CIMA P2 Exam Dumps

An airline company has operated passenger flights with low ticket prices to various airports from a busy airport for several years. It now faces increased competition on a number of its routes and has decided to use the balanced scorecard to monitor its performance.Which of the following statements are correct? Select ALL that apply.  

The directors of a company wish to evaluate two mutually exclusive capital investment projects. Both projects have conventional cash flows: an initial outflow followed by a series of annual cash inflows.The directors are aware of the following three investment appraisal methods: internal rate of return (IRR), net present value (NPV) and accounting rate of return (ARR). The directors have asked for your advice about which method should be used to evaluate these two projects. Which of the following is valid advice to give to the directors?  

A company is investing $150,000 in a project which will yield an annual cash inflow of $40,000 for eight years. The company's cost of capital is 10%.To the nearest $100, what is the project's equivalent annual net present value?  

Which of the following statements are correct with regard to responsibility centres?Select ALL that apply.  

A group consists of two divisions, Alpha and Beta, both of which are profit centers. Alpha sells a product to the external market and also sells it as an intermediate product to Beta.Beta then processes further before selling the final product to the external market. The current group transfer pricing policy requires Alpha to charge Beta with the variable cost of production. Which of the following statements is valid?  

The management of a leisure company, who are risk averse, have just approved an investment in a new amusement park. The country in which the amusement park will be located has a warm and mostly dry climate throughout the year.A number of specific risks related to this investment have been identified as follows. (1) Losses of very small amounts of revenue due to poor weather. (2) A significant financial liability may arise due to the injury of a member of the public. (3) Loss of several days of revenue due to rides being unavailable because of poor maintenance routines. (4) Income fraud as a consequence of the high levels of cash handled by employees.Using the TARA framework, which is the most appropriate way of managing each of these risks?  

A company expects to sell 3,600 units of Product A at a selling price of $750 per unit during the forthcoming year. The currently expected variable cost per unit is $860 per unit. The company requires a return of 15% during the forthcoming year on its investment of $2.4 million in Product A. Absorbed general overheads are expected to amount to $40 per unit. What is the target cost for each unit of product A in the forthcoming year?

A company is considering the replacement of its outdated information system.Which of the following are appropriate approaches for the company to take to assess the potential qualitative benefits of a replacement information system? (1) Ignore the qualitative benefits that may arise because there is too much subjectivity involved in their assessment. (2) Attempt to attribute monetary values to each of the qualitative benefits identified. (3) Acknowledge the existence of qualitative benefits and attempt to assess them in a reasonable manner that is acceptable to all parties. (4) Attempt to express qualitative benefits in general terms linked to a hierarchy of organizational objectives.  

Which of the following statements about learning curves is correct? 

A risk averse decision maker will: 

Which of the following correctly defines the expected value of a project? 

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.  

A positive net present value (NPV) has been calculated for a project to launch a new product. An additional calculation is required to identify the sensitivity of the NPV to changes in the forecast total sales volume.The present value of which of the following would be used in the calculation?  

A company has just launched a new product at a selling price that is designed to rapidly gain market share and to discourage other competitors from entering the market. Which pricing strategy is the company using? 

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 division of a company transfers all its output to other divisions in the same company.For this division, which of the following measures is NOT affected by the transfer price that the division uses?  

Which basis of transfer pricing retains the full autonomy of divisional managers? 

Which of the following factors would prevent a learning curve being observed for a task?

A supermarket group has experienced operational problems during recent years, including a shortage of warehousing space due to increasing turnover and poor inventory management. The product portfolio has expanded considerably. Although this has led to increased sales volume, marketing and logistics costs have increased disproportionately. Non product-specific costs have also increased significantly.Management is now considering using Direct Product Profitability (DPP). Which of the following statements are valid in respect of the possible implementation of DPP within the supermarket group? Select ALL that apply.  

A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain.Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain? 

Kaizen costing is being used by an organization to gradually reduce the unit cost of one of its products in order to achieve a 20% mark up on the product's cost.The selling price of the product must be $72 per unit and this selling price has been maintained for two years. Two years ago the product's cost was $3 per unit more than its selling price. Kaizen costing has achieved an 8% reduction from the previous period's unit cost in each of the past two years. The organization expects to continue to achieve the same rate of cost reduction next year. Which of the following statements provides an accurate analysis of the extent to which Kaizen costing has been successful in achieving the required unit cost for the product?  

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

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 company produces a single product which is sold to one customer.Components for the product are stored in a warehouse and when required for production they are inspected. Those passing the quality check are moved to the initial production line. Partcompleted items are then inspected and those passing this second quality check are moved to the warehouse until required in the finishing process. After the finishing process the products are inspected, packaged and returned to the warehouse until required by the customer. The company is considering implementing a full just-in-time (JIT) system for both purchasing and production and has asked your advice about the activities that will be necessary if this system is implemented. Which THREE of the following activities will definitely be required in the proposed JIT system?  

An organization has a decentralized structure in which division A supplies division B with an intermediate product for which there is no external market. Division B carries out further processing and then sells the final product on the external market. Due to organizational policy the current transfer pricing basis is variable cost.The manager of division A has stated, "The current transfer price is unfair because it does not enable us to recoup our costs". The manager of division B has stated, "The current transfer pricing system enables us to quote competitive prices for the finished product". The Chief Executive of the organization is considering imposing a transfer pricing policy that uses dual pricing.  Dual pricing would: