CIMAPRO19-P01-1 Exam - Topic 4 Question 15 Discussion

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

Question #: 15
Topic #: 4

PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product B. Fixed costs are $800,000 per annum.

The management of PL is considering reducing the selling price per unit to $48. The estimated levels of demand at the revised selling price and the probabilities of them occurring are as follows:

Calculate the probability that the profit will increase from its current level if the selling price is reduced to $48.

AThe probability therefore that the contribution will exceed $2,880,000 is 90%.

BThe probability therefore that the contribution will exceed $2,880,000 is 50%.

CThe probability therefore that the contribution will exceed $2,880,000 is 70%.

DThe probability therefore that the contribution will exceed $2,880,000 is 40%.

Show Suggested Answer

Suggested Answer: A

References:

by Catalina at May 04, 2022, 09:18 PM

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8 months ago

I'm a bit unsure about this one. I'll need to review my notes on Oracle VM Manager's capabilities to make sure I select the right three attributes.

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Okay, the key benefits of activity-based budgeting seem to be that it links resource allocation to the strategic plan and provides a clearer framework for understanding the link between costs and activities. I think I've got a good handle on this.

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Azzie

8 months ago

This question seems straightforward, but I want to make sure I understand the key difference between profit and shareholder wealth before selecting an answer.

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