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CIMAPRO19-P01-1 Exam

Certification Provider: CIMA
Exam Name: P1 Management Accounting
Number of questions in our database: 260
Exam Version: Sep. 19, 2023
CIMAPRO19-P01-1 Exam Official Topics:
  • Topic 1: Determine causality in cost function estimates and impact on budgets/ Identify inventory costs and period costs
  • Topic 2: Determine the activity that causes the change in cost/ Understand the difference between variable costs and fixed costs
  • Topic 3: Understand relevant cash flows and their use in pricing decisions/ Calculate the costs for products or services using activity-based costing
  • Topic 4: Calculate the breakeven point and output level required to meet income targets/ Understand costing and the different reasons for calculating costs
  • Topic 5: Understand the impact of individuals? risk attitudes on decision-making in the short term/ Understand the difference between direct costs and indirect costs
  • Topic 6: Calculate revenue and cost estimates using quantitative analyses/ Calculate and interpret overall flexed budget variances
  • Topic 7: Understand relevant cash flows and non-financial factors and how it affects make or buy decisions/ Understand the strategic implications of short-term decision-making
  • Topic 8: Understand how budgets can help energize and motive individuals and teams/ Recognise how management accountants help make tactical business decisions
  • Topic 9: Calculate subdivision of total usage/efficiency variances into mix and yield variances/ Use material, labour, variable overhead, fixed overhead and sales variances
  • Topic 10: Establish manufacturing standards for material, labour, variable overhead and fixed overhead/ Understand the difference between financial accounting and cost accounting

Free CIMA CIMAPRO19-P01-1 Exam Actual Questions

The questions for CIMAPRO19-P01-1 were last updated On Sep. 19, 2023

Question #1

CDF is a manufacturing company within the DF group. CDF has been asked to provide a quotation for a contract for a new customer and is aware that this could lead to further orders. As a consequence, CDF will produce the quotation by using relevant costing instead of its usual method of full cost plus pricing. The following information has been obtained in relation to the contract: Material D 40 tons of material D would be required. This material is in regular use by CDF and has a current purchase price of $38 per ton. Currently, there are 5 tons in inventory which cost $35 per ton. The resale value of the material in inventory is $24 per ton.

Components 4,000 components would be required. These could be bought externally for $15 each or alternatively they could be supplied by RDF, another company within the DF manufacturing group. The variable cost of the component if it were manufactured by RDF would be $8 per unit, and RDF adds 30% to its variable cost to contribute to its fixed costs plus a further 20% to this total cost in order to set its internal transfer price. RDF has sufficient capacity to produce 2,500 components without affecting its ability to satisfy its own external customers. However, in order to make the extra 1,500 components required by CDF, RDF would have to forgo other external sales of $50,000 which have a contribution to sales ratio of 40%.

Labour hours 850 direct labour hours would be required. All direct labour within CDF is paid on an hourly basis with no guaranteed wage agreement. The grade of labour required is currently paid $10 per hour, but department W is already working at 100% capacity. Possible ways of overcoming this problem are: * Use workers in department Z, because it has sufficient capacity. These workers are paid $15 per hour. * Arrange for sub-contract workers to undertake some of the other work that is performed in department W. The sub-contract workers would cost $13 per hour.

Specialist machine The contract would require a specialist machine. The machine could be hired for $15,000 or it could be bought for $50,000. At the end of the contract if the machine were bought, it could be sold for $30,000. Alternatively, it could be modified at a cost of $5,000 and then used on other contracts instead of buying another essential machine that would cost $45,000. The operating costs of the machine are payable by CDF whether it hires or buys the machine. These costs would total $12,000 in respect of the new contract.

Supervisor The contract would be supervised by an existing manager who is paid an annual salary of $50,000 and has sufficient capacity to carry out this supervision. The manager would receive a bonus of $500 for the additional work.

Development time 15 hours of development time at a cost of $3,000 have already been worked in determining the resource requirements of the contract.

Fixed overhead absorption rate CDF uses an absorption rate of $20 per direct labour hour to recover its general fixed overhead costs. This includes $5 per hour for depreciation.

Calculate the relevant cost of the contract to CDF. You must present your answer in a schedule that clearly shows the relevant cost value for each of the items identified above. You should also explain each relevant cost value you have included in your schedule and why any values you have excluded are not relevant.

Ignore taxation and the time value of money.

Select all the true statements.

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Correct Answer: A, D, E

References:


Question #2

Select the benefits to a company of using sensitivity analysis in investment appraisal.

(Select all the true statements.)

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Correct Answer: A, B, D

References:


Question #3

A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.

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Correct Answer: A

References:


Question #4

Select the benefits to a company of using sensitivity analysis in investment appraisal.

(Select all the true statements.)

Reveal Solution Hide Solution
Correct Answer: A, B, D

References:


Question #5

A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.

Reveal Solution Hide Solution
Correct Answer: A

References:



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