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Question 1

Which of the following is a relevant cost?

A sunk cost
A committed cost
An incremental cost
A historical cost

Correct answer: C

Explanation:

Reference: https://www.acowtancy.com/textbook/cima-p1-2015/c1-relevant-costing/concept-of-relevant-costing/notes

Question 2

Which of the following would NOT require taking into account the time value of money?

Deciding to make a long-term investment in a project on the basis of its payback period.
Selecting an investment project on the basis that it has a positive net present value (NPV).
Calculating the present value of a five-year annuity.
Taking a long-term investment decision on the basis of the project’s internal rate of return (IRR).

Correct answer: C

Explanation:

Reference: https://www.acowtancy.com/textbook/acca-fm/d1-investment-appraisal-techniques/npv/notes

Question 3

A small airport’s management accountant has prepared the following management report on the performance of its four retail outlets.

Which retail outlet has the highest contribution per square metre?

Outlet A
Outlet B
Outlet C
Outlet D

Correct answer: C

Question 4

A company uses standard absorption costing. Budgeted and actual data for the latest period are as follows.

What was the production overhead absorption rate per unit?

$21
$27
$35
$29

Correct answer: C

Question 5

The year-to-date results at the end of month 9 included sales revenue of $3,600,000 and variable costs of $2,100,000.

During month 10, sales revenue was $450,000 and variable costs were $270,000.

What year-to-date contribution to sales ratio (C/S ratio) would be reported at the end of month 10?

58,5%
70,9%
41,5%
40,0%

Correct answer: A

Question 6

A company is considering investing $57,000 in a machine that will last for five years, after which time it will have no value. The machine will generate additional revenue of $190,000 each year. Annual running costs, including depreciation of $11,400 will amount to $168,400.

Assuming that all cash flows occur evenly, the payback period of the investment in the machine is closest to:

2 years 8 months
1 year 9 months
1 year 7 months
2 years 6 months

Correct answer: C

Question 7

Which of the following is NOT a valid purpose of budgeting?

To communicate targets to managers.
To comply with financial reporting requirements.
To coordinate the different activities of an organisation.
To authorise managers to incur expenditure.

Correct answer: D

Explanation:

Reference: https://www.acowtancy.com/textbook/acca-pm/budgetary-systems/budgetary-systems/notes

Question 8

Which of the following is a valid definition of a cash budget?

A detailed budget of estimated cash inflows and outflows incorporating both revenue and capital items.
A detailed budget of estimated cash inflows only, incorporating receipts from cash sales as well as from credit customers.
A detailed budget of estimated cash inflows and outflows incorporating revenue items only.
A detailed budget of estimated cash outflows only, incorporating both depreciation and capital expenditure.

Correct answer: C

Explanation:

Reference: https://www.acowtancy.com/textbook/acca-ma/d2-budget-preparation/cash-budgets/notes

Question 9

Based upon extensive historical evidence, a company’s daily sales volume is known to be normally distributed with a mean of 1,728 units and a standard deviation of 273 units.

What is the probability that, on any one day, the sales volume will be at least 1,300 units?

5.82%
73.89%
44.18%
94.18%

Correct answer: D

Question 10

A new product requires an investment of $200,000 in machinery and working capital. The total sales volume over the product’s life will be 5,000 units. The forecast costs per unit throughout the product’s life are as follows:

The product is required to earn a return on investment of 35%.

What unit selling price needs to be achieved?

$54.00
$50.77
$47.00
$44.55

Correct answer: D

Exam	E3 - Strategic Management Question Tutorial
Number	CIMAPRO17-BA2-X1-ENG
File Name	CIMA.CIMAPRO17-BA2-X1-ENG.TestKing.2020-02-19.36q.vcex
Size	742 KB
Posted	Feb 19, 2020
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