Discuss CIMA CIMAPRA19-F01-1 Exam Topic 5 Question 120

It costs PWR 7.50 to produce product H, per product. Product H is typically sold for 89.99. It costs 5.00 to package product H and 15 to deliver product H to customers.

PWR is currently selling faulty versions of product H from a defunct batch, (let's call this version product I), for 25% of the original price.

Which of the below options represent the correct inventory price for product I?

A2.50

B7.50

C20.00

D3.50

Suggested Answer: A

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25 comments · newest first

Lynda 6 months ago

I agree with Celestine. It’s a good compromise for a defective product.

Celestine 6 months ago

I’m leaning towards option D. 3.50 seems reasonable for faulty items.

Freeman 6 months ago

I feel like option A is too low. It doesn’t cover production.

Selene 6 months ago

This question is tricky! I think it’s about understanding costs.

Rickie 7 months ago

I thought faulty products would be worth even less!

Cristen 7 months ago

So, is the inventory price just the production cost?

Denny 7 months ago

Wait, how can they sell faulty products for that low?

Miesha 7 months ago

Definitely seems like a steal at 25%!

Rodolfo 7 months ago

Product H costs 7.50 to produce.

Nobuko 7 months ago

Haha, I bet the answer is C) 20.00. They're trying to trick us with all these numbers, but the inventory price should be the full cost, right?

Lelia 8 months ago

Hmm, I'm not sure. Maybe B) 7.50 or D) 3.50? This question is making my head spin.

Kimberlie 8 months ago

C) 20.00 has got to be the correct answer. They're selling it for a quarter of the original price, so the inventory price should be the full production cost.

Jaclyn 8 months ago

D) 3.50 seems like the right answer. They're selling it for 25% of the original price, so the inventory price should be 25% of 7.50.

Jules 9 months ago

I think the answer is B) 7.50. That's the cost to produce the original product H, so it should be the same for the faulty version I.

Paz 9 months ago

If product I is sold for 25% of the original price of 89.99, that would be around 22.50, but I’m confused about how that relates to the inventory price.

Tashia 9 months ago

This question reminds me of a practice problem where we had to determine the selling price after discounts. I wonder if the 25% off applies to the total cost or just the production cost.

Kerrie 9 months ago

I think product I should be priced based on its production cost, but I can't recall if we include packaging and delivery in that calculation.

Ryan 9 months ago

I remember we discussed how to calculate the cost of goods sold, but I'm not sure if that applies directly here.

Barbra 9 months ago

Alright, let's break this down. Product H costs 7.50 to produce, 5.00 to package, and 15.00 to deliver, for a total of 27.50. It's sold for 89.99, so the margin is pretty high. For the faulty product I, it's being sold at 25% of the original price, which would be 22.50. But the question is asking for the inventory price, not the selling price. Hmm, I'm not sure about this one.

German 10 months ago

I think the key here is to calculate the cost of producing the faulty product I, since it's being sold at a discounted price. If the original product H costs 27.50 to make, then 25% of that would be 6.875, which rounds to 7.50. So I'm going with option B.

Viki 10 months ago

Okay, let's see. The original product H costs 7.50 to produce, plus 5.00 for packaging and 15.00 for delivery. So the total cost is 27.50. The selling price is 89.99, so the margin is pretty high. But for the faulty product I, it's being sold at 25% of the original price, so I'll need to figure out what that works out to.

Kristal 10 months ago

Hmm, this seems like a tricky one. I'll need to carefully calculate the costs and margins to determine the correct inventory price for the faulty product.

Jesusa 4 months ago

↳ replying to Kristal

So, what does that come out to?

Davida 6 months ago

↳ replying to Kristal

Right! That’s 89.99 times 0.25.

Lizbeth 6 months ago

↳ replying to Kristal

I think we need to find 25% of the original selling price.

CIMAPRA19-F01-1 Exam - Topic 5 Question 120 Discussion