[2022] Pass Key features of P1 Course with Updated 258 Questions [Q138-Q162]

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[2022] Pass Key features of P1 Course with Updated 258 Questions

P1 Sample Practice Exam Questions 2022 Updated Verified

Understanding function and technical aspects of Analyse performance using financial and nonfinancial information

The following will be discussed in CIMA P1 exam dumps:

Prepare performance reports for use by different functions and for different purposes in appropriate formats and media
Identify information that can enable managers to review performance
Explain company performance using KPIs
Interpret variances to review functional and organisational performance
Identify appropriate KPIs for different functions of the organisation

What is the cost of CIMA Operational CIMA P1 Accounting?

CIMA Operational CIMA P1 Accounting costs GBP 425.

NO.138 A project has an expected value of $165,250.
The estimates of cash inflows and their probabilities are:

What is the missing cash inflow?
Give your answer as a whole number.

NO.139 Which of the following, regarding costing methods, is true?

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.

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.

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.

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.

NO.140 A decision tree is being evaluated back to a decision point.
There are two alternatives at this point:
1. To abandon the project and generate a return of $435,000;
2. To continue with the project and generate the following possible returns:

What value should be included at the decision point?

$435,000

$451,000

$443,000

$720,000

NO.141 MDS is facing a temporary shortage of Material H which is used to produce all three of its products.
In order to maximise its profitability, which product should be manufactured first?

The product using the least amount of Material H per unit.

The product with the highest contribution per kg of Material H.

The product with the highest contribution per unit.

The product with the highest profit per unit.

NO.142 State whether the following costs are relevant or non-relevant in the context of short-term decision making scenarios.

NO.143 A company’s product range includes Product N. The costs relating to Product N are shown below:

The direct labour costs relate to specialists employed to work wholly and exclusively with Product N.
If the company stopped making Product N, the insurance overhead cost would cease, but overhead cost J would be unaffected. Both overheads are absorbed in direct proportion to material costs.
Which of the following costs should be used in the decision whether to stop making Product N?

$910,100

$850,000

$944,100

$884,000

NO.144 Which THREE of the following are purposes of all budgets?

Co-ordination

Communication

Profit maximisation

Diversification

Authorization

Consolidation

NO.145 The budgetary control report of XYZ for the latest period is shown below. Variances in brackets are adverse.

What is the sales volume profit variance?

$18,700 favorable

$78,900 adverse

$38,200 adverse

$37,200 adverse

NO.146 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.

The solution from the graph is to produce 330 units of J and 280 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 283.333 units of L.)

The solution from the graph is to produce 310 units of J and 280 units of L. (A simplex solution shows the true optimum to be 308.333 units of J and 283.333 units of L.)

The solution from the graph is to produce 330 units of J and 290 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 293.333 units of L.)

The solution from the graph is to produce 315 units of J and 290 units of L. (A simplex solution shows the true optimum to be 316.333 units of J and 293.333 units of L.)

The solution from the graph is to produce 312 units of J and 295 units of L. (A simplex solution shows the true optimum to be 312.333 units of J and 294.999 units of L.)

The solution from the graph is to produce 317 units of J and 270 units of L. (A simplex solution shows the true optimum to be 316.666 units of J and 269.666 units of L.)

NO.147 Which one of the following would NOT be included in a decision to close a division of an organization?

Head office overheads absorbed on the basis of the number of units produced

Sale of unwanted non-current assets

Redundancy pay for employees of the division

Fixed costs directly attributable to the division

NO.148 LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled
120,960 kilometers. Total costs were $194,400.
LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled.
LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates:
* All costs will be 3% higher than the previous year due to inflation
* Efficiency will remain unchanged
* A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled.
Calculate the following costs to be included in the forthcoming year’s budget:
(i) the total variable costs related to the number of parcels delivered.
(ii) the total variable costs related to the distance travelled.

