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

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 106
Topic #: 3

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?

AEquipment depreciation of $2,000 for the time the passenger seats are in production.

BElectricity charges of $1,500 for the completion of the order.

CAdministration overheads of $3,200 apportioned on the basis of labour hours in production.

DSeat cover material, to be bought for $6,000, which cannot be used on other products.

EIdle 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.

Show Suggested Answer

Suggested Answer: C

References:

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

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Dana

3 months 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

3 months 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

2 months 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

2 months ago

D) Seat cover material, to be bought for $6,000, which cannot be used on other products.

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Lynelle

3 months ago

A) Equipment depreciation of $2,000 for the time the passenger seats are in production.

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Noemi

3 months 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

3 months 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

2 months 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

2 months ago

I think A should be included too, equipment depreciation is important for the production.

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Barabara

2 months ago

I agree, B, C, and D should definitely be included as relevant costs.

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Nobuko

4 months 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

2 months ago

Electricity charges should be included as a relevant cost since it is directly related to completing the order.

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Georgeanna

3 months 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

3 months 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

3 months ago

I agree, including equipment depreciation, seat cover material, and consultant's advice in the quote makes sense.

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Marla

3 months ago

Including those costs in the quote would give a more accurate picture of the total production expenses.

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Marla

4 months ago

I agree, those costs are directly related to the production of the passenger seats.

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Arletta

4 months 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

4 months 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

4 months ago

I think A, D, and E should be included as relevant costs.

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