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

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

One of a company's products is sold to three customers: A, B and C. These customers do not buy anything else from the company. The product costs $20 per unit to manufacture and is sold to the customers for $50 per unit.

The following table shows data for sales and selling costs for the latest period.

Delivery costs of $32,000 and general overheads of $60,000 were incurred during the period.

Deliveries to customers A and B were made by a courier in batches of 100 units; the courier charged $300 for each batch delivered to customer A and $400 for each batch delivered to customer B. Deliveries to customer C were made by mail in batches of 10 units at a cost of $60 per batch.

Which of the following statements is correct?

It is often claimed that a two-part transfer pricing system offers a number of advantages to organizations which use it.

Which of the following statements is NOT an advantage of using a two-part transfer pricing system?

An organization has a decentralized structure in which division A supplies division B with an intermediate product for which there is no external market. Division B carries out further processing and then sells the final product on the external market. Due to organizational policy the current transfer pricing basis is variable cost.

The manager of division A has stated, "The current transfer price is unfair because it does not enable us to recoup our costs".

The manager of division B has stated, "The current transfer pricing system enables us to quote competitive prices for the finished product".

The Chief Executive of the organization is considering imposing a transfer pricing policy that uses dual pricing.

Dual pricing would:

In order to support decision making, management accounting information categorizes costs in a variety of ways.

Responsibility accounting primarily distinguishes between costs on the basis that they are either:

A division of a company transfers all its output to other divisions in the same company.

For this division, which of the following measures is NOT affected by the transfer price that the division uses?

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?