[Sep-2021] CIMA P2 Dumps – Reduce Your Chance of Failure in P2 Exam
To help you achieve your ultimate goal, we suggest the actual CIMA P2 dumps for your Advanced Management Accounting exam preparation to use as your guideline.
NEW QUESTION 96
Which of the following statements about modified internal rate of return (MIRR) and internal rate of return (IRR) is correct?
- A. MIRR favours projects with long payback periods whereas IRR does not.
- B. MIRR and IRR will always rank competing projects in the same order.
- C. MIRR uses a more realistic reinvestment assumption than IRR.
- D. A project's MIRR will always be higher than its IRR.
Answer: C
NEW QUESTION 97
A company comprises several divisions.
One of these divisions was originally expected to earn an operating profit next year of $800,000 on net assets of $4 million.
However, the divisional manager is considering investing in a project that would generate a project return on investment (ROI) of 38% on additional net assets of $500,000.
What would be the divisional ROI next year if the project was implemented?
Give your answer to the nearest percentage.
Answer:
Explanation:
22 %
NEW QUESTION 98
Performance measures that monitor the extent to which a not-for-profit organization's objectives have been achieved are measures of:
- A. efficiency
- B. effectiveness
- C. economy
- D. enterprise
Answer: B
NEW QUESTION 99
An 80% learning curve is expected for a repetitive and complex task.
Which of the following statements is correct?
- A. Each unit produced will take 20% less time to produce than the previous unit.
- B. The cumulative average time per unit will reduce by 20% every time the output is doubled.
- C. Each unit produced will take 80% less time to produce than the previous unit.
- D. The cumulative average time per unit will reduce by 80% every time the output is doubled.
Answer: B
NEW QUESTION 100
Residual income is an appropriate performance measure for which type of responsibility centre?
- A. Profit centre
- B. Revenue centre
- C. Investment centre
- D. Cost centre
Answer: C
NEW QUESTION 101
Place each of the activities described below against the correct classification of quality costs.
Answer:
Explanation:
NEW QUESTION 102
Company S has two divisions, X and Y. Division X transfers 50,000 component units to Division Y each quarter. The market price of the component is $20. Division X's variable cost is $10 per unit and its fixed cost is $150,000 each quarter.
What price would be credited to Division X for each component that it transfers to Division Y under:
two-part tariff pricing (where the two divisions have agreed that the fixed fee will be $100,000); and dual pricing (based on market price and marginal cost).
- A. Two-part tariff pricing = $13
Dual pricing = $22 - B. Two-part tariff pricing = $10
Dual pricing = $20 - C. Two-part tariff pricing = $12
Dual pricing = $18 - D. Two-part tariff pricing = $10
Dual pricing = $22
Answer: B
NEW QUESTION 103
Which basis of transfer pricing retains the full autonomy of divisional managers?
- A. Variable cost-plus pricing
- B. Negotiated pricing
- C. Full cost-plus pricing
- D. Market based pricing
Answer: B
NEW QUESTION 104
Division A and Division B are divisions of the same group. Division A transfers all of its output to Division B.
Which THREE of these alternative transfer pricing bases will prevent any cost inefficiencies in Division A being passed on to Division B?
- A. Standard variable cost plus a profit margin
- B. Actual full cost
- C. Actual prime cost
- D. Market price
- E. Actual variable cost
- F. Standard variable cost
Answer: A,D,F
NEW QUESTION 105
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?
- A. Loss leader
- B. Penetration pricing
- C. Premium pricing
- D. Market skimming
Answer: B
NEW QUESTION 106
A learning curve applies to the manufacture of the first 256 units of a product.
During the manufacture of the first 255 units, the time taken to produce each successive unit is expected to:
- A. Reduce at a decreasing rate.
- B. Reduce at an increasing rate.
- C. Reach the steady state.
- D. Reduce at a constant rate.
Answer: A
NEW QUESTION 107
A company is considering investing $680,000 in a machine to manufacture a new product. A consultant has been appointed to advise on the investment and the company is committed to paying $10,000 to the consultant in year 1, even if the project does not go ahead.
300,000 units of the new product will be produced and sold each year. Unit cost and revenue information based on this level of output is as follows.
60% of the overhead cost is variable. Of the remainder, 10% consists of allocated head office overheads.
The selling price will increase by 2% each year in line with inflation, beginning in year 2. Fixed price contracts mean that all unit costs will remain unaltered.
Taxation information:
* 100% first year allowance will be available for the purchase of the machinery.
* The taxation rate is 30% of taxable profits, payable in the year after that in which the liability arises.
For the purpose of deciding whether to proceed with the investment, what is the relevant cash flow in year 2?
- A. $1,102,320
- B. $1,288,800
- C. $1,099,320
- D. $1,326,960
Answer: A
NEW QUESTION 108
The following cost of quality report has been prepared for the latest period.
What is the difference between the cost of conformance and the cost of non-conformance?
Answer:
Explanation:
$270000
NEW QUESTION 109
A public sector service organization is considering whether to use a balanced scorecard or a value for money approach based on the three Es to assess its performance.
