Free P1 Management Accounting Exam CIMAPRO19-P01-1 Exam Practice Test

Christian the management accountant at a car manufacturer has been given a list of costs that have been incurred due to accidents and errors either occurring or being prevented.Which of the following are examples of non-conformance costs? Select ALL that apply.

• Cost of scrap
• Loss of goodwill
• Cost of repairs to products
• Inspection costs
• Cost of repairs to equipment

Explain how probability analysis could be used to assess the risk of the evaluated projects.Select all the true statements.

• The company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.
• The net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.
• The probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole
• The NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated. If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

When classifying quality costs, which of the following is NOT likely to be an appraisal cost?

• Cost of product liability insurance
• Cost of supervision of testing and inspection activities
• Performance testing costs
• Cost of maintaining inspection equipment

Which THREE of the following are advantages of activity-based costing (ABC), in a multi-product environment, when compared with traditional absorption costing?

• ABC provides a better understanding of overhead costs.
• ABC provides more accurate product costs in a complex business environment.
• ABC is cheaper to operate.
• ABC results in increased unit profit for each product.
• ABC leads to better product pricing decisions.

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.

• Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
• 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.
• Through the tracing of costs to product in this way ABC establishes less accurate costs for the product or service.
• The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.
• Operational analysis will provide information to management on how costs can be incurred and managed.

A company operates a standard costing system.The company combines two raw materials in a process in order to produce a finished product. During month 6 the direct material mix variance was favourable and the direct material yield variance was adverse.Which of the following statements would explain both of the variances?

• There was more wastage in the process than standard and a greater proportion of the cheaper of the two materials was input than standard.
• Both of the materials were purchased at a lower price than standard and the lower quality increased wastage.
• Higher skilled labour resulted in less wastage from the process than standard and a lower proportion of the more expensive of the two materials was input than standard.
• The actual wastage from the process was equal to standard and a greater proportion of the cheaper of the two materials was input than standard.

A master budget comprises which of the following?

• The budgeted income statement and the budgeted cash flow statement only.
• The budgeted income statement and the budgeted statement of financial position only.
• The budgeted income statement and budgeted capital expenditure only.
• The budgeted income statement, the budgeted statement of financial position and the budgeted cash flow statement only.

A company uses limiting factor analysis to identify its optimal production plan. All of the company's products are manufactured in house and cannot be bought in.What objective is assumed with limited factor analysis?

• Cost minimisation
• Ensuring customer demand is met
• Profit maximisation
• Revenue maximisation

The simplex method has been used to determine the optimum output of products P, Q, R and S with constraints on resources J, K and L.In the final simplex tableau, the figure in the product R row and the column for slack variable K is 80.Which of the following statements is correct?

• For each additional unit of resource K available, the contribution would increase by $80.
• For each additional unit of resource K available, the output of product R would increase by 80 units.
• For each additional unit of product R produced, 80 additional units of resource K would be required.
• In the optimum solution, 80 units of resource K are unused.

Which of the following statements regarding marginal and absorption costing are true in the context of pricing decisions?Select ALL that apply.

• Marginal costing is appropriate for long-term pricing decisions.
• Marginal costing is appropriate for short-term pricing decisions.
• Absorption costing when used for pricing decisions includes the 'total-cost' of the product.
• Marginal costing ensures the recovery of all costs incurred in selling prices.
• Marginal costing is more appropriate for use in one-off pricing decisions.
• Absorption costing is more appropriate for use in one-off pricing decisions.