CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 231:

  Which THREE of the following are advantages of activity-based costing (ABC), in a multi- product environment, when compared with traditional absorption costing?

  A. ABC provides a better understanding of overhead costs.
  B. ABC provides more accurate product costs in a complex business environment.
  C. ABC is cheaper to operate.
  D. ABC results in increased unit profit for each product.
  E. ABC leads to better product pricing decisions.
  A. ABC provides a better understanding of overhead costs.
  B. ABC provides more accurate product costs in a complex business environment.
  E. ABC leads to better product pricing decisions.

• Question 232:

  DRAG DROP

  Place the components of the time series next to the example about the impact on sales that they best represent.

  Select and Place:

  

  

• Question 233:

  DRAG DROP

  Place each activity against the correct category according to its classification in the cost hierarchy of activities.

  Select and Place:

  

  

• Question 234:

  You are a management accounting working for a car manufacturer. The company is publicly listed and has been around for many years.

  The company produces 2 products. Car 1 and Car 2. Car 1 sells for £20,000 and Car 2 for £27,000.

  Car 1 can be upgraded post production to the 1ZC model for £5,000 and Car 2 to the 2ZC model for £3,500.

  Post production upgrade the 1ZC sells for £25,500 and the 2ZCfor £30,000.

  The company sources all of its supplies for the same supplier and has access to a large workforce. As a result there are no bottlenecks or limiting factors to production.

  Based on the information above the company should...

  A. Upgrade both models
  B. Upgrade Car 1 but not Car 2
  C. Upgrade Car 2 but not Car 1
  D. Keep both Cars as base models
  B. Upgrade Car 1 but not Car 2

• Question 235:

  A company is using relevant costing to evaluate a make or buy decision.

  The company already has a machine on an operating lease which can be used to make the product.

  How would the lease rental cost be classified?

  A. Relevant cost
  B. Opportunity cost
  C. Irrelevant cost
  D. Incremental cost
  C. Irrelevant cost

• Question 236:

  A manager in your organisation says, "I have spare capacity and I need a unit cost as a basis for pricing a special one-off contract. You have provided me with a relevant cost of $6.50 per unit and a full production cost of $8.00 per unit. Please explain which unit cost I should use."

  Which cost should be used in this decision and why?

  A. The relevant cost because it is the lower unit cost.
  B. The full production cost because it will be used in the financial accounting reporting system.
  C. The relevant cost because it represents the cash flows that will be affected if the contract is accepted.
  D. The full production cost because it is important to ensure that all costs are covered by the selling price.
  C. The relevant cost because it represents the cash flows that will be affected if the contract is accepted.

• Question 237:

  DRAG DROP

  State whether the following costs are relevant or non-relevant in the context of short-term decision making scenarios.

  Select and Place:

  

  

• Question 238:

  Company LGF seeks to maximize profits and has a 'risk seeker' attitude when making decisions. The company has to choose between mutually exclusive projects. A range of possible profit outcomes has been estimated for each project along with their associated probabilities.

  Company LGF would choose the project with the:

  A. Best possible outcome irrespective of the standard deviation.
  B. Highest expected value irrespective of the standard deviation.
  C. Highest standard deviation irrespective of the best possible outcome.
  D. Highest standard deviation irrespective of the expected value.
  A. Best possible outcome irrespective of the standard deviation.

• Question 239:

  

  Calculate the sensitivity of the investment decision to a change in the annual fixed costs.

  By how much should the present value of the fixed cost increase, before this project is not viable?

  A. $7698
  B. $6390
  C. $9050
  D. $8675
  D. $8675

• Question 240:

  DRAG DROP

  A company sells three products A, B and C in a ratio of 2:2:3. Each unit of A,B and C earns a contribution of $4.00, $2.00 and $4.00 respectively. Production fixed costs are $69,000 each month and selling fixed costs are $13,000 each month.

  The company holds no inventory. The management accountant wants to know the total number of units needed to break-even. However, he is unsure about how to calculate the weighted average contribution per unit or what category of fixed cost to use.

  Place the amounts given to complete the table in order to calculate the total number of units to break even.

  Select and Place: