CIMA P1 - Management Accounting Question Tutorial Sample Questions:

1. 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.
What was the material yield variance?

A) The material yield variance was $175 000 A
B) The material yield variance was $155 500 A
C) The material yield variance was $175 500 A
D) The material yield variance was $155 000 A
E) The material yield variance was $98 500 A

2. A company produces a product that requires two materials, Material A and Material B. Details of the material quantities and costs for August are given in the table below.

Budgeted and actual output of the product for August was 12,000 units.
The material yield variance for August is:

A) $1,840 A
B) $1,340 A
C) $1,340 F
D) $1,590 A
E) $1,740 A

3. A company produces trays of pre-prepared meals that are sold to restaurants and food retailers. Three varieties of meals are sold: economy, premium and deluxe.


Calculate, for the original budget, the budgeted fixed overhead costs, the budgeted variable overhead cost per tray and the budgeted total overheads costs.

A) The variable cost per tray = $0.85; The fixed cost = $ 530 000
B) The variable cost per tray = $0.75; The fixed cost = $ 490 000
C) The variable cost per tray = $0.45; The fixed cost = $ 320 000
D) The variable cost per tray = $0.65; The fixed cost = $ 550 000

4. RT produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below:

Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified:
Direct labour hours 7,500 hours
Material A 8,500 kgs
Material B 3,000 litres
Machine hours 7,500 hours
Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.
The optimum production plan will be:

A) Contract: R = 250, T = 360 and Market: R = 500 T = 700
B) Contract: R = 250, T = 360 and Market: R = 600 T = 710
C) Contract: R = 250, T = 360 and Market: R = 650 T = 710
D) Contract: R = 250, T = 360 and Market: R = 660 T = 720
E) Contract: R = 250, T = 360 and Market: R = 500 T = 710

5. 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.

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

Solutions: