CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 161:

  Product G has the following sales information:

  

  If moving averages of annual sales over 3-year periods are calculated, what is the moving average at Year 3?

  A. 182
  B. 168
  C. 185
  D. 170
  A. 182

• Question 162:

  A major company sells a range of electrical, clothing and homeware products through a chain of department stores. The main administration functions are provided from the company's head office. Each department store has its own

  warehouse which receives goods that are delivered from a central distribution center.

  The company currently measures profitability by product group for each store using an absorption costing system. All overhead costs are charged to product groups based on sales revenue. Overhead costs account for approximately one-

  third of total costs and the directors are concerned about the arbitrary nature of the current method used to charge these costs to product groups.

  A consultant has been appointed to analyses the activities that are undertaken in the department stores and to establish an activity based costing system.

  The consultant has identified the following data for the latest period for each of the product groups for the X Town store:

  

  Calculate the total profit for each of the product groups: .... using the current absorption costing system;

  A. The profit or loss in $ was.... Clothing 122; Electrical 56; Homeware (178)
  B. The profit or loss in $ was.... Clothing (175); Electrical 86; Homeware 22
  C. The profit or loss in $ was.... Clothing 85; Electrical 36; Homeware (28)
  D. The profit or loss in $ was.... Clothing 192; Electrical (56); Homeware 148
  D. The profit or loss in $ was.... Clothing 192; Electrical (56); Homeware 148

• Question 163:

  CORRECT TEXT

  A company manufactures a range of products. It is deciding whether to make one of its products internally or to buy the product partially completed from an external source and complete the manufacture in-house. The table below gives details of the variable costs of the two alternatives. Fixed production costs will remain the same under both alternative.

  

  What is the sensitivity of the decision to a change in the external purchase price?

  Give your answer as a whole percentage.

  10%

• Question 164:

  CORRECT TEXT

  A company makes and sells three products A, B and

  C. The products are sold in the ratio of A:B:C = 1:1:4. Monthly fixed costs are $150,000. Product details are shown below:

  

  What sales value of product C is required to achieve a target profit of $72,000 next month?

  Give your answer to the nearest whole $ (in '000s).

  270000

• Question 165:

  Which of the following would help to explain a favourable material price variance?

  A. A decision to reduce the raw materials inventory during the period led to a reduced level of material purchases.
  B. An increase in the quantity of material purchased resulted in unexpected bulk discounts.
  C. The material purchased was of a higher quality than standard.
  D. Improved processing methods meant that material purchases were lower than standard for the output achieved.
  B. An increase in the quantity of material purchased resulted in unexpected bulk discounts.

• Question 166:

  For the forthcoming period, the number of units of product L produced must be no more than four times the number of units of product M produced. The equation to represent this constraint in a linear programming exercise is:

  A. L < 4M
  B. 4L < M
  C. L > 4M
  D. 4L > M
  A. L < 4M

• Question 167:

  QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

  

  The total budgeted cost of setting up the machines is $74,400.

  Select TWO potential benefits of using an activity based budgeting system.

  A. Activity based budgeting allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.
  B. Activity based budgeting provides a clear framework for understanding the link between turnover and the level of activity.
  C. Activity based budgeting is useful for the review of quality systems utilization.
  D. Activity based budgeting allows the identification of value added and non-value added activity and ensures that any budget cuts are made to non-value added activities.
  A. Activity based budgeting allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.
  D. Activity based budgeting allows the identification of value added and non-value added activity and ensures that any budget cuts are made to non-value added activities.

• Question 168:

  A company's product range includes Product N. The costs relating to Product N are shown below:

  

  The direct labour costs relate to specialists employed to work wholly and exclusively with Product N.

  If the company stopped making Product N, the insurance overhead cost would cease, but overhead cost J would be unaffected. Both overheads are absorbed in direct proportion to material costs.

  Which of the following costs should be used in the decision whether to stop making Product N?

  A. $910,100
  B. $850,000
  C. $944,100
  D. $884,000
  A. $910,100

• Question 169:

  Which of the following is a definition of a rolling budget?

  A. A budget that is continuously updated by adding a further accounting period (month or quarter) when the earliest accounting period has expired.
  B. A budget that adjusts for changes in the volume of activity as they occur through the budget year.
  C. A budget that uses the current year budget as the basis for the next year budget.
  D. A budget which changes in response to uncontrollable events.
  A. A budget that is continuously updated by adding a further accounting period (month or quarter) when the earliest accounting period has expired.

• Question 170:

  Christian the management accountant at a car manufacturer has been given a list of costs that have been incurred due to accidents and errors either occurring or being prevented. Which of the following are examples of non-conformance costs? Select ALL that apply.

  A. Cost of scrap
  B. Loss of goodwill
  C. Cost of repairs to products
  D. Inspection costs
  E. Cost of repairs to equipment
  A. Cost of scrap
  B. Loss of goodwill
  C. Cost of repairs to products