CIMA CIMAPRO19-P01-1 Exam Practice Test Instant Access

Question 1

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

ACost of product liability insurance

BCost of supervision of testing and inspection activities

CPerformance testing costs

DCost of maintaining inspection equipment

Answer : A

Question 2

Your company want to know how many units they'd have to sell this season to break even. However, you have some reservations over whether or not breakeven analysis is suitable for the company.

Which of these assumptions over product range limit the accuracy of break even analysis? Select ALL that apply.

AThe company only sells one product

BThe company has a consistent selling ratio across all products

CThe company sells multiple products

DVariable costs remain consistent at any level of production

EFixed costs remain the same regardless of activity

FThe company has a variable selling ratio across all products

GPrices and demand of products will remain steady

Answer : A, B

Question 3

A company makes a product using two materials, X and Y.

The standard materials required for one unit of the product are:

What is the materials yield variance?

Give your answer as a whole number.

See Below Explanation:

Answer : A

Question 4

A manager has to decide between four mutually exclusive projects, A, B, C and D:

Using the above information, which Project would a risk seeking manager choose?

AProject A

BProject B

CProject C

DProject D

Answer : D

Question 5

A company has a budgeted contribution to sales (C/S) ratio of 30% and a budgeted operating profit margin of 20%. Budgeted sales were $100,000.

In month 2, actual production and sales volumes and all costs were as budgeted. The actual C/S ratio was 33% .

Which of the following statements, about the company's contribution and operating profit in month 2, is correct?

AActual operating profit was more than 10% higher than budgeted operating profit.

BActual contribution was less than 10% higher than budgeted contribution.

CActual operating profit was less than 10% higher than budgeted operating profit.

DActual contribution was exactly 10% higher than budgeted contribution.

Answer : A

Question 6

A manager in your organisation says, "I have spare capacity and I need a unit cost as a basis for pricing a special one-off contract. You have provided me with a relevant cost of $6.50 per unit and a full production cost of $8.00 per unit. Please explain which unit cost I should use."

Which cost should be used in this decision and why?

AThe relevant cost because it is the lower unit cost.

BThe full production cost because it will be used in the financial accounting reporting system.

CThe relevant cost because it represents the cash flows that will be affected if the contract is accepted.

DThe full production cost because it is important to ensure that all costs are covered by the selling price.

Answer : C

Question 7

RST is preparing a quotation, on a relevant cost basis, for a special order.

Which TWO of the following are relevant costs that should be included in the quotation?

A$2,000 disposal costs which would be saved when obsolete materials are used for the special order.

BThe cost of a manager who is seconded from a different division to manage the special order. The manager is paid a fixed salary.

CDepreciation charges relating to equipment that will be used on the special order.

DThe reduction in the resale value of machinery, due to be sold immediately, but now to be used to produce the special order.

EThe cost of materials, as determined by the inventory system, that are currently in inventory but are used regularly on other products.

Answer : A, D

CIMA P1 Management Accounting CIMAPRO19-P01-1 Exam Practice Test