CIMAPRA19-P02-1-ENG Practice Online

Question 1

Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?

A : ABC is easier to administer than an absorption costing system

B : ABC will be less detailed than an absorption costing system

C : ABC will provide more accurate overhead allocation than absorption costing

D : ABC will cost less to administer than an absorption costing system

Answer: C

Question 2

Division A is an investment centre with assets of $7.3 million. The following is an extract from the annual budget for division A:

The cost of capital is 14%.
Calculate the residual income for division A.

A : $808,000

B : $1,727,800

C : $358,000

D : $2,008,000

Answer: A

Question 3

Which TWO of the following expressions are correct?

A : 1 + money rate = (1 + real rate) x (1 + inflation rate)

B : 1 + real rate = (1 + money rate) / (1 + inflation rate)

C : 1 + real rate = (1 + inflation rate) / (1 + money rate)

D : 1 + money rate = (1 + inflation rate) / (1 + real rate)

E : 1 + inflation rate = (1 + money rate) x (1 + real rate)

Answer: A,B

Question 4

Which of the following statements is correct in respect of the key feature of dual pricing?

A : The selling price recorded by the selling division is higher than the cost recorded by the receiving division.

B : Internal customers are offered trade discounts depending on the number of units they purchase.

C : Internal transfers are priced at marginal cost and a lump sum payment is made subsequently to contribute to fixed costs.

D : Internal customers are charged a lower price than external customers to reflect savings in distribution costs.

Answer: A

Question 5

How does beyond budgeting NOT help to resolve the weaknesses of traditional budgeting? Select ALL that apply.

A : Managers are set goals and targets to achieve rather than abiding by strict budgets and variances.

B : Managers have a much larger scope of business goals that when achieved, will increase shareholder value.

C : Managers are given more freedom and control over their business units under Beyond budgeting.

D : Managers focus on keeping costs low in the short term to ensure maximised profits.

E : Managers are given incentives to meet or undercut budgets.

F : Managers are encouraged to designate responsibility to others to lessen their workload so they may concentrate on important tasks.

Answer: A,D

Name:	P2 Advanced Management Accounting (Online)
Exam Code:	CIMAPRA19-P02-1-ENG
Certification:	CIMA Professional Qualification
Vendor:	CIMA
Total Questions:	205
Last Updated:	May 13, 2024

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