CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 31:

  A musical instrument manufacturing company is considering a new project that will require 1000 kg of wood. They have 700 kgs of wood in stock which was purchased last year for £4 per kg. The wood in stock can be sold back to the supplier for £5 per kg. The wood in stock will have to be replaced if it is used. The current purchase price of wood is £8 per kg.

  Using this information, what is the relevant cost of wood for the manufacturers decision on this project?

  A. £8,000
  B. £5,000
  C. £11,500
  D. £5,600
  A. £8,000

• Question 32:

  When classifying quality costs, which of the following is NOT likely to be an appraisal cost?

  A. Cost of product liability insurance
  B. Cost of supervision of testing and inspection activities
  C. Performance testing costs
  D. Cost of maintaining inspection equipment
  A. Cost of product liability insurance

• Question 33:

  JL is preparing its cash budget for the next three quarters. The following data have been extracted from the operational budgets:

  

  Additional information is available as follows:

  1.JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be $125,000 at the beginning of Quarter 1. No bad debts are anticipated.

  2.50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be $60,000 at the beginning of Quarter 1.

  3.JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be $303,600 per quarter. This figure includes depreciation of $19,600.

  4.JL expects to repay a loan of $100,000 in Quarter 3.

  5.The cash balance at the beginning of Quarter 1 is estimated to be $49,400 positive.

  Required:

  Prepare a cash budget for each of the THREE quarters.

  What will the closing balance of cash flows in quarter THREE be?

  A. $100 200
  B. $170 400
  C. $145 000
  D. $150 200
  E. $130 200
  F. $160 690
  G. $184 900
  E. $130 200

• Question 34:

  CORRECT TEXT A tennis club is considering running an open day to encourage new members and thus increase membership fees. The cost of the open day will be $1,000. Attendance is dependent on the weather. There is a 60% chance of good weather and a 40% chance of poor weather on the open day.

  The expected new membership fees are:

  

  What is the expected value of running the open day?

  Give your answer as a whole number.

  $1840

• Question 35:

  Where sales volume is the principal budget factor, which of the following is the correct order in which budgets have to be prepared?

  A. Sales budget, production budget, material usage budget, material purchases budget
  B. Sales budget, production budget, materials purchases budget, material usage budget
  C. Production budget, sales budget, material usage budget, material purchases budget
  D. Prodcution budget, material usage budget, material purchases budget, sales budget
  A. Sales budget, production budget, material usage budget, material purchases budget

• Question 36:

  DRAG DROP

  A company is forecasting its revenue for May and has established that sales will be either high, medium or low. The expected value of sales revenue for May has been calculated as $160,000. The following table includes data which relate to the potential sales in May.

  Revenue Probability Expected Value

  High $250,000 0.2 C

  Medium A 0.5 D

  Low $100,000 B $30,000

  Place the figures given in to the spaces marked with the letters A, B, C and D, to complete the above table.

  Select and Place:

  

  

• Question 37:

  Which TWO of the following statements are true for obtaining a reliable forecast from a time series?

  A. There must be an increasing trend.
  B. The past trend must continue in the future.
  C. The past pattern of seasonal variations must continue in the future.
  D. Extrapolation of the trend must be avoided.
  E. There must be a decreasing trend.
  B. The past trend must continue in the future.
  C. The past pattern of seasonal variations must continue in the future.

• Question 38:

  FGH used to manufacture components that required raw material Q.

  Currently there are 80 kg of material Q in inventory.

  The company has no use for the material in the foreseeable future and intends to sell it for scrap.

  A potential new customer has asked for a price for a large order.

  This order would require 100 kg of material Q.

  The company management has decided to quote a price for this work on a relevant cost basis.

  Details of costs for material Q are as follows:

  

  What would be the relevant cost of Material Q to use in this order?

  A. $230
  B. $198
  C. $110
  D. $46
  C. $110

• Question 39:

  Which THREE of the following are never relevant costs for short-term decision making?

  A. Depreciation costs
  B. Incremental costs
  C. Sunk costs
  D. Variable overhead costs
  E. Committed costs
  A. Depreciation costs
  C. Sunk costs
  E. Committed costs

• Question 40:

  A master budget comprises which of the following?

  A. The budgeted income statement and the budgeted cash flow statement only.
  B. The budgeted income statement and the budgeted statement of financial position only.
  C. The budgeted income statement and budgeted capital expenditure only.
  D. The budgeted income statement, the budgeted statement of financial position and the budgeted cash flow statement only.
  D. The budgeted income statement, the budgeted statement of financial position and the budgeted cash flow statement only.