CIMA CIMA-P1 Online Practice Questions and Exam Preparation

CIMA CIMA-P1 Online Questions & Answers

• Question 41:

  A company has to choose between three mutually exclusive projects. Market research has shown that customers could react to the projects in three different ways depending on their preferences. There is a 30% chance that customers will exhibit preferences 1, a 20% chance they will exhibit preferences 2 and a 50% chance they will exhibit preferences 3. The company uses expected value to make this type of decision.

  The net present value of each of the possible outcomes is as follows:

  

  A market research company believes it can provide perfect information about the preferences of customers in this market. What is the maximum amount that should be paid for the information from the market research company?

  A. $145 000
  B. $140 000
  C. $125 000
  D. $135 000
  B. $140 000

• Question 42:

  CORRECT TEXT

  A company manufactures a single product. The following budgeted data applies to month 6:

  

  What was the budgeted fixed production overhead for month 6?

  Give your answer to the nearest whole $ (in '000s).

  $60000

• Question 43:

  EF manufactures and sells three products, X, Y and Z. The following production overhead costs are budgeted for next year:

  

  Required:

  Calculate the total budgeted production overhead cost for each product using activity based budgeting.

  A. The total budgeted production overhead cost was $ 1 285 000
  B. The total budgeted production overhead cost was $ 1 305 000
  C. The total budgeted production overhead cost was $ 2 195 000
  D. The total budgeted production overhead cost was $ 1 188 000
  E. The total budgeted production overhead cost was $ 1 258 000
  D. The total budgeted production overhead cost was $ 1 188 000

• Question 44:

  CORRECT TEXT

  XY sells two products for which the budgeted contribution to sales ratios are as follows:

  

  Total budgeted sales revenue is $920,000, of which $368,000 will be generated by product The products must be sold in a constant mix.

  Budgeted fixed costs are $105,000.

  What is the budgeted breakeven sales revenue?

  Give your answer to the nearest $.

  $500000

• Question 45:

  Which THREE of the following statements relating to fixed overhead variances are correct?

  A. The total fixed overhead cost variance in an absorption costing system is the amount of fixed overhead that has been under- or over-absorbed in the period.
  B. The total fixed overhead variance is made up of the fixed overhead expenditure variance, the fixed overhead efficiency variance and the fixed overhead capacity variance.
  C. The fixed overhead volume variance can be split into the fixed overhead efficiency variance and the fixed overhead capacity variance.
  D. The total fixed overhead cost variance in an absorption costing system is the difference between budgeted fixed overhead and actual fixed overhead incurred.
  E. In a marginal costing operating statement reconciling budgeted contribution to actual profit only the fixed overhead expenditure variance and the fixed overhead volume variance are shown.
  A. The total fixed overhead cost variance in an absorption costing system is the amount of fixed overhead that has been under- or over-absorbed in the period.
  B. The total fixed overhead variance is made up of the fixed overhead expenditure variance, the fixed overhead efficiency variance and the fixed overhead capacity variance.
  C. The fixed overhead volume variance can be split into the fixed overhead efficiency variance and the fixed overhead capacity variance.

• Question 46:

  FG Enterprises manufactures and sells three products. There are 4,400 kg of Material X available in the next period. Material X is used in the manufacture of all three products. The following data is available for the next period.

  

  What is the optimal production plan for the next period in order to maximise profit?

  A. Product L 1,500 units Product M 5,000 units Product N 4,000 units
  B. Product L 3,000 units Product M 5,000 units Product N 3,250 units
  C. Product L 3,000 units Product M 4,400 units Product N 4,000 units
  D. Product L 3,000 units Product M 5,000 units Product N 4,000 units
  B. Product L 3,000 units Product M 5,000 units Product N 3,250 units

• Question 47:

  Which ONE of the following describes full cost-plus pricing?

  A. A method determining the sales price by calculating the full cost of the product and adding a percentage mark-up for profit.
  B. A method determining the sales price by adding a profit margin onto variable production costs.
  C. A method determining the sales price by adding a profit margin onto variable sales costs.
  D. A method determining the sales price by calculating full production costs and adding a percentage mark-up for profit.
  A. A method determining the sales price by calculating the full cost of the product and adding a percentage mark-up for profit.

• Question 48:

  A company produces three products D, E and

  F. The statement below shows the selling price and product costs per unit for each product, based on a traditional absorption costing system.

  

  Each of the products is produced using Process A which has a maximum capacity of 2,500 hours per period.

  If a traditional contribution approach is used, the ranking of products, in order of priority, for the profit maximizing product mix will be:

  A. D, E, F
  B. E, D, F
  C. F, D, F
  D. D, E, F
  C. F, D, F

• Question 49:

  Explain THREE benefits that organizations gain from using budgetary planning and control systems. Select ALL the true statements.

  A. The budget acts as a variable mechanism, with actual results being compared with budget.
  B. Budgeting forces an organization's management to look ahead and set performance targets.
  C. The budget provides an external benchmark against which performance against which performance can be evaluated.
  D. The budget ensures actions of different parts of the organization are coordinated are reconciled otherwise managers take actions for the benefit of their own part of organization that may not benefit the organization as a whole.
  E. Another benefit of budgeting is to set targets to motivate managers and optimize their performance.
  F. The budget is a useful device of influencing an operator's thoughts and motivating operators to perform in line with the organization's marketing budget.
  G. It provides a standard which managers may be motivated to achieve. It can also encourage inefficiency and conflict between managers particularly if the budget is imposed from above, whereby it may act as a threat rather than as a challenge.
  B. Budgeting forces an organization's management to look ahead and set performance targets.
  D. The budget ensures actions of different parts of the organization are coordinated are reconciled otherwise managers take actions for the benefit of their own part of organization that may not benefit the organization as a whole.
  E. Another benefit of budgeting is to set targets to motivate managers and optimize their performance.
  G. It provides a standard which managers may be motivated to achieve. It can also encourage inefficiency and conflict between managers particularly if the budget is imposed from above, whereby it may act as a threat rather than as a challenge.

• Question 50:

  CORRECT TEXT

  A bakery manager is deciding how many batches of birthday cakes to decorate each day.

  Demand for the birthday cakes varies from 12 to 15 batches per day. Each batch decorated and sold earns a contribution of $40 but each batch unsold leads to loss of contribution of $15. The payoff table below shows the total $ contribution from each of the possibilities:

  

  Based on expected values, the number of batches of birthday cakes the bakery manager should decorate each day is:

  14 batches