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CIMAPRA19-P03-1 Exam - Topic 5 Question 64 Discussion

UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's productsWhich of the following are correct?
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report and C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors. and E) UJK should identify an alternative vendor of suitable motors as part of its stress test
A) The motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.

CIMAPRA19-P03-1 Exam - Topic 5 Question 64 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 64
Topic #: 5
[All CIMAPRA19-P03-1 Questions]

UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.

One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's products

Which of the following are correct?

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Suggested Answer: B, C, E

by Elza at Jan 25, 2025, 09:39 AM

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Dulce
8 months ago
They should definitely look for other suppliers, just in case!
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Lashonda
8 months ago
Not sure about contacting the motor manufacturer first, maybe just plan for it?
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Millie
8 months ago
Wait, can they really just raise prices like that? Seems fishy.
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Kallie
8 months ago
Definitely agree, they need to prepare for that!
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Rebecka
9 months ago
Sounds like a 10% hike would really hurt UJK's bottom line.
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Selma
9 months ago
I definitely recall that calculating the impact on profits from absorbing costs is essential, so option D should be included in the analysis.
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Theola
9 months ago
I feel like estimating the impact on demand from price increases is crucial, so option C seems relevant based on similar practice questions we did.
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Rashida
9 months ago
I'm not entirely sure, but I think contacting the motor manufacturer might not be the best approach. It could come off as confrontational.
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Eun
9 months ago
I remember discussing how important it is to note potential cost increases in stress tests, so I think option B makes sense.
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Earleen
9 months ago
This is a great opportunity to demonstrate my analytical skills. I'll start by quantifying the potential impact of the price increase, then evaluate the pros and cons of the different options presented. I'm confident I can come up with a well-reasoned solution.
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Anglea
9 months ago
I'm a bit confused by this question. There are a lot of moving parts to consider, and I'm not sure I have a clear strategy for tackling it. I'll need to re-read the question carefully and try to break it down step-by-step.
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Sophia
9 months ago
Okay, I've got this. The key is to identify the most critical factors and evaluate the options accordingly. I'll focus on calculating the financial impact and considering UJK's strategic options, like finding an alternative supplier.
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Lettie
9 months ago
Hmm, this is a tricky one. I'm not sure if I fully understand all the implications here. I'll need to think through the different scenarios and their potential consequences before deciding on the best approach.
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Ashley
10 months ago
This seems like a straightforward question about how UJK should respond to a potential price increase from their motor supplier. I think I'll start by carefully reading through the options and considering the potential impacts on UJK's business.
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Ellen
1 year ago
Personally, I'd recommend investing in some self-powering garden tools. Who needs motors when you can just attach a hamster wheel to your lawnmower?
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Brandon
1 year ago
E) UJK should identify an alternative vendor of suitable motors as part of its stress test
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Adaline
1 year ago
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
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Lang
1 year ago
C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.
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Jessenia
1 year ago
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
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Catarina
1 year ago
Option A sounds like the start of a bad superhero movie: 'The Motor Manufacturer and the Angry Garden Machinery Company!'
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Johnathon
1 year ago
A is a bit too confrontational. Diplomacy is key when dealing with suppliers, even in a stressful situation.
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Helene
1 year ago
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
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Jeannetta
1 year ago
C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.
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Magda
1 year ago
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
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Joseph
1 year ago
E is a smart move. Identifying an alternative supplier should be a priority in case the current one becomes unreliable.
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Shalon
1 year ago
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
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Quinn
1 year ago
E) UJK should identify an alternative vendor of suitable motors as part of its stress test
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Sommer
1 year ago
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
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Yuki
1 year ago
C is also a good idea. Estimating the impact on demand if they have to raise prices could give them valuable insights.
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Marylyn
1 year ago
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
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Elina
1 year ago
C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.
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Hyman
1 year ago
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
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Yvonne
1 year ago
B and D seem like the most appropriate options. It's crucial to document the potential price increase and its impact on UJK's profits in the stress test report.
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Talia
1 year ago
C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.
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Juan
1 year ago
I agree, it's important to consider both the potential price increase and its impact on profits.
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Miriam
1 year ago
D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
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Ettie
1 year ago
B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
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Shaunna
1 year ago
I think we should also look into option D. Calculating the impact of absorbing the increased cost on UJK's profits is crucial for decision-making.
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Jodi
1 year ago
I agree with Clare. It's important to be prepared for any potential increase in costs from the motor manufacturer.
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Clare
1 year ago
I think option B is correct. We should definitely consider the possibility of increased selling prices in the stress test report.
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