CIMAPRO19-P02-1 Exam - Topic 3 Question 113 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 113
Topic #: 3

A company uses activity based costing. The total production overheads of $16,050 for the next period are for set up costs of $6,450 and quality inspection costs of $9,600. The company produces two products, Product F and Product G. Details relating to the next period are as follows:

A new customer has offered to purchase Product F for $28.00 per unit. The only costs incurred would be those shown above.

What is the profit per unit of Product F that would be gained by accepting the offer? Give your answer to two decimal places.

A$3.90

Show Suggested Answer

Suggested Answer: A

by Glory at Jul 08, 2025, 07:56 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Selma

7 months ago

Totally agree, $3.90 sounds about right!

upvoted 0 times

...

Clarence

7 months ago

I think the profit per unit is actually $3.90.

upvoted 0 times

...

Jennifer

8 months ago

$3.90? That seems a bit high for just setup and inspection costs.

upvoted 0 times

...

Ma

8 months ago

Yep, and Product F's costs need to be calculated!

upvoted 0 times

...

Skye

8 months ago

The total overheads are $16,050, right?

upvoted 0 times

...

Tonette

8 months ago

I'm a bit confused about how to handle the fixed versus variable costs in this scenario. Did we cover that in class?

upvoted 0 times

...

Mickie

8 months ago

I practiced a question where we had to determine the contribution margin, and I feel like that might help here too.

upvoted 0 times

...

Mozell

9 months ago

I think we need to figure out the total costs for Product F first, including both set up and quality inspection costs.

upvoted 0 times

...

Reuben

9 months ago

I remember we calculated profit per unit in a similar question, but I'm not sure how to allocate the overheads correctly between the two products.

upvoted 0 times

...

Ming

9 months ago

Easy peasy. I'll just plug the numbers into the formula and boom, there's my answer. Can't wait to get this one right and boost my grade.

upvoted 0 times

...

Alva

9 months ago

Okay, I think I've got this. I'll first calculate the overhead rate per machine hour, then use that to determine the overhead cost per unit of Product F. From there, it's just a matter of subtracting that from the selling price.

upvoted 0 times

...

Salena

9 months ago

Hmm, I'm a bit confused about how to allocate the overhead costs between the two products. Should I use the machine hours or the number of units produced as the allocation base?

upvoted 0 times

...

Hayley

9 months ago

This looks like a straightforward activity-based costing problem. I'll need to calculate the overhead cost per unit for each product and then subtract that from the selling price of Product F to get the profit per unit.

upvoted 0 times

...

Minna

11 months ago

Wait, what? We have to calculate the profit per unit of Product F? I thought this was a knitting class. Oh well, let's see what I can do.

upvoted 0 times

Cherrie

11 months ago

Great! Looks like we can make a profit by accepting the offer for Product F.

upvoted 0 times

...

Shakira

11 months ago

The profit per unit for Product F would be $3.90 if we accept the offer from the new customer.

upvoted 0 times

...

Cheryl

11 months ago

So, the total cost per unit for Product F is $24.10. Now we just subtract the selling price to find the profit.

upvoted 0 times

...

Simona

11 months ago

Yes, we need to calculate the profit per unit of Product F based on the costs provided.

upvoted 0 times

...

Willis

12 months ago

Sure, I calculated the profit per unit by subtracting the total production overheads from the selling price of Product F.

upvoted 0 times

...

Lenny

12 months ago

But how did you calculate that? Can you explain your rationale?

upvoted 0 times

...

Nickolas

1 year ago

Hmm, this seems straightforward. The only costs are the set-up and quality inspection costs, and the new customer is offering $28 per unit. Can't be that simple, can it? I'll need to double-check my work.

upvoted 0 times

Galen

10 months ago

It does seem simple, but it's always good to double-check calculations.

upvoted 0 times

...

Karl

11 months ago

Profit per unit of Product F would be $11.50

upvoted 0 times

...

Cruz

1 year ago

I agree with Willis, the profit per unit would be $3.90.

upvoted 0 times

...

Novella

1 year ago

Okay, let's see. The total production overhead is $16,050, and it's split between set-up costs and quality inspection costs. We need to find the profit per unit of Product F. Easy enough, let's do this!

upvoted 0 times