P1 Questions PDF [2022] Use Valid New dump to Clear Exam
Passing CIMA P1 Exam Using 2022 Practice Tests
NEW QUESTION 44
N prepares budgets on an annual basis by using the budget from the previous year, and then adjusting it for growth and inflation.
This is an example of:
- A. A flexed budget
- B. A rolling budget
- C. Zero based budgeting
- D. An incremental budget
Answer: D
NEW QUESTION 45
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:
Answer:
Explanation:
14 batches
NEW QUESTION 46
The marketing director of a company is deciding which of three products to launch into a new market.
The following table of possible outcomes has been prepared.
What is the value of perfect information about market conditions?
Give your answer as a whole number to the nearest $ million.
Answer:
Explanation:
$12 million
NEW QUESTION 47
RS is a travel company providing daily tours of a major European capital city. The market is highly competitive and RS has commissioned some market research to help with the pricing decision for a new tour. The research identified the probability of three possible market conditions and the number of tickets that would be sold each day at three different price levels.
Demonstrate, using a decision tree and based on expected value, which ticket price RS should choose.
- A. RS should charge a ticket price of $90.
- B. RS should charge a ticket price of $80.
- C. RS should charge a ticket price of $70.
- D. RS should charge a ticket price of $75
- E. RS should charge a ticket price of $100.
Answer: A
NEW QUESTION 48
PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product B. Fixed costs are $800,000 per annum.
The management of PL is considering reducing the selling price per unit to $48. The estimated levels of demand at the revised selling price and the probabilities of them occurring are as follows:
Calculate the probability that the profit will increase from its current level if the selling price is reduced to $48.
- A. The probability therefore that the contribution will exceed $2,880,000 is 90%.
- B. The probability therefore that the contribution will exceed $2,880,000 is 40%.
- C. The probability therefore that the contribution will exceed $2,880,000 is 50%.
- D. The probability therefore that the contribution will exceed $2,880,000 is 70%.
Answer: A
NEW QUESTION 49
The following information is available about direct material T for the last period.
A JIT purchasing system is in operation.
Calculate the actual price paid per kg of material T.
Give your answer to 2 decimal places.
Answer:
Explanation:
$2.80
NEW QUESTION 50
A company makes Product A and Product B. The production process for both products uses one type of material, one type of labour, and utilises one machine. All three of these resources will be limited in November. The company has performed a linear programming model and the constraints and optimal solution, to maximise contribution, are as follows:
Constraints:
For November, which of the above constraints are binding, and which are non-binding?
Answer:
Explanation:
NEW QUESTION 51
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 $ 1 258 000
- B. The total budgeted production overhead cost was $ 1 305 000
- C. The total budgeted production overhead cost was $ 1 285 000
- D. The total budgeted production overhead cost was $ 2 195 000
- E. The total budgeted production overhead cost was $ 1 188 000
Answer: E
NEW QUESTION 52
EFG is a small business making raspberry jam to sell at local markets. It has recently been approached by a major supermarket to produce a special order for the supply of lemon curd.
Two of the ingredients required are sugar and preservatives, both of which are in inventory.
The sugar has a historic cost of $4 per kg and a replacement cost of $5. It is in regular use for the production of the raspberry jam.
The factory has switched to organic processes and the preservatives are no longer required.
The historic cost of the preservatives was $3 per kg and the replacement cost is $2.50 per kg.
The preservatives can be re-sold to a local competitor for $1 per kg if they are not used in this order.
Which TWO of the following should be included in determining the relevant cost of the special order?
- A. Sugar at $4 per kg
- B. Preservatives at $1 per kg
- C. Sugar at $5 per kg
- D. Preservatives at $3 per kg
- E. Preservatives at $2.50 per kg
Answer: B,C
NEW QUESTION 53
RT produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below:
Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified:
Direct labour hours 7,500 hours
Material A 8,500 kgs
Material B 3,000 litres
Machine hours 7,500 hours
Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.
The optimum production plan will be:
- A. Contract: R = 250, T = 360 and Market: R = 600 T = 710
- B. Contract: R = 250, T = 360 and Market: R = 500 T = 710
- C. Contract: R = 250, T = 360 and Market: R = 500 T = 700
- D. Contract: R = 250, T = 360 and Market: R = 660 T = 720
- E. Contract: R = 250, T = 360 and Market: R = 650 T = 710
Answer: C
NEW QUESTION 54
A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures the company offers pre operation and post operation in-patient care, in a fully equipped hospital, for those patients who will be undergoing the surgical procedures.
Surgeons are paid a fixed fee for each surgical procedure they perform and an additional amount for any follow-up consultations. Post procedure follow-up consultations are only undertaken if there are any complications in relation to the surgical procedure. There is no additional fee charged to patients for any follow up consultations. All other staff are paid annual salaries.
