CIMA Advanced Management Accounting - P2 Exam Practice Test
During a Board meeting at a manufacturing company, concerns regarding the analysing of the current inventory management systems and processes are brought up.
Attendees of the meeting have made several claims and suggestions but the managing director admits that he does not know who to believe and so has asked you to let him know which statements of the following statements are TRUE?
Select ALL that apply.
Attendees of the meeting have made several claims and suggestions but the managing director admits that he does not know who to believe and so has asked you to let him know which statements of the following statements are TRUE?
Select ALL that apply.
Correct Answer: C,D
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The following data are available for four projects with unequal lives.
A 10% discount rate is appropriate for all four projects.
Which project has the highest equivalent annual benefit?
A 10% discount rate is appropriate for all four projects.
Which project has the highest equivalent annual benefit?
Correct Answer: D
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A division of a company transfers all its output to other divisions in the same company.
For this division, which of the following measures is NOT affected by the transfer price that the division uses?
For this division, which of the following measures is NOT affected by the transfer price that the division uses?
Correct Answer: B
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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.
The cost of capital is 14%.
Calculate the residual income for division A.
Correct Answer: A
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The following data relate to an investment opportunity.
The percentage reduction in the annual revenue that could occur before the project is no longer financially viable is:
The percentage reduction in the annual revenue that could occur before the project is no longer financially viable is:
Correct Answer: A
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Which THREE of the following conditions are required for a sustained learning curve to apply?
Correct Answer: A,B,E
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A company uses activity based costing. The total production overheads of $16,050 for the next period are for set up costs of $6,450 and quality inspection costs of $9,600. The company produces two products, Product F and Product G. Details relating to the next period are as follows:
A new customer has offered to purchase Product F for $28.00 per unit. The only costs incurred would be those shown above.
What is the profit per unit of Product F that would be gained by accepting the offer? Give your answer to two decimal places.
A new customer has offered to purchase Product F for $28.00 per unit. The only costs incurred would be those shown above.
What is the profit per unit of Product F that would be gained by accepting the offer? Give your answer to two decimal places.
Correct Answer:
$3.90
A project requires an initial investment of $50,000. It will generate positive cash flows for two years as follows.
The cost of capital is 12% per year.
What is the equivalent annual net present value of the project?
Give your answer to the nearest $10.
The cost of capital is 12% per year.
What is the equivalent annual net present value of the project?
Give your answer to the nearest $10.
Correct Answer:
$8190, $8191
A company has three divisions, each of which is an investment centre. The divisional managers' performance is assessed using return on investment (ROI). A higher ROI will result in a higher bonus for the divisional manager.
The company's cost of capital is 15%.
For the forthcoming year each divisional manager has one investment opportunity available as follows:
The manager(s) of which division(s) will proceed with their respective investment opportunity?
The company's cost of capital is 15%.
For the forthcoming year each divisional manager has one investment opportunity available as follows:
The manager(s) of which division(s) will proceed with their respective investment opportunity?
Correct Answer: B
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Which of the following factors would prevent a learning curve being observed for a task?
Correct Answer: D
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One of a company's products is sold to three customers: A, B and C. These customers do not buy anything else from the company. The product costs $20 per unit to manufacture and is sold to the customers for $50 per unit.
The following table shows data for sales and selling costs for the latest period.
Delivery costs of $32,000 and general overheads of $60,000 were incurred during the period.
Deliveries to customers A and B were made by a courier in batches of 100 units; the courier charged
$300 for each batch delivered to customer A and $400 for each batch delivered to customer B.
Deliveries to customer C were made by mail in batches of 10 units at a cost of $60 per batch.
Which of the following statements is correct?
The following table shows data for sales and selling costs for the latest period.
Delivery costs of $32,000 and general overheads of $60,000 were incurred during the period.
Deliveries to customers A and B were made by a courier in batches of 100 units; the courier charged
$300 for each batch delivered to customer A and $400 for each batch delivered to customer B.
Deliveries to customer C were made by mail in batches of 10 units at a cost of $60 per batch.
Which of the following statements is correct?
Correct Answer: C
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