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CIMA Operational P1 Exam Dumps

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Question 16

‘Public sector organizations are often judged by their economy, efficiency and effectiveness. Consequently, they should use an approach to budgeting other than incremental budgeting.’

Required:

Explain ONE advantage and TWO disadvantages of public sector organizations using incremental budgeting.

Select all true statements.

Options:

A.

An incremental; approach is not as easy and fast to implement than other forms of budgeting approaches e.g. zero based budgeting.

B.

Public sector organizations tend to be fairly complex and in many cases outputs cannot be measured in monetary terms therefore the link between inputs and outputs is difficult to establish. An incremental approach can therefore provide a cost effective approach to budgeting.

C.

Under an incremental approach to budgeting, existing operations and the current budgeted allowance for these existing activities are taken as the base level for preparing the budget.

D.

The main advantage of incremental budgeting is that the cost of past activities becomes fixed and any inefficiencies or wastage is perpetuated.

E.

The incremental approach means that budget holders in public sector organizations will be encouraged to use up this year’s budget will be as high as possible.

F.

The incremental approach encourages managers in public sector organizations to look at the efficiency and effectiveness of activities undertaken.

Question 17

A company makes and sells three products A, B and C. The products are sold in the ratio of A:B:C = 1:1:4.

Monthly fixed costs are $150,000. Product details are shown below:

What sales value of product C is required to achieve a target profit of $72,000 next month?

Give your answer to the nearest whole $ (in '000s).

Options:

Question 18

An ice cream manufacturer experiences regular fluctuations in sales.

Which component in a time series do these fluctuations represent?

Options:

A.

Basic trend

B.

Cyclical variation

C.

Random fluctuation

D.

Seasonal variation

Question 19

In a manufacturing company, breakeven occurs at which TWO of the following?

Options:

A.

When contribution is equal to zero

B.

When profit is equal to zero

C.

When revenue is equal to contribution

D.

When revenue is equal to fixed costs

E.

When fixed costs are equal to contribution

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Exam Code: P1
Exam Name: Management Accounting
Last Update: Jun 19, 2024
Questions: 260
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