CIMAPRO19-P02-1 Online Practice Questions and Answers

Which TWO of the following actions taken during the budgetary planning process will result in the creation of budgetary slack?

A. Overestimating costs

B. Underestimating costs

C. Underestimating revenues

D. Overestimating revenues

E. Overestimating profit

A company has a cost of capital of 12% and a maximum of $20 million to invest. It has identified three possible investment projects, none of which is divisible, as follows.

Which project(s) should the company invest in?

A. Project 1 only

B. Project 2 only

C. Project 3 only

D. Projects 1 and 3 only

A product requires one each of three different components. Faulty components are identified only at the end of the manufacturing process. The following average fault rates have been identified: Component A - 1 in 100 Component B - 1 in 20 Component C - 1 in 10 The probability that a unit of finished product contains no faulty components is:

A. 0.84645

B. 0.00005

C. 0.99231

D. 0.97692

Which of the following is a valid objective of a transfer pricing system?

A. To achieve divisional autonomy

B. To maintain head office control

C. To establish centralised decision making

D. To develop a top-down culture

In an organization's transfer pricing system the selling division and the purchasing division each record a different price for the same transaction. This is known as a:

A. Dual pricing system.

B. Two part tariff system.

C. Full cost pricing system.

D. Marginal cost plus pricing system.

A risk averse decision maker will:

A. accept a risk if it is accompanied by a satisfactory potential return.

B. avoid all risks.

C. accept a risk if the expected value of the potential outcomes is positive.

D. always select the course of action that has the lowest risk.

A manufacturing company sells a large range of products. Forecast data for the next period for one of these products are as follows.

After manufacture, each complete batch must be stored in a local warehouse until it is subsequently sent to the company's main national warehouse. The company does not own a local warehouse. A local warehouse with a maximum

capacity of 500 units could be rented for $2,450 for the next period.

Alternatively a larger local warehouse with a maximum capacity of 700 units could be rented for $3,430 for the next period.The company will not begin the manufacture of any new batch until the previous batch has been sent to its main

national warehouse. What would be the change in the total cost of set up and storage if the batch size was changed to 600 units?

Give your answer to the nearest whole $.

A. $3770

Which of the following statements is NOT correct?

Transfer prices between responsibility centers should be set at a level that:

A. provides an artificial selling price that enables the transferring division to earn a return for its efforts and the receiving division to incur a cost for benefits received.

B. enables profit centre performance to be measured 'commercially'.

C. encourages a balance of goal congruence, managerial effort and centralized management.

D. encourages profit centre managers to agree on the amount of goods and services to be transferred at a level that is consistent with organizational aims.

Company B, a video games developer, wants to use data to track the amount of traffic it receives on its social media pages. It specifically wants to find out the demographic it is most popular with on this platform, and how it can branch out to different demographics through further advertising. How best could the company use big data to expand its demographic reach? Select ALL that apply.

A. Use other data detailing regional sales to target areas where the demographics in question form a large part of the population.

B. Resolve to focus advertising on the demographics with which the company is popular so as to save money.

C. Implement an aggressive marketing campaign targeted at the demographics in question.

D. Use the data to create new products that would appeal more to the demographics with which the company is not popular.

E. Create a blog appealing to the demographics in question with news about the company.

SkillWeave Industries are focused on managing the risk of selling their cars to the region due to economic turmoil, and have now begun using funds from sales in the region to fund supplier purchases from that region to reduce the risk from

the volatile currency. However, SkillWeave want to go a step further and make the risk even less sizeable.

Which of the following is a method by which SkillWeave can operate in the market and transfer the risk of exchange rate exposure to another party?

A. Invoice international sales in domestic currency

B. Temporarily stop operating in that target market

C. Arrange a forward foreign exchange rate contract agreeing to buy a given amount of the foreign currency in 3 months time for a fixed exchange rate based on current rates

D. Put a sale on all vehicles stationed in the region to clear stock quickly