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: 6 / 6
Total 202 questions

Which TWO of the following are reasons why cost-based approaches to transfer pricing are often used in practice?

A.

The buying division will want to maximize its profits.

B.

The transferring division will want to maximize its profits.

C.

Because the external market is imperfect.

D.

Because there is often no external market for the product that is being transferred.

E.

The approach allows the organization to cover all the costs.

A project is viable because it has a positive net present value (NPV).

Details of four of the input variables, together with the sensitivity of the viability of the project to a change in each one in isolation, are given below.

Which of the following statements is correct?

A.

A 1% change in the initial investment will result in a change of 3% in the NPV.

B.

The resale value at the end of the project is the most sensitive of the four variables.

C.

If the incremental annual cash contributions reduce by more than 8% then the project will no longer be viable.

D.

If the rate of taxation on profits increases to 40% then the project will no longer be viable.

An organization has carried out a risk assessment for a project.

Which of the following possible outcomes are examples of upside risk?

Select ALL that apply.

A.

The project might be developed more quickly than expected.

B.

The project's costs might be higher than expected.

C.

The project's Economic Value Added might be higher than expected.

D.

The project's environmental damage might be less than expected.

E.

The project's payback period might be greater than expected.

The following cost of quality report has been prepared for the latest period.

What is the difference between the cost of conformance and the cost of non-conformance?

A project with a 6 year life generates a positive net present value of $1,100. The discount rate is 8%.

To the nearest $, the equivalent annual benefit is:

A.

$5,085

B.

$238

C.

$177

D.

$693

Which THREE of the following are advantages of changing from a 'top-down' to a 'bottom-up' (participative) style of budgeting?

A.

The budget will be based on information from employees who are familiar with the day to day activities.

B.

Motivation will improve due to a feeling of ownership of the budget.

C.

There will be increased commitment to organizational objectives.

D.

Budget setters will be forced to justify every item on the budget.

E.

There will be reduced likelihood of budgetary slack being built into the budgets for 'selfish' reasons.

F.

It will be less time-consuming for operational managers.

A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain.

Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain?

A.

Inbound logistics would need to ensure that materials of appropriate quality are delivered on a just in time basis.

B.

Operations would need to be carried out on a right first time basis as any failure could delay production.

C.

After sales service would need to ensure that appraisal costs are kept to a minimum.

D.

Procurement would need to arrange to purchase goods so that they are delivered as required.

E.

Firm infrastructure would need to arrange appropriate training courses for staff.

F.

Technology development would need to ensure that processes are continually improving.

A manufacturing company sells a large range of products. Forecast data for the next period for one of these products are as follows.

After manufacture, each complete batch must be stored in a local warehouse until it is subsequently sent to the company's main national warehouse. The company does not own a local warehouse. A local warehouse with a maximum capacity of 500 units could be rented for $2,450 for the next period.

Alternatively a larger local warehouse with a maximum capacity of 700 units could be rented for $3,430 for the next period.The company will not begin the manufacture of any new batch until the previous batch has been sent to its main national warehouse.

What would be the change in the total cost of set up and storage if the batch size was changed to 600 units?

Give your answer to the nearest whole $.

The discount rate at which the net present value (NPV) is zero is known as the

A.

accounting rate of return

B.

risk adjusted discount rate

C.

internal rate of return

D.

breakeven point

An organization uses a balanced scorecard approach to performance measurement, both at the corporate level and to assess the performance of each of its responsibility centre managers.

Which THREE of the following statements are valid in respect of the effect of this approach on the behavior of the responsibility centre managers?

A.

It encourages them to focus mainly on short-term financial measures.

B.

It provides them with a range of performance measures to discourage a tendency to focus on only one measure.

C.

It provides them with clear guidance as to how customer satisfaction problems should be solved.

D.

It encourages them to make decisions that are in line with corporate objectives.

E.

It encourages them to identify, and deal with, problems at an earlier stage.