Summer Sale Limited Time 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: ecus65

CIMA P2 - Advanced Management Accounting

CIMA P2 Premium Access     Download Demo    
Page: 4 / 6
Total 202 questions

The following information is available for four investment projects:

A discount rate of 12% is appropriate for all four projects. The organization is subject to capital rationing and wishes to prioritise the projects using the profitability index (PI).

Which project has the highest PI?

A.

Project A

B.

Project B

C.

Project C

D.

Project D

In accordance with a just-in-time (JIT) philosophy, which of the following is regarded as a value added activity?

A.

Inspecting raw material deliveries

B.

Moving work in progress around production facilities

C.

Holding inventory

D.

Dispatching products to customers

A company is considering four mutually exclusive projects. There are three possible future demand conditions but the company has no idea of the probability of each of these demand conditions occurring. The forecast net present values (NPVs) of each of the four projects, under each of the three possible future demand conditions, are as follows.

Which investment would be selected using the maximin criterion?

A.

Investment A

B.

Investment B

C.

Investment C

D.

Investment D

Firefighters risk serious and potentially fatal accidents whenever they attend an incident.

Which of the following statements is correct?

A.

The risk of serious accidents should be accepted in all but the most extreme incidents.

B.

The risk of serious accidents should always be accepted because that is what firefighters are paid to do.

C.

The risk of serious accidents should be avoided because the risk has a high probability and a high impact.

D.

Every incident should be the subject of a detailed and thorough risk assessment before the firefighters are permitted to respond.

A learning curve applies to the manufacture of the first 256 units of a product.

During the manufacture of the first 255 units, the time taken to produce each successive unit is expected to:

A.

Reduce at a decreasing rate.

B.

Reduce at a constant rate.

C.

Reduce at an increasing rate.

D.

Reach the steady state.

Which of the following statements is correct in respect of the key feature of dual pricing?

A.

The selling price recorded by the selling division is higher than the cost recorded by the receiving division.

B.

Internal customers are offered trade discounts depending on the number of units they purchase.

C.

Internal transfers are priced at marginal cost and a lump sum payment is made subsequently to contribute to fixed costs.

D.

Internal customers are charged a lower price than external customers to reflect savings in distribution costs.

A large company that sells a single product has many customers. The contribution per unit of the product is $40. Data for the company as a whole are given below.

Using customer profitability analysis, what is the total annual profit for this customer?

A.

$1,660,000

B.

$1,780,000

C.

$1,460,000

D.

$2,340,000

Company S has two divisions, X and Y. Division X transfers 50,000 component units to Division Y each quarter. The market price of the component is $20. Division X's variable cost is $10 per unit and its fixed cost is $150,000 each quarter.

What price would be credited to Division X for each component that it transfers to Division Y under:

two-part tariff pricing (where the two divisions have agreed that the fixed fee will be $100,000); and dual pricing (based on market price and marginal cost).

A.

Two-part tariff pricing = $10

Dual pricing = $22

B.

Two-part tariff pricing = $12

Dual pricing = $18

C.

Two-part tariff pricing = $10

Dual pricing = $20

D.

Two-part tariff pricing = $13

Dual pricing = $22

An investment centre is appraising a potential project that is expected to yield a Return on Investment (ROI) of 12%.

Without the project the investment centre expects to earn an ROI of 14%. The cost of capital is 10%.

What would be the impact on the investment centre's performance measures if the project is accepted?

A.

Residual Income would decrease and ROI would increase.

B.

Residual Income would decrease and ROI would decrease.

C.

Residual Income would increase and ROI would increase.

D.

Residual Income would increase and ROI would decrease.

A new product is being manufactured for the first time. The first unit required 600 minutes of labor to manufacture. It is expected that there will be a 90% learning curve for the first 20 units.

The learning index for a 90% learning curve is - 0.152.

Calculate the expected labor time to manufacture the 10th unit.

Your answer should be given to the nearest whole minute.