CIMA CIMAPRO19-P02-1 Exam Questions Instant Access

Question 1

One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:

Adetermined

Bwasted

Cunder absorbed

Damortised

Answer : A

Question 2

Three years ago the large number of faulty products being returned by its customers resulted in a company adopting total quality management (TQM). The company has increased expenditure on staff training and product inspections. This has resulted in a reduction in the number of faulty products returned.

Which of the following statements is correct?

ASpending more on conformance costs has resulted in a reduction in internal failure costs.

BSpending more on conformance costs has resulted in a reduction in external failure costs.

CSpending more on non-conformance costs has resulted in a reduction in conformance costs.

DSpending more on prevention costs has resulted in a reduction in appraisal costs.

Answer : B

Question 3

Which TWO of the following actions taken during the budgetary planning process will result in the creation of budgetary slack?

AOverestimating costs

BUnderestimating costs

CUnderestimating revenues

DOverestimating revenues

EOverestimating profit

Answer : A, C

Question 4

Which of the following statements about learning curves is correct?

AThe learning index for an 80% learning curve is calculated as log 2 divided by log 0.8.

BThe learning index for an 80% learning curve is calculated as log 0.8 divided by log 2.

CA 90% learning curve indicates a faster rate of learning than an 80% learning curve.

DThe learning index will always have a positive value.

Answer : B

Question 5

A manager must decide which one of three projects should be implemented. For each project the possible outcomes and their associated probabilities can be estimated reliably. The manager has decided to make the decision based solely on which project has the highest expected value of profit.

Which of the following statements are correct?

Select ALL that apply.

AThe manager will select the project with the lowest standard deviation.

BThe range of possible outcomes for each project is not important to the manager.

CThe decision is characterized by uncertainty and the manager is risk seeking.

DThe manager will select the project with the highest of all of the possible outcomes.

EThe decision is characterized by risk and the manager is risk neutral.

Answer : B, E

Question 6

Which of the following correctly defines the expected value of a project?

AThe weighted average of the possible outcomes of the project.

BThe actual amount of incremental wealth that the project will generate.

CThe most likely amount of incremental wealth that the project will generate.

DThe present value of the positive cash flows that the project will generate.

Answer : A

Question 7

A machine requires an initial investment of $500,000. The net present value (NPV) of the investment in the machine is $36,500.

Which of the following statements is correct in relation to the sensitivity of the investment?

AThe initial investment can increase by no more than 7.3% before the project is not viable.

BThe NPV can decrease by no more than 7.3% before the project is not viable.

CThe initial investment can increase by no more than 13.7% before the project is not viable.

DThe NPV can decrease by no more than 13.7% before the project is not viable.

Answer : A

CIMA P2 Advanced Management Accounting CIMAPRO19-P02-1 Exam Questions