CIMA CIMAPRO19-P02-1 Exam Practice Test Instant Access

Question 1

Which TWO of the following conditions are necessary for a learning curve to apply?

AThe process must be simple.

BThe process must be complex.

CThere must be regular breaks in production.

DProduction must be machine intensive.

EProduction must be labor intensive.

Answer : B, E

Question 2

SDF makes cars. Demand for one of SDF's most popular models has declined because of a long-running television program. SDF's car is driven by a villainous character in the program and that has created such a negative association that sales have declined so significantly that SDF is planning to discontinue production.

Which of the following statements is correct? Select ALL that apply.

ABusiness risks can arise from unexpected events.

BThe use of a product in a television program can create upside risks.

CSDF should have considered the possibility that sales of this car could be affected by public perception, even though the car's practical attributes are unchanged.

DSDF's board should accept full responsibility for permitting this to happen.

ESDF's sales department should have prevented the television production company from buying the car.

Answer : A, B, C

Question 3

A group consists of two divisions, Alpha and Beta, both of which are profit centers. Alpha sells a product to the external market and also sells it as an intermediate product to Beta.

Beta then processes further before selling the final product to the external market. The current group transfer pricing policy requires Alpha to charge Beta with the variable cost of production.

Which of the following statements is valid?

AA two-part tariff would provide a more effective basis for assessing divisional performance.

BA dual pricing approach to transfer pricing would increase Beta's total profit and reduce Alpha's.

CIf Alpha has unfulfilled external demand then the transfer price should always be set at variable cost.

DTransfer prices only affect the assessment of performance of investment centres, not of profit centres.

Answer : A

Question 4

Which of the following statements about the use of traditional budgeting compared with a beyond budgeting approach is correct?

AIf the organization has devolved decision making, beyond budgeting is not appropriate because it does not allow the same level of empowerment as traditional budgeting.

BIf the organization's products are subject to rapid technological change, beyond budgeting would allow managers to respond more quickly than under traditional budgeting.

CIf there is a dynamic external environment with fast moving opportunities, beyond budgeting will inhibit the organization's ability to take advantage of these opportunities whereas traditional budgeting will not.

DIf the organization's culture is such that a top down budgeting system is desired then this is better achieved by adopting beyond budgeting rather than traditional budgeting.

Answer : B

Question 5

Which basis of transfer pricing retains the full autonomy of divisional managers?

AFull cost-plus pricing

BVariable cost-plus pricing

CNegotiated pricing

DMarket based pricing

Answer : C

Question 6

An organization is competing in the high technology market. It sets a high sales price for its products initially to target the early adopters, and then the price is gradually reduced.

This pricing strategy is known as:

AMarket skimming

BPenetration pricing

CPremium pricing

DLoss leader pricing

Answer : A

Question 7

A company manufactures and sells a range of products. Relevant data for one unit of a particular product are as follows.

The company is using target costing to ensure that it achieves a contribution of 40% of the market selling price.

In order to achieve the target cost, by how much does the company need to reduce the variable cost per unit?

A$ 2.10

B$ 0.50

C$ 1.40

D$ 2.60

Answer : B

CIMAPRO19-P02-1 P2 Advanced Management Accounting Exam Practice Test