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CIMAPRO19-P01-1 Exam - Topic 5 Question 65 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam
Question #: 65
Topic #: 5
[All CIMAPRO19-P01-1 Questions]

A company makes and sells three products A, B and C.

The selling prices and costs of the three products, using a traditional absoprtion costing system, are shown in the table below.

The company has undertaken an analysis of overhead costs using activity-based costing (ABC).

The revised overhead costs for products A, B and C are $6, $32 and $55 respectively.

When comparing the figures obtained under the two costing methods, which of the following statements are true?

Select ALL that apply.

Show Suggested Answer Hide Answer
Suggested Answer: A, D, E

References:


by Laticia at Feb 05, 2023, 03:44 AM

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Mari
5 months ago
Product B's profit is lower with ABC, that's a fact!
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Lacey
5 months ago
I disagree, ABC doesn’t always mean lower overhead costs.
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Olen
6 months ago
Wait, how can A be profitable under ABC but not under absorption?
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Melita
6 months ago
I think Product C is overpriced, totally agree with that.
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Amber
6 months ago
Product B definitely makes a profit under both methods.
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Yuonne
6 months ago
I don’t recall if ABC always results in lower overhead costs for the company. It seems like it could vary depending on the product mix.
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Graciela
6 months ago
I'm a bit confused about product C being overpriced. I thought cost-plus pricing was supposed to cover costs, but maybe ABC shows a different picture?
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Mammie
6 months ago
I remember a similar question where the most profitable product under absorption costing ended up showing a loss with ABC. I think that might apply here too.
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Tess
6 months ago
I think product B does make a profit under both methods, but I'm not entirely sure if the profit is actually lower with ABC. I need to double-check the numbers.
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Susy
6 months ago
Okay, I've got this. The key is to remember that federal law generally supersedes state law, unless the state law is more stringent. I'll go with option C.
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Billye
6 months ago
I'm not entirely sure about this one. The CDATA section is throwing me off a bit. I'll need to review my notes and examples to make sure I'm approaching this the right way.
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Becky
7 months ago
Custom Scaling sounds like the best option here. Adjusting the text size directly should make the most difference in reducing eye strain during long reading sessions.
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Lilli
11 months ago
Looks like the company is really going to need to re-evaluate their pricing strategies after this ABC analysis. Maybe they should hire a team of accountants who can actually do math.
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Nicolette
10 months ago
Product C is currently overpriced based on cost plus pricing and the selling price should be reduced.
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Willard
10 months ago
Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
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Yolando
11 months ago
Product B makes a profit under both methods, but the profit is lower using ABC.
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Kirk
11 months ago
Wait, so are we supposed to find the most profitable product or the one that's the least unprofitable? I feel like I need a crystal ball for this one.
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Shawnda
10 months ago
The product that is the most profitable under traditional absorption costing makes a loss under the ABC methodology.
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Dortha
11 months ago
Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
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Lashaun
11 months ago
Product B makes a profit under both methods, but the profit is lower using ABC.
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Cassie
12 months ago
Aha, so the company was overpricing Product C all this time. They should probably give their pricing team a raise for catching that.
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Alton
10 months ago
Definitely, it's important for companies to regularly review their costing methods to ensure accurate pricing.
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Truman
10 months ago
It's interesting how the profit margins can change based on the costing method used.
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Man
10 months ago
Yes, the pricing team did a good job catching that. Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
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Anthony
10 months ago
Product C is currently overpriced based on cost plus pricing and the selling price should be reduced.
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Carma
10 months ago
It's interesting how the costing method can change the perceived profitability of a product.
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Rochell
11 months ago
Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
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Floyd
11 months ago
Yes, the company should definitely adjust the selling price of Product C to reflect the actual costs.
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Shannan
11 months ago
Product C is currently overpriced based on cost plus pricing and the selling price should be reduced.
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Selma
12 months ago
Oh, this is tricky. I can already see that the traditional absorption costing was hiding some important cost information. Time to dive into the details!
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Dong
12 months ago
Hmm, looks like we need to do some careful analysis here. The revised overhead costs from ABC seem to have a significant impact on the profitability of these products.
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Emile
11 months ago
Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
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Mertie
11 months ago
Product B makes a profit under both methods, but the profit is lower using ABC.
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Antonette
1 year ago
I see your point, Delpha. But maybe the overhead costs allocation in ABC is affecting the profitability differently.
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Delpha
1 year ago
I disagree with option B. The most profitable product under traditional costing should still be profitable under ABC.
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Antonette
1 year ago
I think option A is true because Product B makes a profit under both methods.
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