New Release P1 CIMA Operational Questions

Page: 3 / 9

Question 12

The standard production cost of making a product is as follows:

What is the fixed production overhead capacity variance?

Options:

$9,000F

$6,000F

$3,000F

$6,000A

Question 13

Explain why sensitivity analysis is useful when dealing with uncertainty in project

appraisal.

Select all the true statements.

Options:

Sensitivity analysis enables a company to determine the effect of changes to fixed costs on the planned outcome

Sensitivity analysis enables a company to determine the effect of changes to variables on the planned outcome

In project appraisal, an analysis can be made if all the key variables to ascertain by how much variable would need to change before the net present value (NPV) reaches zero i.e. the indifference point.

In project appraisal, in analysis can be made of all the key variables to ascertain by how much each variable would need to change before the net present value (NPV) reaches 100% i.e. the maximum point.

Question 14

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 $.

Options:

Question 15

A bakery manager is deciding how many batches of birthday cakes to decorate each day.

Demand for the birthday cakes varies from 12 to 15 batches per day. Each batch decorated and sold earns a contribution of $40 but each batch unsold leads to loss of contribution of $15.

The payoff table below shows the total $ contribution from each of the possibilities: