cima CIMAPRO19 P02 1 Exam Questions

Questions for the CIMAPRO19 P02 1 were updated on : Nov 21 ,2025

Page 1 out of 14. Viewing questions 1-15 out of 202

Question 1

During a Board meeting at a manufacturing company, concerns regarding the analysing of the current
inventory management systems and processes are brought up.
Attendees of the meeting have made several claims and suggestions but the managing director
admits that he does not know who to believe and so has asked you to let him know which
statements of the following statements are TRUE?
Select ALL that apply.

  • A. Standard Costing is ideal for organisations running a JIT inventory system
  • B. A JIT system is likely to result in economies of scale
  • C. ABC is ideal for organisations running a JIT inventory system
  • D. Standard costing is ideal for organisations in a TQM environment
  • E. A JIT inventory system reduces inventory costs
Answer:

C, D

User Votes:
A
50%
B
50%
C
50%
D
50%
E
50%
Discussions
vote your answer:
A
B
C
D
E
0 / 1000

Question 2

Endure Co. makes 1,000 units ofX and 2,000 units of Y.
Costs for X: Material $4, labour $8, direct overhead $2, fixed cost $4.
Costs for Y: Material $9, labour $9, direct overhead $4, fixed cost $6.
Selling price for X and Y are S19 and $25 respectively. Another company can sell ready made product
X and product Y's to Endure Co, this company sells X at $12 and Y at $21. Advise Endure Co. on what
would
be
the
most cost effective way to source products X and Y.

  • A. Endure should buy X and Yfrom the other supplier.
  • B. Endure should buy X but produce Y themselves.
  • C. Endure should produce both X and Y themselves.
  • D. Endure should buy Y but produce X themselves.
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 3

Which of the following are TRUE about the theory of constraints? Select ALL that apply.

  • A. Each resource should be put to its most profitable use
  • B. Relieve all the constraints in a system simultaneously to ensure optimality
  • C. Ensure that each constraint is being used efficiently
  • D. Relieve constraints until the cost of relieving the last constraint exceeds the benefit
Answer:

A, C, D

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 4

The manager of Ice Sculpting Co. believes that too much material is being wasted during downtime.
She researched, and found throughput accounting to be an adequate alternative. However, she
wasn't
sure
if
all
that
she read was accurate.
Which of the following statements are TRUE when using Throughput Accounting? Select ALL that
apply.

  • A. If there is no demand, then there should be no production.
  • B. Not all sales equal to profit
  • C. Stocking up on inventory is bad for business.
  • D. All costs, except materials, are considered fixed.
  • E. Departments should be operating at full capacity regardless of bottlenecks
Answer:

A, C, D

User Votes:
A
50%
B
50%
C
50%
D
50%
E
50%
Discussions
vote your answer:
A
B
C
D
E
0 / 1000

Question 5

We have 2 divisions with the following information: Profit before depreciation: B1=$800,000,
B2=S1,000,000; Assets: B1 =$2,000,000, B2=S3,000,000; Capital employed: B1 = $1,700,000 and B2 =
$2,550,000.
20%
straight-line depreciation is used.
Calculate ROI for each division.

  • A. ROI for B1 is 47% and ROI for B2 is 39.2%
  • B. ROI for B1 is 25.5% and ROI for B2 is 17.7%
  • C. ROI for B1 is 23.5% and ROI for B2 is 23.5%
  • D. ROI for B1 is 23.5% and ROI for B2 is 15.7%
Answer:

D

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 6

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
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 7

SkillWeave are an international clothing manufacturer known for their durable and high quality
products. Recently their biggest market in the world's premier customs union has had some
economic
volatility.
This
has
resulted in the currency of this market being very unstable and difficult to predict in terms of
whether it will retain, lose or gain relative value to domestic currency.
Which of the following is an effective risk reduction technique for SkillWeave's clothing sales to this
region?

  • A. Pay part suppliers from the region in their currency, generated from sales in the region
  • B. Temporarily stop producing for and selling cars to the region
  • C. Pay part suppliers from the region in domestic currency, generated from sales in the region
  • D. Buy parts domestically to avoid using the region's currency
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 8

Which of the following statements is TRUE about the activity based costing system when compared
to absorption costing method?

