CIMA Management Accounting - P1 Exam Questions

QUESTION NO: 1
A company is launching a new product with a selling price of $20.
Demand and variable cost are both uncertain and possible demand levels and variable costs are given below:

Outcomes for demand and variable cost are independent.
What is the expected contribution from the product?
Give your answer as a whole number.

QUESTION NO: 2
RT produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below:

Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified: Direct labour hours 7,500 hours Material A 8,500 kgs Material B 3,000 litres Machine hours 7,500 hours (Refer to previous 2 questions.) You have now presented your optimum production plan to the purchasing and production managers of RT. During your presentation it became clear that the predicted resource restrictions were rather optimistic. In fact, the managers agreed that the availability of all of the resources could be as much as
10% lower than their original predictions.
Assuming that RT completes the order with the commercial customer, and using linear programming, show the optimum production plan for RT for June 2010 on the basis that the availability of all resources is 10% lower than originally predicted.

QUESTION NO: 3
A project has an expected value of $165,250.
The estimates of cash inflows and their probabilities are:

What is the missing cash inflow?
Give your answer as a whole number.

QUESTION NO: 4
Since there is no likelihood of them receiving a pay rise in the foreseeable future, your colleagues are considering leaving their current employment and starting their own business.
When preparing the data to evaluate their decision, their current salaries would be:

QUESTION NO: 5
Explain why sensitivity analysis is useful when dealing with uncertainty in project appraisal.
Select all the true statements.

QUESTION NO: 6
TDM edits, prints and publishes three magazines, Mag A, Mag B and Mag C. The company operates an activity-based costing system.
The following information has been obtained.

What is the overhead cost attributable for each Mag A publication?
Give your answer to the nearest whole cent.

QUESTION NO: 7
Which THREE of the following would be contained within a master budget?

QUESTION NO: 8
XY sells two products for which the budgeted contribution to sales ratios are as follows:

Total budgeted sales revenue is $920,000, of which $368,000 will be generated by product X. The products must be sold in a constant mix.
Budgeted fixed costs are $105,000.
What is the budgeted breakeven sales revenue?
Give your answer to the nearest $.

QUESTION NO: 9
A company manufactures a single product. The following budgeted data applies to month 6:

What was the budgeted fixed production overhead for month 6?
Give your answer to the nearest whole $ (in '000s).

QUESTION NO: 10
A company uses an activity based costing system. The company manufactures three products, details of which are given below:

QUESTION NO: 11
A company operates a customer complaints department.
How will the cost of the customer complaints department be classified in a system focussed on quality related costs?