CIMA Exam CIMAPRO19-P01-1 Topic 3 Question 96 Discussion

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

Question #: 96
Topic #: 3

QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

The total budgeted cost of setting up the machines is $74,400.

Select TWO potential benefits of using an activity based budgeting system.

AActivity based budgeting allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.

BActivity based budgeting provides a clear framework for understanding the link between turnover and the level of activity.

CActivity based budgeting is useful for the review of quality systems utilization.

DActivity based budgeting allows the identification of value added and non-value added activity and ensures that any budget cuts are made to non-value added activities.

Show Suggested Answer

Suggested Answer: C

References:

by Veta at Sep 08, 2024, 12:50 PM

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Malcolm

3 months ago

I'm just glad they didn't include an option about using ABB to communicate with aliens or something. You know there's always that one weird answer choice on these exams!

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Chantay

3 months ago

B) Activity based budgeting provides a clear framework for understanding the link between turnover and the level of activity.

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Gaston

3 months ago

A) Activity based budgeting allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.

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Cheryl

4 months ago

Haha, I bet the person who wrote option B has never actually used an ABB system. 'Clear framework for understanding turnover'? Yeah, right!

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Paz

4 months ago

I agree, A and D are the correct answers. ABB gives you a more granular view of your costs and allows you to make targeted budget cuts, which is super important in today's business climate.

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Ludivina

2 months ago

ABB definitely provides a clear framework for understanding the link between turnover and activity levels. It's a valuable tool for budgeting product costs.

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Bernardine

3 months ago

Yes, ABB is great for allocating resources efficiently and ensuring budget cuts are made to non-value added activities.

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Elvis

3 months ago

I think A and D are the best options. ABB helps in identifying value added activities and making targeted budget cuts.

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Flo

4 months ago

A and D seem like the most relevant benefits. Activity-based budgeting helps prioritize activities and identify value-added vs non-value-added costs, which is crucial for effective resource allocation.

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Trevor

3 months ago

Yes, activity based budgeting helps in prioritizing activities and ensuring resources are allocated efficiently.

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Trevor

4 months ago

I agree, A and D are definitely important benefits of using an activity based budgeting system.

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Maryanne

4 months ago

I believe B could also be a potential benefit. Understanding the link between turnover and activity level is crucial for effective budgeting.

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Nicholle

4 months ago

I agree with you, Leonard. A and D make sense because they help in allocating resources efficiently and identifying non-value added activities.

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Leonard

5 months ago

I think the potential benefits of using an activity based budgeting system are A and D.

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