Pass the CIMA Operational P1 Questions and answers with ExamsMirror

Your company operates using TQM. As the accountant you have been tasked with producing a quality report so that management can understand how well their new range of products is being received and how the

quality of the products has improved. In order to produce the report you have requested information from different departments, but you soon realise not all the information is relevant. You have information regarding the

following:

Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit

Which pieces of information are relevant to your report? Select ALL that apply.

A company has to choose between three mutually exclusive projects. Market research has shown that customers could react to the projects in three different ways depending on their preferences. There is a 30% chance that customers will exhibit preferences 1, a 20% chance they will exhibit preferences 2 and a 50% chance they will exhibit preferences 3. The company uses expected value to make this type of decision.

The net present value of each of the possible outcomes is as follows:

A market research company believes it can provide perfect information about the preferences of customers in this market.

What is the maximum amount that should be paid for the information from the market research company?

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

Identify, using graphical linear programming, the weekly production schedule for products J and L that will maximize the profits of JRL during the next four weeks.

A completed unit of Product A requires 9 kg of material and 10% of material is wasted in the production process.

Material has a standard cost of $5 per kg.

Product A also requires 4 labour hours at a standard cost of $10 per labour hour and variable overheads at a standard cost of $2 per labour hour

What is the standard variable production cost per unit of Product A?

When classifying quality costs, which of the following is NOT likely to be an appraisal cost?

Rank the budgets listed below to show the order in which they should normally be prepared:

A manager is deciding which one of four services to provide next period.

The contribution earned by each service will depend on the weather conditions as follows.

Using the maximin criterion, which service will the manager provide?

8fb9be1c-b0d5-4acb-8cfb-f4b4426e641B. The primary objective of Company A is to maximise profit. It is now deciding on the optimum production mix for the next period and has one limited production resource.

The production mix decision should be based on:

A major company sells a range of electrical, clothing and homeware products through a chain of department stores. The main administration functions are provided from the company’s head office.  Each department store has its own warehouse which receives goods that are delivered from a central distribution center.

The company currently measures profitability by product group for each store using an absorption costing system. All overhead costs are charged to product groups based on sales revenue. Overhead costs account for approximately one-third of total costs and the directors are concerned about the arbitrary nature of the current method used to charge these costs to product groups.

A consultant has been appointed to analyses the activities that are undertaken in the department stores and to establish an activity based costing system.

The consultant has identified the following data for the latest period for each of the product groups for the X Town store:

Calculate the total profit for each of the product groups:

…. using the current absorption costing system;

RT produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of the products are shown below: 

Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified: Direct labour hours 7,500 hours 

Material A 8,500 kgs

Material B 3,000 litres

Machine hours 7,500 hours

Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan. 

The contribution per unit for R and T will be...?