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Fundamentals of Management Accounting Questions 171–175 (page: 36)

Updated On: 9-Feb-2026

CORRECT TEXT
Refer to the exhibit.



The standard variable cost per unit of Product W is $26. The budgeted sales of Product W in April was 3,300 units. The company recorded the following variances for the month of April:

During April 3,600 units of Product W were actually sold.

The budgeted contribution for Product W in April was to the nearest $000:

  1. $17000

Answer(s): A



Which THREE of the following statements could explain why an adverse material price variance has arisen?

  1. Change in market conditions causing a general price rise
  2. Increased efficiency in the purchasing department
  3. Purchase of inferior quality materials
  4. Bulk purchasing resulting in higher discounts
  5. Poor production planning
  6. Poor inventory control

Answer(s): A,E,F



A company has produced its cash budget for the year and is concerned at the level of the cash deficit being shown. Which THREE of the following would enable the company to reduce its cash deficit in the short term?

  1. Reduce inventory level of finished goods
  2. Increase receivable levels to encourage sales
  3. Purchase new non-current assets to increase productivity levels
  4. Increase the overdraft facility
  5. Take longer to pay suppliers
  6. Lease rather than purchase new non-current assets

Answer(s): A,E,F



A company's output level increases but remains within the relevant range. Which ONE of the following statements is incorrect?

  1. Total variable costs will increase
  2. Total fixed costs will remain the same
  3. Variable costs per unit will decrease
  4. Fixed costs per unit will decrease

Answer(s): C



The managing director of a small expanding company has made a number of statements about CIMA's role in relation to its members and to worldwide organizations.

Which ONE of the following statements is NOT correct?

  1. CIMA is a member of IFAC (International Federation of Accountants)
  2. CIMA's members work primarily in the private sector
  3. CIMA provides its members and students with ethical guidance
  4. CIMA's continuing professional development scheme is applicable to all members

Answer(s): B



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