Free CIMA CIMAPRO15-P01-X1-ENG Exam Dumps Questions & Answers

A medium-sized manufacturing company, which operates in the electronics industry, has employed a firm of consultants to carry out a review of the company's planning and control systems. The company presently uses a traditional incremental budgeting system and the inventory management system is based on economic order quantities (EOQ) and reorder levels. The company's normal production patterns have changed significantly over the previous few years as a result of increasing demand for customized products. This has resulted in shorter production runs and difficulties with production and resource planning. The consultants have recommended the implementation of activity based budgeting and a manufacturing resource planning system to improve planning and resource management.
What are the benefits for the company that could occur following the introduction of an activity based budgeting system?
Select ALL the correct answers.

• A.  Activity based techniques including activity based budgeting focus on the outputs of a process rather than the input to the process. This approach provides a clear framework for understanding the link between costs and the level of activity. It allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.
• B.  Under an activity based budgeting system, resource allocation is linked to the strategic plan and is prepared after considering alternative strategies. This approach ensures that new activities that are required to meet the company's strategic objectives are included in the budget.
• C.  Under a traditional incremental budgeting system the focus is on existing resources and operations.
  Adjustments are then made for changes in activity and price which results in past inefficiencies being perpetuated. Under an activity based budgeting system, only resources that are needed to perform activities required to meet the budgeted production and sales volumes are included.
• D.  The approach under an Activity based Budgeting System is to make arbitrary cuts in order to meet overall financial targets.
• E.  Activity Based Budgeting Systems present costs under functional headings i.e. the emphasis is on the nature of the cost. The weakness if this approach is that it gives little indication of the link between the level of activity and the cost incurred.

TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers' specific requirements. The standard cost per unit of its most popular cake is as follows:

The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and $20 per kg respectively.
TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no inventory during the period.
Prepare a statement which reconciles the flexed budget material cost and the actual material cost. Your statement should include the material price planning variances, and the operational variances including material price, material mix and material yield.
What was the material price planning variance for ingredient A?

• A.  The Material price planning variance - Ingredient A was $75 000 F
• B.  The Material price planning variance - Ingredient A was $72 000 F
• C.  The Material price planning variance - Ingredient A was $71 000 F
• D.  The Material price planning variance - Ingredient A was $73 000 F

GH manufactures a product using skilled labour and high quality materials. The company operates a standard costing system and a just-in-time (JIT) purchasing and production system. The standard selling price and variable costs for one unit of the product are as follows:

Prepare a statement that reconciles the budgeted contribution with the actual contribution for October. Your statement should show the variances in as much detail as possible.
What was the actual contribution for October?

• A.  $ 1,324,000
• B.  $ 1,494,000
• C.  $ 1,414,000
• D.  $ 1,594,000
• E.  $ 1,198,000

A company's management is considering investing in a project with an expected life of 4 years. It has a positive net present value of $180,000 when cash flows are discounted at 8% per annum. The project's cash flows include a cash outflow of $100,000 for each of the four years. No tax is payable on projects of this type.
The percentage increase in the annual cash outflow that would cause the company's management to reject the project from a financial perspective is, to the nearest 0.1%:

• A.  45.0%
• B.  55,6%
• C.  184.0%
• D.  54.3%

LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled 120,960 kilometers. Total costs were $194,400.
LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled.
LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates:
* All costs will be 3% higher than the previous year due to inflation
* Efficiency will remain unchanged
* A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled.
Calculate the following costs to be included in the forthcoming year's budget:
(i) the total variable costs related to the number of parcels delivered.
(ii) the total variable costs related to the distance travelled.

• A.  Parcel related cost for next year = $112,308; Distance related costs for next year = $79,590
• B.  Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699
• C.  Parcel related cost for next year = $105,306; Distance related costs for next year = $30,590
• D.  Parcel related cost for next year = $109,118; Distance related costs for next year = $89,699
• E.  Parcel related cost for next year = $115,306; Distance related costs for next year = $31,590