CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 21:

  A company produces trays of pre-prepared meals that are sold to restaurants and food retailers. Three varieties of meals are sold: economy, premium and deluxe.

  

  Calculate, for the original budget, the budgeted fixed overhead costs, the budgeted variable overhead cost per tray and the budgeted total overheads costs.

  A. The variable cost per tray = $0.75; The fixed cost = $ 490 000
  B. The variable cost per tray = $0.65; The fixed cost = $ 550 000
  C. The variable cost per tray = $0.45; The fixed cost = $ 320 000
  D. The variable cost per tray = $0.85; The fixed cost = $ 530 000
  B. The variable cost per tray = $0.65; The fixed cost = $ 550 000

• Question 22:

  A manager is deciding which one of four services to provide next period. The contribution earned by each service will depend on the weather conditions as follows.

  

  Using the maximin criterion, which service will the manager provide?

  A. Service P
  B. Service Q
  C. Service R
  D. Service S
  D. Service S

• Question 23:

  CORRECT TEXT

  The following information is available regarding a company's two products for last period.

  What is the favourable sales quantity profit variance for last period?

  

  Give your answer to the nearest whole $.

  $1500

• Question 24:

  CORRECT TEXT

  A company currently uses a rate of $32 per machine hour to absorb its total production overheads of $960,000.

  Using this system the production overhead cost per unit of product X is $160.

  An activity based costing exercise has revealed that only $345,000 of the production overhead is driven by machine hours. The remainder is driven by the number of machine set ups, at a rate of $9.60 per set up.

  Product X requires 3 set ups per unit.

  Calculate the total production overhead cost per unit of product X using an activity based costing system.

  Give your answer to two decimal places.

  $86.30

• Question 25:

  JDM is considering whether to go ahead with the launch of a new product. Profit from the new product is dependent on the level of demand.

  The following table shows the estimated profits and their respective probabilities at different levels of demand.

  The company could still cancel the launch of the product but would incur a cost of $7,000.

  

  What is the maximum amount that the company should pay for perfect information about demand for the product?

  A. $13,350
  B. $41,000
  C. $16,500
  D. $37,850
  A. $13,350

• Question 26:

  A company manufactures three products X, Y and Z.

  The company is currently operating at full capacity and is unable to meet the full sales demand for Product Z.

  According to the latest management accounts, Product Y is loss making, whilst X and Z both make strong positive contributions.

  Which of the following is relevant when making a decision on whether or not to discontinue the manufacture of Product Y?

  A. The salary of the sales manager who deals with all three products.
  B. The rent and rates of the factory used to make the three products.
  C. The contribution from additional sales of Product Z.
  D. The cost of market research carried out last month to establish if sales of Product Y are likely to improve.
  C. The contribution from additional sales of Product Z.

• Question 27:

  A manufacturing company uses activity-based costing to charge overheads to its three products. One of the main activities is quality inspection. The cost driver is the number of inspections and the budgeted cost is $211,200. Additional budgeted data.

  

  What is the budgeted quality inspection cost for a unit of product F?

  A. $6.60
  B. $3.30
  C. $9.60
  D. $4.80
  A. $6.60

• Question 28:

  Your company operates using TQM. As the accountant you have been tasked with producing a quality report so that management can understand how well their new range of products is being received and how the quality of the products has

  improved. In order to produce the report you have requested information from different departments, but you soon realise not all the information is relevant. You have information regarding the following:

  Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit

  Which pieces of information are relevant to your report? Select ALL that apply.

  A. Customer returns and refunds
  B. Number of defects per unit
  C. Cost of downtime
  D. Training costs
  E. Environmental costs
  A. Customer returns and refunds
  B. Number of defects per unit

• Question 29:

  A manufacturing company produces and sells a single product.

  It is preparing its budget for the next period and expects to breakeven.

  Budgeted fixed costs are the same as budgeted variable costs and the budgeted contribution to sales ratio is 50%.

  If all budgeted costs decreased by 10%, which of the following statements is true?

  A. Total contribution would increase by less than the increase in total profit.
  B. Total profit would increase by the same amount as the increase in total contribution.
  C. The contribution to sales margin would increase by more than five percentage points.
  D. The contribution to sales margin would increase by less than five percentage points.
  A. Total contribution would increase by less than the increase in total profit.

• Question 30:

  A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures the company offers pre operation and post operation in-patient care, in a fully equipped hospital, for those patients who will be undergoing the surgical procedures.

  Surgeons are paid a fixed fee for each surgical procedure they perform and an additional amount for any follow-up consultations. Post procedure follow-up consultations are only undertaken if there are any complications in relation to the surgical procedure. There is no additional fee charged to patients for any follow up consultations. All other staff are paid annual salaries.

  The company's existing costing system uses a single overhead rate, based on revenue, to charge the costs of support activities to the procedures. Concern has been raised about the inaccuracy of procedure costs and the company's accountant has initiated a project to implement an activity-based costing (ABC) system.

  The project team has collected the following data on each of the procedures.

  

  Calculate the profit per procedure for each of the three procedures, using the current basis for charging the costs of support activities to procedures. What was the profit for the knee procedure?

  A. $1510
  B. $1210
  C. $1390
  D. $1485
  B. $1210