Parcel related cost for next year = $112,308; Distance related costs for next year = $79,590

Parcel related cost for next year = $109,118; Distance related costs for next year = $89,699

Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699

Parcel related cost for next year = $105,306; Distance related costs for next year = $30,590

Parcel related cost for next year = $115,306; Distance related costs for next year = $31,590

NO.149 Company M is preparing its budgeted profit statement for the next year.
The initial budget for Product A is as follows with some changes proposed by the sales director to increase the quality of the product.
What would the budgeted profit of Product A be if the proposed changes are made?

Give your answer as a whole number.

NO.150 Explain how probability analysis could be used to assess the risk of the evaluated projects.
Select all the true statements.

The company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.

The net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.

The probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole

The NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated.
If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

NO.151 FGH used to manufacture components that required raw material Q.
Currently there are 80 kg of material Q in inventory.
The company has no use for the material in the foreseeable future and intends to sell it for scrap.
A potential new customer has asked for a price for a large order.
This order would require 100 kg of material Q.
The company management has decided to quote a price for this work on a relevant cost basis.
Details of costs for material Q are as follows:

What would be the relevant cost of Material Q to use in this order?

$230

$198

$110

$46

NO.152 A manager is deciding which one of four services to provide next period.
The contribution earned by each service will depend on the weather conditions as follows.

Using the maximin criterion, which service will the manager provide?

Service P

Service Q

Service R

Service S

NO.153 Which THREE of the following statements relating to fixed overhead variances are correct?

The total fixed overhead cost variance in an absorption costing system is the amount of fixed overhead that has been under- or over-absorbed in the period.

The total fixed overhead variance is made up of the fixed overhead expenditure variance, the fixed overhead efficiency variance and the fixed overhead capacity variance.

The fixed overhead volume variance can be split into the fixed overhead efficiency variance and the fixed overhead capacity variance.

The total fixed overhead cost variance in an absorption costing system is the difference between budgeted fixed overhead and actual fixed overhead incurred.

In a marginal costing operating statement reconciling budgeted contribution to actual profit only the fixed overhead expenditure variance and the fixed overhead volume variance are shown.

NO.154 A budgetary control report for the latest period is shown below:

Which TWO of the following statements are correct?

The sales volume contribution variance is $216 favourable.

The sales volume contribution variance is $1,008 adverse.

The sales price variance is $756 favourable.

The standard variable cost per unit is $4.80.

NO.155

Calculate the sensitivity of the investment decision to a change in the annual fixed costs.
By how much should the present value of the fixed cost increase, before this project is not viable?

$7698

$6390

$9050

$8675

NO.156 A time series (TS) is made up of two main components i.e. trend (T) and the seasonal variation (SV).
The equation that represents the seasonal variation under the additive model is:

NO.157 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?

NO.158 Which of the following statements about expected value is NOT correct?

It assumes that the decision is repeated a very large number of times.

It draws management attention to the possibility of very high or very low outcomes.

It is the weighted average outcome based on the probability of each outcome.

It represents the distribution of possible outcomes by a single figure.

NO.159 The standard production cost of making a product is as follows:

What is the fixed production overhead capacity variance?

$9,000F

$6,000F

$3,000F

$6,000A

NO.160 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?

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

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

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

Actual contribution was exactly 10% higher than budgeted contribution.

NO.161 A company’s markets are affected by fluctuating exchange rates. It is difficult to forecast more than two or three months ahead.
Which of the following budgeting systems would be most useful in this company’s circumstances?

Rolling budgets

Flexed budgets

Activity-based budgets

Zero-based budgets

NO.162 A snowboard manufacturer is considering investing in technology that will give a good indication of how heavy snowfall will be in the future. The predictions tend to be reasonably accurate.
The current budgeted profit for the year is £2,560,000 but if they invest in this technology and it works, the expected profit will be £2,640,000. The manufacturer is willing to invest a maximum of £40,000 into the venture.
What is the expected profit if the investment is NOT made?

£2,560,000

£2,640,000

£2,520,000

£2,600,000