Online Access Free CIMAPRO19-P02-1 Practice Test

Place the correct quality cost classification against each cost described below.

Correct Answer:

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.Accept risk 1; avoid risk 2; transfer risk 3; reduce risk 4
• B.Accept risk 1; transfer risk 2; avoid risk 3; reduce risk 4
• C.Transfer risk 1; accept risk 2; avoid risk 3; reduce risk 4
• D.Reduce risk 1; transfer risk 2; avoid risk 3; accept risk 4

An organization has the right to mine for gold on its land. The price of gold and the cost of extraction are such that mining is not currently financially viable. However, the organization has the right to commence mining at any time in the future if the price of gold increases and makes mining financially viable.
This right to commence mining in the future is an option to:

• A.expand
• B.delay
• C.abandon
• D.redeploy

A company is considering two mutually exclusive projects, an analysis of which is given below:

The company's cost of capital is 12%.
Assuming an objective of maximising shareholders' wealth, which project would be recommmended?

• A.Project B because it has the higher net present value.
• B.Project A because it has the higher internal rate of return.
• C.Project B because it has the shorter payback period.
• D.Project A because it has the higher accounting rate of return.

Which of the following statements is correct in respect of the key feature of dual pricing?

• A.The selling price recorded by the selling division is higher than the cost recorded by the receiving division.
• B.Internal customers are charged a lower price than external customers to reflect savings in distribution costs.
• C.Internal transfers are priced at marginal cost and a lump sum payment is made subsequently to contribute to fixed costs.
• D.Internal customers are offered trade discounts depending on the number of units they purchase.