CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 181:

  RT produces two products from different quantities of the same resources using a just-in- time (JIT) production system. The selling price and resource requirements of each of the products are shown below:

  

  Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified: Direct labour hours 7,500 hours

  Material A 8,500 kgs Material B 3,000 litres Machine hours 7,500 hours

  Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.

  The contribution per unit for R and T will be...?

  A. R = $47 per unit. T = $61 per unit
  B. R = $51 per unit. T = $61 per unit
  C. R = $47 per unit. T = $65 per unit
  D. R = $45 per unit. T = $66 per unit
  A. R = $47 per unit. T = $61 per unit

• Question 182:

  PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product

  B. Fixed costs are $800,000 per annum.

  The management of PL is considering reducing the selling price per unit to $48. The estimated levels of demand at the revised selling price and the probabilities of them occurring are as follows:

  

  Calculate the probability that the profit will increase from its current level if the selling price is reduced to $48.

  A. The probability therefore that the contribution will exceed $2,880,000 is 90%.
  B. The probability therefore that the contribution will exceed $2,880,000 is 50%.
  C. The probability therefore that the contribution will exceed $2,880,000 is 70%.
  D. The probability therefore that the contribution will exceed $2,880,000 is 40%.
  A. The probability therefore that the contribution will exceed $2,880,000 is 90%.

• Question 183:

  A company wants to evaluate the financial impact of accepting a one-time contract using spare resources. Which costing method is most appropriate?

  A. Absorption costing
  B. Full costing
  C. Marginal costing
  D. Historical costing
  C. Marginal costing

• Question 184:

  CORRECT TEXT

  An entity manufactures two products.

  The sales revenues of the products are in the constant mix of 3:1. Forecast data for next period are as follows:

  

  The margin of safety for next period is $30,000 of sales revenue. Fixed costs are constant at all levels of output.

  What is the forecast profit for next period?

  Give your answer to the nearest whole number.

  $15000

• Question 185:

  CORRECT TEXT

  Information about a company's two products is as follows:

  

  The products are currently sold in equal quantities.

  Monthly fixed costs are $360,000.

  What is the monthly breakeven sales revenue assuming a sales quantity mix of 50/50?

  Give your answer to the nearest $.

  $1600000

• Question 186:

  RS is a travel company providing daily tours of a major European capital city. The market is highly competitive and RS has commissioned some market research to help with the pricing decision for a new tour. The research identified the probability of three possible market conditions and the number of tickets that would be sold each day at three different price levels.

  

  Demonstrate, using a decision tree and based on expected value, which ticket price RS should choose.

  A. RS should charge a ticket price of $70.
  B. RS should charge a ticket price of $80.
  C. RS should charge a ticket price of $90.
  D. RS should charge a ticket price of $100.
  E. RS should charge a ticket price of $75
  C. RS should charge a ticket price of $90.

• Question 187:

  A manufacturing company has a capacity of 10,000 units. The flexed production cost budget of the company is as follows:

  

  All costs are either fixed, variable or semi-variable.

  What is the budgeted total production cost if the company operates at 85% capacity?

  A. $13,680
  B. $14,025
  C. $15,980
  D. $12,852
  A. $13,680

• Question 188:

  A company manufactures a single product. The company absorbs fixed production overhead using a pre-determined rate per unit. The following data applies for month 7:

  

  During month 7 fixed production overhead was over absorbed by $40,000. What was the actual number of units produced during month 7?

  A. 16,000
  B. 14,000
  C. 8,000
  D. 6,000
  A. 16,000

• Question 189:

  A special contract requires 640 units of component T.

  The inventory of 280 units of component T cost $0.20 per unit but the component is not currently used by the company.

  The current market price of component T is $0.24 per unit but the inventory could be sold for $0.15 per unit.

  The relevant cost of the units of component T required for the special contract is:

  A. $100.40
  B. $128.40
  C. $142.40
  D. $153.60
  B. $128.40

• Question 190:

  The breakeven point in units, in a multiple product context, is calculated using which of the following formulae?

  A. Fixed costs / weighted average contribution to sales ratio
  B. Fixed costs / weighted average profit per unit
  C. Fixed costs / weighted average contribution per unit
  D. Fixed costs / weighted average revenue per unit
  C. Fixed costs / weighted average contribution per unit