CIMA Management Accounting - CIMAPRO19-P01-1 FREE EXAM DUMPS QUESTIONS & ANSWERS
Information about a company's only two products is as follows:
The revenue from the products must be in the constant mix of 2U:3V. Budgeted monthly sales revenue is $110,000.
Fixed costs are $23,095 each month.
To the nearest $10, what is the budgeted monthly margin of safety in terms of sales revenue?
The revenue from the products must be in the constant mix of 2U:3V. Budgeted monthly sales revenue is $110,000.
Fixed costs are $23,095 each month.
To the nearest $10, what is the budgeted monthly margin of safety in terms of sales revenue?
Correct Answer: D
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A company manufactures a single product and absorbs fixed production overheads at a predetermined rate based on budgeted expenditure and budgeted units.
Which TWO of the following would definitely lead to an over absorption of fixed production overheads?
Which TWO of the following would definitely lead to an over absorption of fixed production overheads?
Correct Answer: A,C
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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.
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.
Correct Answer: A,C,G
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GH manufactures a product using skilled labour and high quality materials. The company operates a standard costing system and a just-in-time (JIT) purchasing and production system. The standard selling price and variable costs for one unit of the product are as follows:
Prepare a statement that reconciles the budgeted contribution with the actual contribution for October.
Your statement should show the variances in as much detail as possible.
What was the actual contribution for October?
Prepare a statement that reconciles the budgeted contribution with the actual contribution for October.
Your statement should show the variances in as much detail as possible.
What was the actual contribution for October?
Correct Answer: A
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A manufacturing company uses activity-based costing to charge overheads to its three products. One of the main activities is quality inspection. The cost driver is the number of inspections and the budgeted cost is $211,200.
Additional budgeted data.
What is the budgeted quality inspection cost for a unit of product F?
Additional budgeted data.
What is the budgeted quality inspection cost for a unit of product F?
Correct Answer: D
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Which costing method, used in just-in-time (JIT) production systems, attaches cost directly to output rather than following the flow of product through the production process?
Correct Answer: C
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A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:
Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.
Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.
Correct Answer: A
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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?
The contribution earned by each service will depend on the weather conditions as follows.
Using the maximin criterion, which service will the manager provide?
Correct Answer: A
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Which THREE of the following are advantages of activity-based costing (ABC), in a multi-product environment, when compared with traditional absorption costing?
Correct Answer: B,C,D
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Sales volumes reported for the latest period are used by managers as the basis to forecast sales for the forthcoming period. The forecasts are compared with the budgeted sales and plans are adjusted to ensure that the budgeted sales are achieved.
This is an example of:
This is an example of:
Correct Answer: C
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Your company operates using TQM. As the accountant you have been tasked with producing a quality report so that management can understand how well their new range of products is being received and how the quality of the products has improved. In order to produce the report you have requested information from different departments, but you soon realise not all the information is relevant. You have information regarding the following:
Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit Which pieces of information are relevant to your report? Select ALL that apply.
Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit Which pieces of information are relevant to your report? Select ALL that apply.
Correct Answer: B,E
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A completed unit of Product A requires 9 kg of material and 10% of material is wasted in the production process.
Material has a standard cost of $5 per kg.
Product A also requires 4 labour hours at a standard cost of $10 per labour hour and variable overheads at a standard cost of $2 per labour hour What is the standard variable production cost per unit of Product A?
Material has a standard cost of $5 per kg.
Product A also requires 4 labour hours at a standard cost of $10 per labour hour and variable overheads at a standard cost of $2 per labour hour What is the standard variable production cost per unit of Product A?
Correct Answer: A
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For the past year a manufacturing company has recorded the number of units produced (x) each week and the total production cost (y) for that week. The company intends to use this data to predict future costs.
For the circumstance described above, linear regression is more useful and accurate than the high-low method because:
1. It uses all the sets of data observed to calculate the line of best fit.
2. The coefficient of variation can estimate what percentage of x is due to a change in y.
3. Forecasts remain valid for values for x outside of the observed range.
Which of the above statements are true?
For the circumstance described above, linear regression is more useful and accurate than the high-low method because:
1. It uses all the sets of data observed to calculate the line of best fit.
2. The coefficient of variation can estimate what percentage of x is due to a change in y.
3. Forecasts remain valid for values for x outside of the observed range.
Which of the above statements are true?
Correct Answer: D
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