Title: Cima P2 Exam Questions
1CIMA P2 - Advanced Management Accounting exam in
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ANSWERS CIMA P2 - Advanced Management
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2- Question No 1
- Which TWO of the following are examples of
management information made possible by the
availability of big data? - Customer profitability analysis to identify key
strategic customers - Customer information harvested from social media
to target products - Production cycle time analysis to improve
production efficiency - Real-time inventory management information shared
with producers to influence their production
plans - A five-year history of a company's aged debtor
list to assess the long-run effectiveness of
credit control - Answer B, D Question No 2
- Company D is about to launch an innovative and
unique product which may face direct competition
within three years. The company needs to achieve
a rapid payback on all investments because it
has limited access to external finance. - Which is the most appropriate pricing strategy
for company D's new product, and for what
reason? - Market skimming because it exploits areas of the
market which are sensitive to price. - Penetration pricing because it can be used to
rapidly build sales volume in mature markets. - Market skimming because it enables high prices to
be charged to buyers who want the product as
soon as possible. - Penetration pricing because it can be used to
rapidly build sales volume in high growth
markets. - Answer C Question No 3
- Performance measures that monitor the extent to
which a not-for-profit organization's objectives
have been achieved are measures of - Economy
- Efficiency
- Effectiveness
3- Answer C Question No 4
- An organization employs a dual pricing basis for
the transfer of components between its
divisions. This means that - Each division has a separate transfer price for a
single transaction. - The transfer price is based on marginal cost with
a separate charge to allow for fixed costs. - The transfer price is based on the cost of the
product plus a mark-up for profit. - The transfer price is based on the market price
less a discount. - Answer A Question No 5
- For a complex and repetitive task, which of the
following correctly describes a steep learning
curve? - Repeated training may be required but this will
not necessarily result in a reduction in the
time taken to complete the task. - After the initial learning period there will be a
rapid reduction in the time taken to complete
the task. - There will be a long period before there is a
reduction in the time taken to complete the
task. - After the initial learning period there will be a
slow reduction in the time taken to complete the
task. - Answer B Question No 6
- A manufacturing company has recently introduced a
Total Quality Management (TQM) system. The
company has invested heavily in the education and
training of its staff, in addition to
implementing new product design engineering.
There is a plan to sample units from each batch
of products manufactured to test for errors,
although this has not yet been implemented due
to budget constraints. - The company is experiencing high levels of
customer complaints, with many faulty units being
returned by the customer for refund or
replacement. Sales revenue has fallen recently,
mainly due to negative press coverage linked to
dissatisfied customers. - Select the statement MOST likely to apply.
4- The high level of external failure costs is the
result of a lack of expenditure on prevention
costs. - The high level of internal failure costs is the
result of a lack of expenditure on appraisal
costs. - The high level of external failure costs is the
result of a lack of expenditure on appraisal
costs. - The high level of internal failure costs is the
result of a lack of expenditure on prevention - costs.
- Answer C Question No 7
- A company is considering four mutually exclusive
projects. There are three possible future demand
conditions but the company has no idea of the
probability of each of these demand conditions
occurring. The forecast net present values (NPVs)
of each of the four projects, under each of the
three possible future demand conditions, are as
follows. - Which investment would be selected using the
maximin criterion?
- Investment A
- Investment B
- Investment C
- Investment D
- Answer C
5Question No 8 The following data are available
for an investment centre for the latest period.
Where appropriate the data have been adjusted to
reflect economic values. What cost of capital has
been used to calculate the EVA?
Give your answer to the nearest
percentage. Answer 9 Question No 9 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?
6- Division 1 and Division 3
- Division 2 and Division 3
- Division 3 only
- Division 1 only
- Answer B Question No 10
- A company makes three products, E, F and G. Total
overheads for the year are expected to be - 1.2 million, with the following split between
cost pools - Cost driver information has been estimated as
follows
The company plans to make 10,000 units of product
E in the year, with an expected direct cost of
0.60 per unit. This annual production of product
E is expected to require 20 quality inspections,
28 purchase requisitions, and 400 kilogrammes of
materials. What is the overhead cost per unit of
product E? A. 0.10 B. 0.70 C. 3.57 D.
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