Which of the following are correct comparisons of the balanced scorecard and value for money based on the three Es as performance measurement frameworks?
Select ALL that apply.
- A. The three Es approach was designed for public sector service organizations, but the balanced scorecard approach can also be used in the public sector.
- B. Efficiency is measured as one of the three Es but the balanced scorecard does not measure efficiency.
- C. The balanced scorecard is concerned with meeting the organization's objectives whereas the three Es approach is concerned only with reducing costs.
- D. If the organization wishes to consider both financial and non-financial performance then the balanced scorecard should be used rather than the three Es.
- E. The public's satisfaction with the organization's services can be measured by both the three Es and the balanced scorecard.
Answer: A,E
NEW QUESTION 110
A company is considering investing $150,000 in a project which will generate the following contributions during the first three years.
Tax depreciation allowance is 25% each year of the reducing balance.
The taxation rate is 30% of taxable profits and tax is payable in the year after that in which it arises.
To the nearest $10, what is the forecast total project cash flow in year 3?
- A. $82,840
- B. $74,400
- C. $85,650
- D. $71,430
Answer: A
NEW QUESTION 111
A company has three divisions, each of which is an investment centre. The divisional managers' performance is assessed using return on investment (ROI). A higher ROI will result in a higher bonus for the divisional manager.
The company's cost of capital is 15%.
For the forthcoming year each divisional manager has one investment opportunity available as follows:
The manager(s) of which division(s) will proceed with their respective investment opportunity?
- A. Division 1 only
- B. Division 1 and Division 3
- C. Division 2 and Division 3
- D. Division 3 only
Answer: C
NEW QUESTION 112
Which of the following statements is NOT correct?
Transfer prices between responsibility centers should be set at a level that:
- A. encourages a balance of goal congruence, managerial effort and centralized management.
- B. encourages profit centre managers to agree on the amount of goods and services to be transferred at a level that is consistent with organizational aims.
- C. provides an artificial selling price that enables the transferring division to earn a return for its efforts and the receiving division to incur a cost for benefits received.
- D. enables profit centre performance to be measured 'commercially'.
Answer: A
NEW QUESTION 113
The performance of an investment centre manager is assessed by return on investment (ROI) alone. At present, his expected ROI for next year is 15%. The manager must now decide whether to invest in a new project that is expected to yield an ROI of 14%. The cost of capital is 12%.
Indicate whether each of the following statements is true or false.
Answer:
Explanation:
NEW QUESTION 114
Product WB currently sells for $13 per unit. Annual demand at that price is 20,000 units. If the price increases to $15, the annual demand falls by 500 units.
What is the formula for the demand curve?
- A. Qd = a - b(P
- B. Q = a - bP
- C. P = f(Q).
- D. P = a -b(Q)
Answer: A
NEW QUESTION 115
Company TTM has the opportunity to invest $60,000 in a project. The project is anticipated to produce annual returns of $12,500 each year for 8 years. The cost of capital is 12%.
What is the net present value of the project? Give your answer to the nearest whole number.
Answer:
Explanation:
$2100
NEW QUESTION 116
For a complex and repetitive task, which of the following correctly describes a steep learning curve?
- A. There will be a long period before there is a reduction in the time taken to complete the task.
- B. Repeated training may be required but this will not necessarily result in a reduction in the time taken to complete the task.
- C. After the initial learning period there will be a rapid reduction in the time taken to complete the task.
- D. After the initial learning period there will be a slow reduction in the time taken to complete the task.
Answer: C
NEW QUESTION 117
K Supermarket spends $80,000 per year on checking and processing receipts of inventory. Annual warehouse costs are a further $70,000 per year. These costs are currently treated as fixed overheads in the company's costing system.
As an experiment, the company is preparing a direct profitability analysis of a small range of products, including fresh grapes.
K Supermarket receives a total of 3,600 deliveries every year. 20% of these deliveries are of perishable goods such as grapes. It takes twice as long to process a delivery of perishable goods compared to a normal delivery because perishable goods have to be checked more carefully.
Half of the warehouse costs are for the chilled store that is used to store perishable goods. At any time, the chilled store has 800 kilos of perishable goods in stock.
K Supermarket receives 150 deliveries of grapes every year. Each delivery is for 100 kilos of grapes. The grapes spend an average of two days in the chilled store before they are sold.
Calculate the total cost per kilo of checking, processing and storing grapes that should be taken into account in determining the profitability of grapes.
Give your answer to the nearest whole cent.
Answer:
Explanation:
61 cents
NEW QUESTION 118
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. Buy parts domestically to avoid using the region's currency
- 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. Pay part suppliers from the region in their currency, generated from sales in the region
Answer: D
NEW QUESTION 119
A company has just received the latest in a series of annual payments; this payment was $620. The annual payments are expected to continue for three more years with each payment being increased by the expected rate of inflation. The real cost of capital is 8% per year and the expected rate of inflation is
6% per year.
What is the present value of the future payments the company expects to receive?
Give your answer to the nearest $.
Answer:
Explanation:
$1598
NEW QUESTION 120
......
Accurate & Verified Answers As Seen in the Real Exam here: https://www.braindumpquiz.com/P2-exam-material.html