Free Access CIMA.P1.v2025-10-10.q95 Practice Test (Page 9)

Question 36

Explain why sensitivity analysis is useful when dealing with uncertainty in project appraisal.
Select all the true statements.

A.Sensitivity analysis enables a company to determine the effect of changes to fixed costs on the planned outcome

B.Sensitivity analysis enables a company to determine the effect of changes to variables on the planned outcome

C.In project appraisal, an analysis can be made if all the key variables to ascertain by how much variable would need to change before the net present value (NPV) reaches zero i.e. the indifference point.

D.In project appraisal, in analysis can be made of all the key variables to ascertain by how much each variable would need to change before the net present value (NPV) reaches 100% i.e. the maximum point.

Question 37

A manufacturing company has fixed production overhead costs, direct material costs and direct labour costs. The number of units of closing finished goods inventory is lower than the opening inventory.
Which of the following statements is true?

A.The profit using marginal costing will be higher than if absorption costing is used.

B.The profit using absorption costing will be higher than if throughput costing is used.

C.The profit using absorption costing will be higher than if marginal costing is used.

D.The profit using marginal costing will be higher than if throughput costing is used.

Question 38

The definition of a trend is:

A.an underlying long-term movement over time in the values of the data recorded.

B.a non-recurring fluctuation which could not be predicted.

C.a medium-term or long-term influence which repeats in cycles.

D.a short-term fluctuation due to different circumstances which affect results at different points in time.

Question 39

A company accountant is trying to determine the optimum production plan for the period using linear programming.
The accountant has correctly formulated the linear programming problem as follows:
Variables (products): x and y
Objective function: Maximise contribution, C = 10x + 15y
Material constraint: 4x + 6y ≤ 500 (kg)
Labour constraint: x + 2y ≤ 350 (hours)
Machine constraint: 10x + 4y ≤ 1,500 (hours)
x constraint: 50 ≤ x ≤ 200
y constraint: y ≥ 0
Which of the following statements is true?

A.Product y requires 4 machine hours to manufacture.

B.The selling price of y is $15.

C.The maximum demand for product x is 50 units.

D.Product x requires twice as much labour time as Product y.

Question 40

Sales volumes reported for the latest period are used by managers as the basis to forecast sales for the forthcoming period. The forecasts are compared with the budgeted sales and plans are adjusted to ensure that the budgeted sales are achieved.
This is an example of:

A.Incremental budgeting

B.Feedback control

C.Flexed budgets

D.Feedforward control

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Question 36

Question 37

Question 38

Question 39

Question 40

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