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CIMA P1 Exam Sample Questions


Question # 1

The cost card for one unit of Product G is as follows:


The opening and closing inventories of Product G for month 5 are budgeted to be 10 units and 60 units respectively. Profit for month 5 using absorption costing is budgeted to be $15,000. What is the budgeted profit for month 5 using throughput costing?
A. $9,800
B. $12,800
C. $17,200
D. $20,200


A. $9,800




Question # 2

Assume that you have made profit calculations based on standard profit calculation methods and activity based costing methods.

In which ways will this information be beneficial to the management team?

Select all the true statements.
A. Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
B. The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
C. Through the tracing of costs to product in this way ABC establishes less accurate costs for the product or service.
D. The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.
E. Operational analysis will provide information to management on how costs can be incurred and managed.


A. Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
B. The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
D. The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.




Question # 3

The following details are available for a company's production overhead costs at different levels of activity:

The company uses the high-low method to calculate its budgeted production overhead costs.
What is the budget for production overhead costs at an activity level of 8,500 units?
Give your answer as a whole number.
Answer: $25950




Question # 4



Select the benefits to a company of using sensitivity analysis in investment appraisal. (Select all the true statements.)
A. Sensitivity analysis enables a company to determine the effect of changes to variables on the planned outcome.
B. Sensitivity analysis enables a company to assess the risk associated with a project.
C. Sensitivity analysis enables identification of fixed costs that are of special significance.
D. Sensitivity analysis enables risk management strategies to be put in place to focus on those variables of special significance.


A. Sensitivity analysis enables a company to determine the effect of changes to variables on the planned outcome.
B. Sensitivity analysis enables a company to assess the risk associated with a project.
D. Sensitivity analysis enables risk management strategies to be put in place to focus on those variables of special significance.




Question # 5

RT produces two products from different quantities of the same resources using a just-intime (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
Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.
The contribution per unit for R and T will be...?
A. R = $47 per unit. T = $61 per unit
B. R = $51 per unit. T = $61 per unit
C. R = $47 per unit. T = $65 per unit
D. R = $45 per unit. T = $66 per unit


A. R = $47 per unit. T = $61 per unit



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