CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 171:

  DRAG DROP

  Place the correct label against each item to categorise the cost of the item within the quality cost framework.

  Select and Place:

  

  

• Question 172:

  MBB is considering the costs to be incurred in respect of a special order.

  The order would require 625 kg of Material K.

  This is a material that is readily available and regularly used by the organization in its other products.

  There are 265 kg of Material K in inventory which cost $1,590 when it was purchased.

  The current market price is $6.48 per kg.

  Material K is normally used to make Product X. Each unit of Material X requires 3 kg of Material K, and if Material K is costed at $6 per kg, each unit of Product X yields a contribution of $30.

  The relevant cost of Material K to be included in the costing of the special order is:

  A. $3,990
  B. $4,050
  C. $3,923
  D. $6,250
  B. $4,050

• Question 173:

  CORRECT TEXT

  Company M is preparing its budgeted profit statement for the next year.

  The initial budget for Product A is as follows with some changes proposed by the sales director to increase the quality of the product.

  What would the budgeted profit of Product A be if the proposed changes are made?

  

  Give your answer as a whole number.

  $129500

• Question 174:

  The performance of a production manager is assessed on efficient use of materials during the production process. Actual data and data from the fixed budget for Month 4 are as follows:

  

  What figures should be compared in order to assess the production manager's performance for Month 4?

  A. 15,500 kg and 11,000 kg
  B. 15,500 kg and 14,000 kg
  C. 16,500 kg and 16,000 kg
  D. 11,000 kg and 14,000 kg
  A. 15,500 kg and 11,000 kg

• Question 175:

  LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled 120,960 kilometers. Total costs were $194,400.

  LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled. LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates:

  1.All costs will be 3% higher than the previous year due to inflation

  2.Efficiency will remain unchanged

  3.A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled. Calculate the following costs to be included in the forthcoming year's budget:

  (i)

  the total variable costs related to the number of parcels delivered.

  (ii)

  the total variable costs related to the distance travelled.

  A. Parcel related cost for next year = $112,308; Distance related costs for next year = $79,590
  B. Parcel related cost for next year = $109,118; Distance related costs for next year = $89,699
  C. Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699
  D. Parcel related cost for next year = $105,306; Distance related costs for next year = $30,590
  E. Parcel related cost for next year = $115,306; Distance related costs for next year = $31,590
  C. Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699

• Question 176:

  JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

  

  The optimal solution in the previous question shows that the shadow prices of skilled labour and direct material A are as follows:

  Skilled labour $ Nil

  Direct material A $11.70

  Explain the relevance of these values to the management of JRL.

  What is the additional contribution that can be earned?

  A. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 825
  B. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $5, 825
  C. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $3, 825
  D. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 570
  A. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 825

• Question 177:

  A company is considering whether to develop an overseas market for its products. The cost of developing the new market is estimated to be $250,000. There is a 70% probability that the development of the new market will succeed and a 30% probability that the development of the new market will fail and no further expenditure will be incurred.

  If the market development is successful, the profit from the new market will depend on prevailing exchange rates. There is a 50% chance that exchange rates will be in line with expectations and a profit of $500,000 will be made. There is a 20% chance that exchange rates will be favorable and a profit of $630,000 will be made and a 30% chance that exchange rates will be adverse and a profit of $100,000 will be made. The profit figures stated are before taking account of the development costs of $250,000.

  Use a decision tree to decide whether the company should develop an overseas market for its products.

  Select one correct answer.

  A. There is 70% chance that the project will fail.
  B. There is 65% chance that the project will fail.
  C. The overseas market should not be developed.
  D. The overseas market should be developed.
  E. There is a chance to make $506 000 profit.
  F. There may be a loss of $110 000.
  D. The overseas market should be developed.

• Question 178:

  CORRECT TEXT

  A project has five possible outcomes as follows:

  

  The probability of a contribution of $68,000 is equal to the probability of a contribution of $75,000. Fixed costs are $70,000.

  What is the probability of the project making a profit?

  0.45

• Question 179:

  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 yield variance for August is:

  A. $1,340 A
  B. $1,590 A
  C. $1,740 A
  D. $1,340 F
  E. $1,840 A
  C. $1,740 A

• Question 180:

  A company makes and sells three products A, B and

  C. The selling prices and costs of the three products, using a traditional absoprtion costing system, are shown in the table below.

  

  The company has undertaken an analysis of overhead costs using activity-based costing (ABC).

  The revised overhead costs for products A, B and C are $6, $32 and $55 respectively.

  When comparing the figures obtained under the two costing methods, which of the following statements are true?

  Select ALL that apply.

  A. Product B makes a profit under both methods, but the profit is lower using ABC.
  B. The product that is the most profitable under traditional absorption costing makes a loss under the ABC methodology.
  C. Product C is currently overpriced based on cost plus pricing and the selling price should be reduced.
  D. Activity-based costing results in a lower level of overhead costs for the company.
  E. Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
  A. Product B makes a profit under both methods, but the profit is lower using ABC.
  B. The product that is the most profitable under traditional absorption costing makes a loss under the ABC methodology.
  E. Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.