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CIMA P1 - Management Accounting Question Tutorial Sample Questions:

1. The term 'budgetary slack' refers to the:

A) Lead time between the preparation of the functional budgets and the approval of the master budget by senior management
B) Difference between the budgeted output and the actual output
C) Difference between budgeted capacity utilization and full capacity
D) Intentional over estimation of costs and/or under estimation of revenue in a budget

2. EF manufactures and sells three products, X, Y and Z. The following production overhead costs are budgeted for next year:

Required:
Calculate the total budgeted production overhead cost for each product using activity based budgeting.

A) The total budgeted production overhead cost was $ 2 195 000
B) The total budgeted production overhead cost was $ 1 305 000
C) The total budgeted production overhead cost was $ 1 188 000
D) The total budgeted production overhead cost was $ 1 285 000
E) The total budgeted production overhead cost was $ 1 258 000

3. 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 activity-based costing.

A) Profit Per Machine using ABC: Small $196, Medium $1191, Large $1046
B) Profit Per Machine using ABC: Small $166, Medium $1241, Large $746
C) Profit Per Machine using ABC: Small $1076, Medium $1041, Large $1946
D) Profit Per Machine using ABC: Small $176, Medium $1341, Large $946
E) Profit Per Machine using ABC: Small $186, Medium $1441, Large $2046
F) Profit Per Machine using ABC: Small $376, Medium $2341, Large $986

4. A decision maker that makes decisions using the minimax regret criterion would be classified as:

A) Risk neutral
B) Risk spreading
C) Risk averse
D) Risk seeking

5. A master budget comprises the...

A) budgeted income statement and budgeted capital expenditure only
B) budgeted income statement and budgeted balance sheet only.
C) budgeted income statement, budgeted balance sheet and budgeted cash flow statement only.
D) budgeted income statement and budgeted cash flow statement only.

Solutions: