CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 211:

  Which of the following, regarding costing methods, is true?

  A. A company produces two products which undergo similar processes. The company has very low overhead costs. This company should consider activity based costing rather than traditional absorption costing to ensure that its pricing decisions are more accurate.
  B. A company which has introduced technology to reduce labour costs now incurs a greater proportion of non volume-related support activities. Activity based costing would be more appropriate than traditional absorption costing in this environment.
  C. A company is making short term decisions based on the contribution per unit of its different products. These decisions are based upon full absorption costing data.
  D. In traditional absorption costing, overheads are charged to a product by absorbing them at the cost driver rate for an activity based on their usage of the activity.
  B. A company which has introduced technology to reduce labour costs now incurs a greater proportion of non volume-related support activities. Activity based costing would be more appropriate than traditional absorption costing in this environment.

• Question 212:

  CORRECT TEXT

  XY manufactures a range of products and uses an activity based costing system.

  Budgeted production of Product B is 7,500 units.

  Overheads have been identified by activity and related to appropriate cost drivers.

  Product B is produced in batches of 250 units. Machines have to be reset after every batch and quality inspections are carried out on every third batch.

  

  What is the total overhead cost per unit of Product B?

  Give your answer to two decimal places.

  $1.40

• Question 213:

  The following statements relate to the advantage(s) that linear regression has over the high-low method in the analysis of cost behaviour:

  

  Which statement(s) is/are true?

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

• Question 214:

  Assume that you have made profit calculations based on standard profit calculation methods and activity based costing methods.

  In which ways will this information be beneficial to the management team?

  Select all the true statements.

  A. Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
  B. The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
  C. Through the tracing of costs to product in this way ABC establishes less accurate costs for the product or service.
  D. The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.
  E. Operational analysis will provide information to management on how costs can be incurred and managed.
  A. Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
  B. The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
  D. The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.

• Question 215:

  DRAG DROP

  A manufacturing company sells 5 different products.

  The company holds no inventories and has a high level of fixed cost.

  Place against the statements below the comment "needed" or "not needed" to select ALL of the information required to calcuate the total number of units to break-even.

  Select and Place:

  

  

• Question 216:

  MDS is facing a temporary shortage of Material H which is used to produce all three of its products. In order to maximise its profitability, which product should be manufactured first?

  A. The product using the least amount of Material H per unit.
  B. The product with the highest contribution per kg of Material
  C. The product with the highest contribution per unit.
  D. The product with the highest profit per unit.
  B. The product with the highest contribution per kg of Material

• Question 217:

  Which TWO of the following costs are relevant for decision-making?

  A. Historical cost
  B. Opportunity cost
  C. Committed cost
  D. Incremental cost
  B. Opportunity cost
  D. Incremental cost

• Question 218:

  TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers' specific requirements. The standard cost per unit of its most popular cake is as follows:

  

  The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and $20 per kg respectively. TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no

  inventory during the period.

  Discuss the usefulness of the planning and operational variances calculated for TP's management.

  Select ALL the TRUE statements.

  A. The use of planning and operational variances will enable TP's management to draw a distinction between variances caused by factors extraneous to the business and planning errors (planning variances) and variances caused by factors that are within the control of management (operational variances).
  B. The purchasing manager's performance can't be compared with the adjusted standards that reflect the conditions the manager actually operated under during the reporting period.
  C. If planning and operational variances are not distinguished, there is potential for dysfunctional behavior especially where the manager has been operating efficiently and performance is being judged by factors outside the manager's control. In the case of TP it became evident during the period that the prevailing market prices for materials were significantly less than those set during the budget process.
  D. Where a revision of standards is required due to environmental changes that were not foreseeable at the time the budget was prepared, the planning variances are controllable.
  E. Standards that failed to anticipate known market trends when they were set will reflect faulty standard setting.
  A. The use of planning and operational variances will enable TP's management to draw a distinction between variances caused by factors extraneous to the business and planning errors (planning variances) and variances caused by factors that are within the control of management (operational variances).
  C. If planning and operational variances are not distinguished, there is potential for dysfunctional behavior especially where the manager has been operating efficiently and performance is being judged by factors outside the manager's control. In the case of TP it became evident during the period that the prevailing market prices for materials were significantly less than those set during the budget process.
  E. Standards that failed to anticipate known market trends when they were set will reflect faulty standard setting.

• Question 219:

  When a moving average is plotted onto a graph, where should the plotted points be located?

  A. At the mid-point of the period to which they apply.
  B. At the end of the period to which they apply.
  C. At the beginning of the period to which they apply.
  D. Anywhere within the period to which they apply.
  A. At the mid-point of the period to which they apply.

• Question 220:

  Which of the following explain why standard costing is less appropriate in the contemporary business environment?

  1.In a continuous improvement environment standard costing can restrict the impetus to remain as cost competitive as rivals.

  2.Fixed overhead variances are less relevant as fixed costs represent a decreasing proportion of total manufacturing cost.

  3.In a just-in-time environment there are fewer costs to control.

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