  • A. ABC is easier to administer than an absorption costing system
  • B. ABC will be less detailed than an absorption costing system
  • C. ABC will provide more accurate overhead allocation than absorption costing
  • D. ABC will cost less to administer than an absorption costing system
Answer:

C

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 9

You have just assessed an investment proposal, involving an immediate cash outflow followed by a
series of cash inflows over the next 7years, by deducing the NPV and the IRR. You have now
discovered
that
you
have
underestimated the discount rate.
Correcting the underestimation will have the following effect, relative to your original deductions:

  • A. NPV will reduce, IRR will not change
  • B. NPV and IRR will not change
  • C. NPV will increase, IRR will reduce
  • D. NPV and IRR will both increase
  • E. Not enough information given for an answer
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
E
50%
Discussions
vote your answer:
A
B
C
D
E
0 / 1000

Question 10

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.
Answer:

A, B, C

User Votes:
A
50%
B
50%
C
50%
D
50%
E
50%
Discussions
vote your answer:
A
B
C
D
E
0 / 1000

Question 11

Juan is looking to invest in the mining industry. He has narrowed his options down to two rival
companies, both with sales of £200m. Company A has an EBIT of £10m whereas Company B has an
EBIT of £14m.
This would suggest that Company B is the better investment but Juan is suspicious that Company B
has more financial backing than Company A.
Which ratios will tell him which company will use his investment the best?

  • A. Profit margin
  • B. R.O.C.E
  • C. Current ratio
  • D. Quick ratio
Answer:

A, B

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 12

Oliver owns a computer repair company. He is looking to close of of his departments as the demand
for computer cleaning has dropped dramatically in the last 2 years and is no longer profitable.
The contribution margin of the department is £12,000, and the overheads are £23,000 (out of which
£4,000 cannot be eliminated).
How would closing this department impact operating income?

  • A. Increase operating income by £7,000
  • B. Decrease operating income by £7,000
  • C. Decrease operating income by £12,000
  • D. Increase operating income by £12,000
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000

Question 13

PorkyCo is a leading bread manufacturer in Toyland operating two functional divisions: pulled and
roasted. PorkyCo uses IT systems in all of its functions, for example, accounting has one system,
manufacturing
has
its
system, warehousing has another and human resources is the latest to develop a dedicated system
to manage training and development
The issue now is that when the CEO, Mr Button, needs information about two or more functions, he
has to convene the department heads to get their reports and then study each in turn. As senior
management
accountant at PorkyCo, help free up Mr Button's time by suggesting the most efficient way of getting
all the information he needs.

  • A. Deploy ERP technology.
  • B. Merge loaves and rolls into a single vertical.
  • C. Move to a networked organisation.
  • D. Create an intranet.
  • E. Deploy an extranet.
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
E
50%
Discussions
vote your answer:
A
B
C
D
E
0 / 1000

Question 14

Under the absorption costing system, which simply allocates our entire amount of production
overheads based on machine hours, we have found that out of our 4 products, 2 are profitable, 1
breaks even and 1 is making a loss.
Model D the most recent addition to the range is making a large loss after the price of a major
component rose dramatically. Model A is only just breaking now too as costs have risen. The only two
products
making
profit
are Models B and C. These two require the least about of machine hours so this makes sense.
However, the management have a few reservations. They cannot understand how B is so profitable.
It requires several more stages of production than the other models and a whole day longer to be
customised by an expert.
Select the correct answer from the list below that can help to explain this situation.

  • A. ABC would show that only a small amount of our overheads are based on machine hours.
  • B. ABC could have shown that some products are selling poorly and should be discontinued.
  • C. ABC would show that if overheads are shared equally that model B would be less profitable.
Answer:

A

User Votes:
A
50%
B
50%
C
50%
Discussions
vote your answer:
A
B
C
0 / 1000

Question 15

TTR Ltd plans to purchase a new plant for $1,000m on the 1st of January 20X6. The annual sales
expected from the production of this plant is S400m per year. The plant has an expected life of five
years. The financial accountant has computed the NPV of the project at $61.42m considering a
discount rate of 10%. The marketing director wants to know the percentage drop in revenue that the
sales team can afford before the project becomes unviable. Which of the following indicates the
percentage
required
by
the
marketing
director?

  • A. 4.05%
  • B. 5.05%
  • C. 4.5%
  • D. 10%
Answer:

A

User Votes:
A
50%
B
50%
C
50%
D
50%
Discussions
vote your answer:
A
B
C
D
0 / 1000
To page 2