The company's existing costing system uses a single overhead rate, based on revenue, to charge the costs of support activities to the procedures. Concern has been raised about the inaccuracy of procedure costs and the company's accountant has initiated a project to implement an activity-based costing (ABC) system. The project team has collected the following data on each of the procedures.
Calculate the profit per procedure for each of the three procedures using activity-based costing.
What was the profit for the knee procedure, using ABC costing?
- A. $781
- B. $2305
- C. $1808
- D. $2466
Answer: D
NEW QUESTION 55
CDF is a manufacturing company within the DF group. CDF has been asked to provide a quotation for a contract for a new customer and is aware that this could lead to further orders. As a consequence, CDF will produce the quotation by using relevant costing instead of its usual method of full cost plus pricing.
The following information has been obtained in relation to the contract: Material D 40 tons of material D would be required. This material is in regular use by CDF and has a current purchase price of $38 per ton. Currently, there are 5 tons in inventory which cost $35 per ton. The resale value of the material in inventory is $24 per ton.
Components 4,000 components would be required. These could be bought externally for $15 each or alternatively they could be supplied by RDF, another company within the DF manufacturing group. The variable cost of the component if it were manufactured by RDF would be $8 per unit, and RDF adds 30% to its variable cost to contribute to its fixed costs plus a further 20% to this total cost in order to set its internal transfer price. RDF has sufficient capacity to produce 2,500 components without affecting its ability to satisfy its own external customers. However, in order to make the extra 1,500 components required by CDF, RDF would have to forgo other external sales of $50,000 which have a contribution to sales ratio of 40%.
Labour hours 850 direct labour hours would be required. All direct labour within CDF is paid on an hourly basis with no guaranteed wage agreement. The grade of labour required is currently paid $10 per hour, but department W is already working at 100% capacity. Possible ways of overcoming this problem are: * Use workers in department Z, because it has sufficient capacity. These workers are paid $15 per hour. * Arrange for sub-contract workers to undertake some of the other work that is performed in department W. The sub-contract workers would cost $13 per hour.
Specialist machine The contract would require a specialist machine. The machine could be hired for
$15,000 or it could be bought for $50,000. At the end of the contract if the machine were bought, it could be sold for $30,000. Alternatively, it could be modified at a cost of $5,000 and then used on other contracts instead of buying another essential machine that would cost $45,000. The operating costs of the machine are payable by CDF whether it hires or buys the machine. These costs would total $12,000 in respect of the new contract.
Supervisor The contract would be supervised by an existing manager who is paid an annual salary of
$50,000 and has sufficient capacity to carry out this supervision. The manager would receive a bonus of
$500 for the additional work.
Development time 15 hours of development time at a cost of $3,000 have already been worked in determining the resource requirements of the contract.
Fixed overhead absorption rate CDF uses an absorption rate of $20 per direct labour hour to recover its general fixed overhead costs. This includes $5 per hour for depreciation.
Calculate the relevant cost of the contract to CDF. You must present your answer in a schedule that clearly shows the relevant cost value for each of the items identified above. You should also explain each relevant cost value you have included in your schedule and why any values you have excluded are not relevant.
Ignore taxation and the time value of money.
Select all the true statements.
- A. Machine operating costs is a relevant cost.
- B. Direct labour cist is a relevant cost
- C. The total relevant cost was $94 740
- D. Development Cost is a relevant cost.
- E. General fixed overhead costs are relevant costs.
- F. The total relevant cost was $104 320
- G. The total relevant cost was $84 990
Answer: A,B,G
NEW QUESTION 56
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 maintaining inspection equipment
- C. Cost of supervision of testing and inspection activities
- D. Performance testing costs
Answer: A
NEW QUESTION 57
Which of the following, regarding costing methods, is true?
- A. In traditional absorption costing, overheads are charged to a product by absorbing them at the cost driver rate for an activity based on their usage of the activity.
- B. A company is making short term decisions based on the contribution per unit of its different products.
These decisions are based upon full absorption costing data. - C. A company which has introduced technology to reduce labour costs now incurs a greater proportion of non volume-related support activities. Activity based costing would be more appropriate than traditional absorption costing in this environment.
- D. A company produces two products which undergo similar processes. The company has very low overhead costs. This company should consider activity based costing rather than traditional absorption costing to ensure that its pricing decisions are more accurate.
Answer: C
NEW QUESTION 58
Product G has the following sales information:
If moving averages of annual sales over 3-year periods are calculated, what is the moving average at Year 3?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: C
NEW QUESTION 59
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Introduction to CIMA Operational CIMA P1 Accounting
CIMA Operational is the first level of the CIMA Professional qualification. After completing this level you can progress onto the Management level, then complete the Strategic level to become a chartered management accountant. You will need to have completed CIMA Certificate, AAT Professional (Level 4), or have an accountancy or finance degree.
The purpose of the CIMA P1 exam dumps is to spotlight areas of student difficulty, so that remedial measures can be taken before the chances for success are impaired. The CIMA Operational CIMA P1 Accounting is generally given by students who are interested in accounting and finance.
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