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CIMA P1 - Management Accounting

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Total 260 questions

The standard production cost of making a product is as follows:

What is the fixed production overhead capacity variance?

A.

$9,000F

B.

$6,000F

C.

$3,000F

D.

$6,000A

A company is launching a new product.

The company accountant has constructed a payoff table to show the estimated profit at different levels of production and demand.

How many units should the company produce if the minimax regret criterion is applied?

A.

100,000

B.

150,000

C.

180,000

D.

200,000

A company operates a standard costing system.

The company combines two raw materials in a process in order to produce a finished product. During month 6 the direct material mix variance was favourable and the direct material yield variance was adverse.

Which of the following statements would explain both of the variances?

A.

There was more wastage in the process than standard and a greater proportion of the cheaper of the two materials was input than standard.

B.

Both of the materials were purchased at a lower price than standard and the lower quality increased wastage.

C.

Higher skilled labour resulted in less wastage from the process than standard and a lower proportion of the more expensive of the two materials was input than standard.

D.

The actual wastage from the process was equal to standard and a greater proportion of the cheaper of the two materials was input than standard.

A company produces and sells more than one product.

All products are manufactured using the same facilities and incur common fixed costs.

Which of the following is used to calculate the break-even sales revenue for the business?

A.

Total fixed costs / weighted average contribution to sales ratio

B.

Total fixed costs / weighted average contribution per unit

C.

Total fixed costs / contribution per unit

D.

Total fixed costs / operating profit to sales ratio

Which THREE of the following are functional budgets?

A.

Human resource budget

B.

Sales budget

C.

Research and development budget

D.

Master budget

E.

Cash budget

Which of the following statements about relevant costs is correct?

A.

Relevant costs will always be lower than the full costs used in external profit reporting.

B.

Relevant costs will always be higher than the full costs used in external profit reporting.

C.

Relevant costs may not be used in external profit reporting because they do not adhere to the accruals basis of accounting.

D.

Relevant costs must be used in external profit reporting so that reported profits follow the pattern of cash flow.

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.

A musical instrument manufacturing company is considering a new project that will require 1000 kg of wood. They have 700 kgs of wood in stock which was purchased last year for £4 per kg. The wood in stock can be

sold back to the supplier for £5 per kg. The wood in stock will have to be replaced if it is used. The current purchase price of wood is £8 per kg.

Using this information, what is the relevant cost of wood for the manufacturers decision on this project?

A.

£8,000

B.

£5,000

C.

£11,500

D.

£5,600

A time series (TS) is made up of two main components i.e. trend (T) and the seasonal variation (SV).

Which TWO of the following could be used to find the seasonal component of a trend?

A.

SV = TS - T

B.

SV = TS / T

C.

SV = TS + T

D.

SV = T / TS

E.

SV = T - TS

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?

A.

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

B.

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

C.

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

D.

Actual contribution was exactly 10% higher than budgeted contribution.