CIMA CIMAPRO19-P02-1 Exam Practice Test Instant Access

Question 1

Which of the following are TRUE about the theory of constraints? Select ALL that apply.

AEach resource should be put to its most profitable use

BRelieve all the constraints in a system simultaneously to ensure optimality

CEnsure that each constraint is being used efficiently

DRelieve constraints until the cost of relieving the last constraint exceeds the benefit

Answer : A, C, D

Question 2

Which of the following statements regarding multinational transfer pricing is INCORRECT?

ATransfer prices affect tax liabilities and royalties because of different laws in countries.

BIf transfer prices are inflated, this will increase profits of buying division.

CCompanies have incentives to set transfer price to increase revenues in low-tax countries.

DCompanies have incentives to set transfer price to increase costs in high-tax countries.

Answer : B

Question 3

How does beyond budgeting NOT help to resolve the weaknesses of traditional budgeting? Select ALL that apply.

AManagers are set goals and targets to achieve rather than abiding by strict budgets and variances.

BManagers have a much larger scope of business goals that when achieved, will increase shareholder value.

CManagers are given more freedom and control over their business units under Beyond budgeting.

DManagers focus on keeping costs low in the short term to ensure maximised profits.

EManagers are given incentives to meet or undercut budgets.

FManagers are encouraged to designate responsibility to others to lessen their workload so they may concentrate on important tasks.

Answer : D, E, F

Question 4

A company uses activity based costing. The total production overheads of $16,050 for the next period are for set up costs of $6,450 and quality inspection costs of $9,600. The company produces two products, Product F and Product G. Details relating to the next period are as follows:

A new customer has offered to purchase Product F for $28.00 per unit. The only costs incurred would be those shown above.

What is the profit per unit of Product F that would be gained by accepting the offer? Give your answer to two decimal places.

See Below Explanation:

Answer : A

Question 5

A firm of accountants uses an activity-based costing system. The firm's costing system permits staff to indicate specific tasks undertaken for clients, such as requesting missing information. The amount charged for a request for missing information is based on the following analysis.

Each request takes an average of 15 minutes of professional staff time. Professional staff are charged out at $100 per hour.

Administrators then process the information request and prepare a standard letter. The average time administration staff spend on each information request is 20 minutes. The cost of administration staff at the firm is $75,600 per year. Administration staff work for a total of 6,000 hours per year. The cost of printing and posting a letter is $1.

Calculate the cost of an information request.

Give your answer to 2 decimal places.

See Below Explanation:

Answer : A

Question 6

The following summarised financial statements have been prepared by JNM's North subsidiary for the year just ended:

Calculate the North subsidiary's Residual Income, assuming that JNM's cost of capital is 10%.

Give your answer to the nearest $ million.

See Below Explanation:

Answer : A

Question 7

A new product is being manufactured for the first time. The first unit required 600 minutes of labor to manufacture. It is expected that there will be a 90% learning curve for the first 20 units.

The learning index for a 90% learning curve is - 0.152.

Calculate the expected labor time to manufacture the 10th unit.

Your answer should be given to the nearest whole minute.

See Below Explanation:

Answer : A

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