CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 261:

  A decision tree is being evaluated back to a decision point. There are two alternatives at this point:

  1.To abandon the project and generate a return of $435,000;

  2.To continue with the project and generate the following possible returns:

  

  What value should be included at the decision point?

  A. $435,000
  B. $451,000
  C. $443,000
  D. $720,000
  B. $451,000

• Question 262:

  A company is evaluating a special order that would require using spare capacity. Which cost should be excluded when making the decision?

  A. Variable costs
  B. Fixed overheads that are already committed
  C. Opportunity cost of idle labour
  D. Material purchase for the order
  B. Fixed overheads that are already committed

• Question 263:

  THS produces two products from different combinations of the same resources. Details of the products are shown below:

  

  Identify, using graphical linear programming, the optimal production plan for products E and R to maximize THS's profit in the month.

  A. The solution (from the graph0 is to produce 675 units of E and 470 units of R.
  B. The solution (from the graph0 is to produce 495 units of E and 670 units of R.
  C. The solution (from the graph0 is to produce 475 units of E and 770 units of R.
  D. The solution (from the graph0 is to produce 375 units of E and 750 units of R.
  E. The solution (from the graph0 is to produce 375 units of E and 870 units of R.
  F. The solution (from the graph0 is to produce 495 units of E and 470 units of R.
  D. The solution (from the graph0 is to produce 375 units of E and 750 units of R.

• Question 264:

  Which of the following distinguishes risk from uncertainty?

  A. Risk can be quantified whereas uncertainty cannot.
  B. Risk can have both upside and downside whereas uncertainty is always downside.
  C. Risk should be taken into account in decision making whereas uncertainty should not.
  D. Risk is relevant to financial decisions whereas uncertainty is relevant to non-financial.
  A. Risk can be quantified whereas uncertainty cannot.

• Question 265:

  A company manufactures a single product and absorbs fixed production overheads at a predetermined rate based on budgeted expenditure and budgeted units. Which TWO of the following would definitely lead to an over absorption of fixed production overheads?

  A. The actual number of units produced are greater than budgeted and the actual fixed production overhead expenditure is as budgeted.
  B. The actual number of units produced are less than budgeted and the actual fixed production overhead expenditure is higher than budgeted.
  C. Actual number of units produced are greater than actual units sold and the actual fixed production overhead expenditure is as budgeted.
  D. Actual fixed production overhead expenditure is higher than budgeted and production units are as budgeted.
  E. Actual fixed production overhead expenditure is less than budgeted and production units are as budgeted.
  A. The actual number of units produced are greater than budgeted and the actual fixed production overhead expenditure is as budgeted.
  E. Actual fixed production overhead expenditure is less than budgeted and production units are as budgeted.

• Question 266:

  Which of the following statements is true?

  A. Standard costing is best suited to a stable environment.
  B. Standard costing is focused on achieving zero defects.
  C. Standard costing is focused on delivering quality products to customers.
  D. Standard costing embraces the philosophy of continual improvement.
  A. Standard costing is best suited to a stable environment.

• Question 267:

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

  

  *

  Refer to your answer in the previous question.

  The optimal solution to 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.

  Select ALL the true statements.

  A. The shadow price equals the additional contribution that would be earned from one extra unit of a scarce resource.
  B. In a situation such as this, where a number of resources are scarce, the shadow price of any particular scarce resource will depend on whether or not the resource is not binding.
  C. The shadow price for skilled labour is NIL because although there is a shortage of skilled labour it does have a constraining effect on output of JR as other resources are more scarce.
  D. Since material A is one of the binding constraints, if the availability of material A could be increased by one unit, this would change the optimal plan.
  E. The decrease in contribution as a result of this change is the value of the shadow price of material A. The shadow price thus represents the maximum premium that should be paid for an additional unit of material A.
  A. The shadow price equals the additional contribution that would be earned from one extra unit of a scarce resource.
  D. Since material A is one of the binding constraints, if the availability of material A could be increased by one unit, this would change the optimal plan.

• Question 268:

  ABC uses an activity-based costing system.

  The company manufactures three products, details of which are given below:

  

  Total material movement costs for the period are $10,000.

  The material movement cost per unit for Product Z (to the nearest $0.01) is:

  A. $10.67
  B. $2.71
  C. $3.23
  D. $7.62
  A. $10.67

• Question 269:

  EFG is a small business making raspberry jam to sell at local markets. It has recently been approached by a major supermarket to produce a special order for the supply of lemon curd.

  Two of the ingredients required are sugar and preservatives, both of which are in inventory.

  The sugar has a historic cost of $4 per kg and a replacement cost of $5. It is in regular use for the production of the raspberry jam.

  The factory has switched to organic processes and the preservatives are no longer required.

  The historic cost of the preservatives was $3 per kg and the replacement cost is $2.50 per kg.

  The preservatives can be re-sold to a local competitor for $1 per kg if they are not used in this order.

  Which TWO of the following should be included in determining the relevant cost of the special order?

  A. Sugar at $4 per kg
  B. Sugar at $5 per kg
  C. Preservatives at $3 per kg
  D. Preservatives at $1 per kg
  E. Preservatives at $2.50 per kg
  B. Sugar at $5 per kg
  D. Preservatives at $1 per kg

• Question 270:

  CORRECT TEXT

  A company produces and sells two products, product A and product

  B.

  What are the total fixed costs when the weighted average contribution per unit is $5 and the breakeven points for product A and product B are 10,000 units and 5,000 units respectively?

  Give your answer as a whole number (in 000's).

  $75000