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CIMAPRO19-P01-1 Exam - Topic 3 Question 106 Discussion

Company NBO is providing a quote to manufacture 500 passenger seats for a bus company.Relevant cost is being used as the basis for the quote.Which THREE of the following should be included as relevant costs or savings in the production of the 500 passenger seats?
C) Administration overheads of $3,200 apportioned on the basis of labour hours in production.
A) Equipment depreciation of $2,000 for the time the passenger seats are in production.
B) Electricity charges of $1,500 for the completion of the order.
D) Seat cover material, to be bought for $6,000, which cannot be used on other products.
E) Idle time pay of $1,000 which would be paid to workers if the quote is not accepted
F) $750 paid for a consultant's advice on quoting for the order.

CIMAPRO19-P01-1 Exam - Topic 3 Question 106 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam
Question #: 106
Topic #: 3
[All CIMAPRO19-P01-1 Questions]

Company NBO is providing a quote to manufacture 500 passenger seats for a bus company.

Relevant cost is being used as the basis for the quote.

Which THREE of the following should be included as relevant costs or savings in the production of the 500 passenger seats?

Show Suggested Answer Hide Answer
Suggested Answer: C

References:


by Jennifer at Jan 28, 2025, 03:34 PM

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Cristal
9 months ago
Admin overheads shouldn't be included, they’re fixed costs.
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Valene
10 months ago
Totally agree, idle time pay is relevant if the quote isn't accepted!
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Kelvin
10 months ago
Wait, why is equipment depreciation relevant? Seems off.
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Melvin
10 months ago
I think the electricity charges should count too.
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Xochitl
10 months ago
Definitely includes the seat cover material, it's specific to this order.
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Mariann
10 months ago
The seat cover material seems relevant since it can't be used elsewhere, but I'm a bit confused about the idle time pay. Would that be included?
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Precious
11 months ago
I practiced a similar question where we had to exclude overheads, so I think administration overheads should not be included here either.
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Jimmie
11 months ago
I'm not sure about the equipment depreciation; I thought it was a sunk cost and shouldn't be included in relevant costs.
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Lorenza
11 months ago
I remember we discussed that only costs directly related to the production should be included, so I think electricity charges might be relevant.
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Patrick
11 months ago
The consultant's advice fee seems like a relevant cost since it's specifically for this order. I'll make sure to include that one.
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Dortha
11 months ago
I'm not sure about the administration overheads and the idle time pay. Those seem more like indirect costs, but I'll have to double-check the definitions.
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Cheryll
11 months ago
I'm pretty confident that the equipment depreciation, electricity charges, and seat cover material are all relevant costs that should be included.
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Jeannetta
11 months ago
Okay, let's think this through step-by-step. We need to identify the costs that are directly related to the production of the 500 passenger seats.
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Marta
11 months ago
This question seems straightforward, but I want to make sure I understand the concept of relevant costs before selecting the answers.
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Dana
1 year ago
Hmm, let's see. Equipment depreciation, electricity charges, admin overheads... Sounds like a real electrifying, bureaucratic production line we've got here! I'd definitely include the consultant's fee - gotta make sure those seats are 'chair-ismatic' enough to win the contract.
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Rupert
1 year ago
Wait, are we supposed to be answering this for an exam? Yikes, I should've paid more attention in class. Guess I'll just pick the ones that sound the most 'relevant' and hope for the best!
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Clay
1 year ago
E) Idle time pay of $1,000 which would be paid to workers if the quote is not accepted
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Vashti
1 year ago
D) Seat cover material, to be bought for $6,000, which cannot be used on other products.
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Lynelle
1 year ago
A) Equipment depreciation of $2,000 for the time the passenger seats are in production.
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Noemi
1 year ago
I'm gonna have to disagree with my peers. E is a must-include - you can't just ignore the idle time pay if the quote isn't accepted. That's a real cost that needs to be factored in.
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Chanel
1 year ago
I would go with B, C, and D. The electricity charges and administration overheads are still costs associated with the order, even if they're not directly for the production. And the seat cover material is a no-brainer.
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Jess
1 year ago
I'm not sure about E and F, they seem more like potential costs if the order is not accepted.
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Dahlia
1 year ago
I think A should be included too, equipment depreciation is important for the production.
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Barabara
1 year ago
I agree, B, C, and D should definitely be included as relevant costs.
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Nobuko
1 year ago
A, D, and F seem like the most relevant costs to include in the quote. The equipment depreciation, seat cover material, and consultant's advice all directly impact the production costs.
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Franklyn
1 year ago
Electricity charges should be included as a relevant cost since it is directly related to completing the order.
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Georgeanna
1 year ago
Idle time pay should not be included as a relevant cost since it is only applicable if the quote is not accepted.
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Ettie
1 year ago
I think administration overheads should also be included since it is directly related to the production of the passenger seats.
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Leota
1 year ago
I agree, including equipment depreciation, seat cover material, and consultant's advice in the quote makes sense.
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Marla
1 year ago
Including those costs in the quote would give a more accurate picture of the total production expenses.
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Marla
1 year ago
I agree, those costs are directly related to the production of the passenger seats.
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Arletta
1 year ago
I'm not sure about E. Wouldn't idle time pay only be relevant if the quote is not accepted?
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Justine
1 year ago
I agree with Sylvie. A for equipment depreciation, D for seat cover material, and E for idle time pay make sense.
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Sylvie
1 year ago
I think A, D, and E should be included as relevant costs.
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