CIMA CIMAPRA17-BA2-1 Exam Practice Test Instant Access

Question 1

An organisation produces and sells a single product. The organisation's management accountant has reported the following information for the most recent period.

Which TWO of the following statements are valid? (Choose two.)

AIf the contribution to sales ratio changed to 30%, the breakeven point would become higher.

BIf the fixed cost changed to $445,000, the breakeven point would not change.

CIf the sales volume changed to 220,000 units, the breakeven point would not change.

DIf the selling price changed to $22 per unit, the breakeven point would become lower.

EIf the variable cost changed to $16 per unit, the breakeven point would become lower.

Answer : A, C

Question 2

In responsibility accounting, costs and revenues are grouped according to:

Athe budget holder.

Btheir function.

Cthe service provided.

Dtheir behaviour.

Answer : D

Question 3

The concept of the time value of money:

Arecognises the fact that a cash flow received today will always be worth more than a larger cash flow received in the future.

Bis used for making short term decisions.

Cdetermines the higher interest rates that must be paid on longer term loans.

Drecognises the fact that earlier cash flows are worth more because they can be reinvested.

Answer : A

Question 4

A confectionery manufacturer is considering adding a new product to the current range. Forecast data for the product are as follows.

Incremental fixed costs attributable to the new product are forecast to be $24,000 each period.

The forecast sales volume of 180 units is insufficient to achieve the target profit of $10,000 each period.

Which of the following statements is correct?

AThe margin of safety is negative because the target profit will not be achieved from the forecast sales volume.

BIf the fixed cost is changed to $20,000 the sales volume required to break even will decrease.

CIf the forecast sales volume is changed to 190 units the sales volume required to achieve the target profit will decrease.

DIf the selling price is changed to $510 the sales volume required to achieve the target profit will increase.

Answer : C

Question 5

A company's management accountant wishes to calculate the present value of the cost of renting a delivery vehicle. There will be five annual rental payments of $5,000, the first of which is due immediately. The company's discount rate is 12%.

Which TWO of the following are valid ways to calculate the present value of the rental payments? (Choose two.)

A$5,000 + ($5,000 x 3.605)

B$5,000 + $5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4

C$5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4+ $5,000/(1.12)5

D$5,000 x 3.605

E$5,000 + ($5,000 x 3.037)

Answer : A, D

Question 6

A company is considering investing $57,000 in a machine that will last for five years, after which time it will have no value. The machine will generate additional revenue of $190,000 each year. Annual running costs, including depreciation of $11,400 will amount to $168,400.

Assuming that all cash flows occur evenly, the payback period of the investment in the machine is closest to:

A2 years 8 months

B1 year 9 months

C1 year 7 months

D2 years 6 months

Answer : C

Question 7

In a company that manufactures many different products on the same production line, which TWO of the following would NOT be classified as indirect production costs? (Choose two.)

ASalary paid to the factory manager.

BFactory rent.

CMaintenance costs for the company's only production line.

DCommissions paid to the sales team.

ERoyalties paid to the designers of the products.

Answer : A, B

CIMAPRA17-BA2-1 BA2 - Fundamentals of Management Accounting Exam Practice Test