CIMA CIMAPRO19-P01-1 Exam Practice Test Instant Access

Question 1

A flexible budget is a budget that is:

Aset prior to the control period and not subsequently changed in response to changes in activity period has expired

Bcontinuously updated by adding a further accounting period when the earliest accounting period has expired

Cchanged in response to changes in the level of activity

Dchanged in response to changes in costs

Answer : C

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Question 2

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine.

The company's existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department's support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The company's accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department:

Calculate the annual profit per machine for each of the three sizes of machine, using the current basis for charging the costs of support activities to machines.

AThe profit per machine for the medium machine was: $1276

BThe profit per machine for the medium machine was: $1376

CThe profit per machine for the medium machine was: $1350

DThe profit per machine for the medium machine was: $1250
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Answer : A

Question 3

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

The optimal solution in the previous question shows that the shadow prices of skilled labour and direct material A are as follows:

Skilled labour $ Nil

Direct material A $11.70

Explain the relevance of these values to the management of JRL.

What is the additional contribution that can be earned?

AThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 825

BThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $5, 825

CThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $3, 825

DThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 570

Answer : A

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Question 4

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

Identify, using graphical linear programming, the weekly production schedule for products J and L that will maximize the profits of JRL during the next four weeks.

AOptimum plan (including major customer order) is therefore:W 900 unitsR 700 unitsX 2,100 units

BOptimum plan (including major customer order) is therefore:W 1, 000 unitsR 600 unitsX 2,000 units

COptimum plan (including major customer order) is therefore:W 910 unitsR 800 unitsX 2,200 units

DOptimum plan (including major customer order) is therefore:W 900 unitsR 650 unitsX 2,000 units

EOptimum plan (including major customer order) is therefore:W 950 unitsR 750 unitsX 2,300 units

Answer : D

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Question 5

A decision maker that makes decisions using the minimax regret criterion would be classified as:

ARisk averse

BRisk seeking

CRisk neutral

DRisk spreading

Answer : A

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Question 6

A marketing manager is trying to decide which of four potential selling prices to charge for a new product. The state of the economy is uncertain and may show signs of recession, growth or boom. The manager has prepared a regret matrix showing the regret for each of the possible outcomes depending on the decision made.

If the manager applies the minimax regret criterion to make decisions, which selling price would be chosen?

A$40

B$45

C$50

D$55

Answer : B

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Question 7

A university is trying to decide whether or not to advertise a new post-graduate degree programme. The number of students starting the programme is dependent on economic conditions. If conditions are poor, it is expected that the programme will attract 40 students without advertising. There is a 60% chance that economic conditions will be poor. If economic conditions are good it is expected that the programme will attract only 20 students without advertising. There is a 40% chance that economic conditions will be good.

If the programme is advertised and economic conditions are poor, there is a 65% chance that the advertising will stimulate further demand and student numbers will increase to 50. If economic conditions are good, there is a 25% chance the advertising will stimulate further demand and numbers will increase to 25 students.

The profit expected, before deducting the cost of advertising, at different levels of student numbers are as follows:

The cost of advertising the programme will be $15,000.

Required:

Demonstrate, using a decision tree, whether the programme should be advertised.

AYes, the programme should be advertised as the profit will be $82000

BYes, the programme should be advertised as the profit will be $92000

CNo, the programme should not be advertised as there will be a loss $82000

DNo, the programme should not be advertised as there will be a loss $92000

Answer : A

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CIMAPRO19-P01-1 P1 Management Accounting Exam Practice Test