead expenditure variance is:

  A. $13,000 A
  B. $23,500 A
  C. $20,000 A
  D. $10,500 A
  A. $13,000 A

• Question 144:

  A company reports planning and operational variances to its managers. The following data are available concerning the price of direct material M in the last period. Material M is the only material used by the company. The company operates a just-in-time (JIT) purchasing system.

  

  Which TWO of the following statements about last period are definitely correct based on this information? The direct material price operational variance was adverse.

  A. The direct material usage operational variance was adverse.
  B. The direct material price planning variance was adverse.
  C. The direct material price planning variance was favourable.
  D. The direct material price operational variance was favourable.
  C. The direct material price planning variance was favourable.
  D. The direct material price operational variance was favourable.

• Question 145:

  A decision maker that makes decisions using the minimax regret criterion would be classified as:

  A. Risk averse
  B. Risk seeking
  C. Risk neutral
  D. Risk spreading
  A. Risk averse

• Question 146:

  CORRECT TEXT

  The manager of a recently opened cafe is deciding how many sandwiches to make each day.

  The sandwiches are made in the morning before the cafe opens.

  If demand exceeds the number of sandwiches made in the morning no extra sandwiches can be made during the day. Any unsold sandwiches are thrown away at the end of each day.

  Daily demand is uncertain but is predicted to be 10, 20, 30 or 40 sandwiches.

  The following regret matrix has been prepared:

  

  If the minimax regret criterion is used to make the decision, the manager will choose to make:

  20 Sandwiches

• Question 147:

  A flexible budget is a budget that is:

  A. set prior to the control period and not subsequently changed in response to changes in activity period has expired
  B. continuously updated by adding a further accounting period when the earliest accounting period has expired
  C. changed in response to changes in the level of activity
  D. changed in response to changes in costs
  C. changed in response to changes in the level of activity

• Question 148:

  A company is considering two mutually exclusive projects.

  The returns on each project, at both high and low demand, have been multipled by the estimated probabilities to calculate the expected values shown in the table below:

  

  Market research would be able to determine with certainty what the level of demand will be. What is the maximum amount that the company should pay for this certainty?

  A. $600
  B. $700
  C. $360
  D. $2,300
  A. $600

• Question 149:

  N prepares budgets on an annual basis by using the budget from the previous year, and then adjusting it for growth and inflation. This is an example of:

  A. An incremental budget
  B. A rolling budget
  C. A flexed budget
  D. Zero based budgeting
  A. An incremental budget

• Question 150:

  A medium-sized manufacturing company, which operates in the electronics industry, has employed a firm of consultants to carry out a review of the company's planning and control systems. The company presently uses a traditional incremental budgeting system and the inventory management system is based on economic order quantities (EOQ) and reorder levels. The company's normal production patterns have changed significantly over the previous few years as a result of increasing demand for customized products. This has resulted in shorter production runs and difficulties with production and resource planning. The consultants have recommended the implementation of activity based budgeting and a manufacturing resource planning system to improve planning and resource management.

  What are the benefits for the company that could occur following the introduction of an activity based budgeting system?

  Select ALL the correct answers.

  A. Under an activity based budgeting system, resource allocation is linked to the strategic plan and is prepared after considering alternative strategies. This approach ensures that new activities that are required to meet the company's strategic objectives are included in the budget.
  B. Under a traditional incremental budgeting system the focus is on existing resources and operations. Adjustments are then made for changes in activity and price which results in past inefficiencies being perpetuated. Under an activity based budgeting system, only resources that are needed to perform activities required to meet the budgeted production and sales volumes are included.
  C. Activity based techniques including activity based budgeting focus on the outputs of a process rather than the input to the process. This approach provides a clear framework for understanding the link between costs and the level of activity. It allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.
  D. Activity Based Budgeting Systems present costs under functional headings i.e. the emphasis is on the nature of the cost. The weakness if this approach is that it gives little indication of the link between the level of activity and the cost incurred.
  E. The approach under an Activity based Budgeting System is to make arbitrary cuts in order to meet overall financial targets.
  A. Under an activity based budgeting system, resource allocation is linked to the strategic plan and is prepared after considering alternative strategies. This approach ensures that new activities that are required to meet the company's strategic objectives are included in the budget.
  B. Under a traditional incremental budgeting system the focus is on existing resources and operations. Adjustments are then made for changes in activity and price which results in past inefficiencies being perpetuated. Under an activity based budgeting system, only resources that are needed to perform activities required to meet the budgeted production and sales volumes are included.
  C. Activity based techniques including activity based budgeting focus on the outputs of a process rather than the input to the process. This approach provides a clear framework for understanding the link between costs and the level of activity. It allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.