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CIMAPRO19-P02-1 Exam - Topic 1 Question 56 Discussion

Oliver owns a computer repair company. He is looking to close of of his departments as the demand for computer cleaning has dropped dramatically in the last 2 years and is no longer profitable.The contribution margin of the department is 12,000, and the overheads are 23,000 (out of which 4,000 cannot be eliminated).How would closing this department impact operating income?
A) Increase operating income by 7,000
B) Decrease operating income by 7,000
C) Decrease operating income by 12,000
D) Increase operating income by 12,000

CIMAPRO19-P02-1 Exam - Topic 1 Question 56 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 56
Topic #: 1
[All CIMAPRO19-P02-1 Questions]

Oliver owns a computer repair company. He is looking to close of of his departments as the demand for computer cleaning has dropped dramatically in the last 2 years and is no longer profitable.

The contribution margin of the department is 12,000, and the overheads are 23,000 (out of which 4,000 cannot be eliminated).

How would closing this department impact operating income?

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Suggested Answer: A

by Malcolm at Aug 02, 2022, 04:29 AM

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Dante
10 months ago
I think it’ll decrease by 7k, not 12k.
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Lisha
10 months ago
Overheads matter too, but I think it’ll still decrease income.
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Joana
10 months ago
Wait, how can it increase income if he's losing money?
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Chantell
11 months ago
Totally agree, it's a loss for sure.
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Ryan
11 months ago
Closing the department means losing that 12k contribution margin.
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Marta
11 months ago
I'm a bit confused about how to interpret the overheads. If 4,000 can't be eliminated, does that mean we still incur that cost even if we close the department? I hope I remember the right approach!
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Lazaro
11 months ago
This question reminds me of a practice problem where we had to analyze the impact of closing a department. I think the key is to look at the net effect on income after considering fixed costs.
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Denae
11 months ago
I think if the contribution margin is 12,000 and the unavoidable overheads are 4,000, closing the department might actually save some costs. I feel like it could increase operating income, but I need to double-check my calculations.
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Sheridan
11 months ago
I remember that the contribution margin is important for understanding how much a department contributes to covering fixed costs. But I'm not sure how to factor in the overheads correctly.
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Ty
11 months ago
Okay, I've got this. The key is recognizing that the question is asking about mechanisms to monitor and review system activity. That points directly to audit controls as the correct answer. I'll mark that one confidently.
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Rikki
11 months ago
Okay, let's see... I know hostname and domain/workgroup membership are definitely options, but I'm not sure about the third one.
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Valene
11 months ago
This seems straightforward. I'll focus on identifying the air conditioners that don't require cooling towers.
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Erick
11 months ago
I'll definitely use my calculator to be precise. Those percentage calculations can trip you up easily.
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Yuette
11 months ago
I'm a bit confused by the wording of the question. What exactly is a 502 error, and how does it relate to the Anti-DDoS service? I'll need to do some quick research to make sure I understand the context before answering.
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