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CIMA CIMAPRO15-P01-X1-ENG Exam Prep
P1 Management Accounting (Page 6 )

Updated On: 19-Sep-2026
Page 3 of 15
PDF with 67 Questions

The term ‘budgetary slack’ refers to the:

  1. Lead time between the preparation of the functional budgets and the approval of the master budget by senior management
  2. Difference between the budgeted output and the actual output
  3. Difference between budgeted capacity utilization and full capacity
  4. Intentional over estimation of costs and/or under estimation of revenue in a budget

Answer(s): D



PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product B. Fixed costs are $800,000 per annum.

The management of PL is considering reducing the selling price per unit to $48. The estimated levels of demand at the revised selling price and the probabilities of them occurring are as follows:

The estimated variable costs per unit at either of the higher levels of demand and the probabilities of them occurring are as follows:


The level of demand and the variable cost per unit are independent of each other.
Calculate the probability that the profit will increase from its current level if the selling price is reduced to $48.

  1. The probability therefore that the contribution will exceed $2,880,000 is 90%.
  2. The probability therefore that the contribution will exceed $2,880,000 is 50%.
  3. The probability therefore that the contribution will exceed $2,880,000 is 70%.
  4. The probability therefore that the contribution will exceed $2,880,000 is 40%.

Answer(s): A



CH is a building supplies company that sells products to trade and private customers.
Budget data for each of the six months to March are given below:


80% of the value of credit sales is received in the month after sale, 10% two months after sale and 8% three months after sale. The balance is written off as a bad debt.
75% of the value of credit purchases is paid in the month after purchase and the remaining 25% is paid two months after purchase.
All other operating costs are paid in the month they are incurred.
CH has placed an order for four new forklift trucks that will cost $25,000 each. The scheduled payment date is in February.
The cash balance at 1 January is estimated to be $15,000.
Prepare a cash budget for each of the THREE months of January, February and March.
Select All the correct answers.

  1. The total receipts in January will be $245 000
  2. Total payments in March will be $323 000
  3. The total receipts in January will be $320 000
  4. The total payments in February will be $405 000

Answer(s): B,C



Explain THREE benefits that organizations gain from using budgetary planning and control systems.
Select ALL the true statements.

  1. The budget acts as a variable mechanism, with actual results being compared with budget.
  2. Budgeting forces an organization’s management to look ahead and set performance targets.
  3. The budget provides an external benchmark against which performance against which performance can be evaluated.
  4. The budget ensures actions of different parts of the organization are coordinated are reconciled otherwise managers take actions for the benefit of their own part of organization that may not benefit the organization as a whole.
  5. Another benefit of budgeting is to set targets to motivate managers and optimize their performance.
  6. The budget is a useful device of influencing an operator’s thoughts and motivating operators to perform in line with the organization’s marketing budget.
  7. It provides a standard which managers may be motivated to achieve. It can also encourage inefficiency and conflict between managers particularly if the budget is imposed from above, whereby it may act as a threat rather than as a challenge.

Answer(s): B,D,E,G



THS produces two products from different combinations of the same resources. Details of the products are shown below:


THS is preparing the production plan for next month. The maximum resource availability for the month is:


Identify, using graphical linear programming, the optimal production plan for products E and R to maximize THS’s profit in the month.

  1. The solution (from the graph0 is to produce 675 units of E and 470 units of R.
  2. The solution (from the graph0 is to produce 495 units of E and 670 units of R.
  3. The solution (from the graph0 is to produce 475 units of E and 770 units of R.
  4. The solution (from the graph0 is to produce 375 units of E and 750 units of R.
  5. The solution (from the graph0 is to produce 375 units of E and 870 units of R.
  6. The solution (from the graph0 is to produce 495 units of E and 470 units of R.

Answer(s): D



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