Free CIMA P1 Practice Exam with Questions & Answers | Set: 7

A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures the company offers pre operation and post operation in-patient care, in a fully equipped hospital, for those patients who will be undergoing the surgical procedures.

Surgeons are paid a fixed fee for each surgical procedure they perform and an additional amount for any follow-up consultations. Post procedure follow-up consultations are only undertaken if there are any complications in relation to the surgical procedure. There is no additional fee charged to patients for any follow up consultations. All other staff are paid annual salaries.

The company’s existing costing system uses a single overhead rate, based on revenue, to charge the costs of support activities to the procedures. Concern has been raised about the inaccuracy of procedure costs and the company’s accountant has initiated a project to implement an activity-based costing (ABC) system.

The project team has collected the following data on each of the procedures. 

Calculate the profit per procedure for each of the three procedures, using the current basis for charging the costs of support activities to procedures.

What was the profit for the knee procedure?

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine.

The company’s existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department’s support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The company’s accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department:

Calculate the annual profit per machine for each of the three sizes of machine, using the current basis for charging the costs of support activities to machines.

A manufacturing company sells 5 different products.

The company holds no inventories and has a high level of fixed cost.

Place against the statements below the comment "needed" or "not needed" to select ALL of the information required to calcuate the total number of units to break-even.

Information about a company's two products is as follows:

The products are currently sold in equal quantities.

Monthly fixed costs are $360,000.

What is the monthly breakeven sales revenue assuming a sales quantity mix of 50/50?

Give your answer to the nearest $.

The following statements relate to the advantage(s) that linear regression has over the high-low method in the analysis of cost behaviour:

Which statement(s) is/are true?

Which of the following distinguishes risk from uncertainty?

Company XPP sells a perishable product that has to be produced each day in anticipation of the following day's sales.

Any product remaining unsold at the end of the day following production is wasted.

The payoff table below shows the daily profit or loss depending on the amounts produced and sold.

A new ordering system is being discussed with customers.

The new system would require customers to order in advance to enable production each day of the following day's sales quantity, thus eliminating waste.

What is the expected increase in average daily profit if the new system is accepted by customers?

Give your answer as a whole number.

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.

Which THREE of the following are never relevant costs for short-term decision making?

A company is considering two mutually exclusive projects.

The returns on each project, at both high and low demand, have been multipled by the estimated probabilities to calculate the expected values shown in the table below:

Market research would be able to determine with certainty what the level of demand will be.

What is the maximum amount that the company should pay for this certainty?