P2 Practice Test & Exam Questions (Page 4 )

QUESTION: 138

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?

Profit margin
R.O.C.E
Current ratio
Quick ratio

Answer(s): A,B

Show Answer Next Question

QUESTION: 139

In order to remain competitive an organization wishes to achieve cost savings for one of its existing products.

Which of the following correctly describes methods which the organization can use to achieve these cost savings?

Select ALL that apply.

Functional analysis is carried out only on existing products and is concerned only with minimizing the cost of the originally defined functions of a product.
Value engineering is a fundamental rethinking and radical redesign of an organization's existing processes.
Target costing is continuously setting new stretch targets while the product is in production.
Value analysis is examining a product's costs in order to achieve its purpose at a reduced cost while maintaining its reliability and quality.
Kaizen costing is seeking to make cost savings by continuously making small incremental cost reductions while the product is in production.

Answer(s): D,E

Show Answer Next Question

QUESTION: 140

There is a 60% probability of a project yielding a positive net present value (NPV) of $280,000 and a 30% probability of it yielding a positive NPV of $140,000.

The only other possible outcome is that the project will yield a negative NPV of $160,000.

What is the expected value of the project's NPV?

$194,000
$210,000
$280,000
$260,000

Answer(s): A

Show Answer Next Question

QUESTION: 141

A manufacturing company has recently introduced a Total Quality Management (TQM) system. The company has invested heavily in the education and training of its staff, in addition to implementing new product design engineering. There is a plan to sample units from each batch of products manufactured to test for errors, although this has not yet been implemented due to budget constraints.

The company is experiencing high levels of customer complaints, with many faulty units being returned by the customer for refund or replacement. Sales revenue has fallen recently, mainly due to negative press coverage linked to dissatisfied customers.

Select the statement MOST likely to apply.

The high level of external failure costs is the result of a lack of expenditure on prevention costs.
The high level of internal failure costs is the result of a lack of expenditure on appraisal costs.
The high level of external failure costs is the result of a lack of expenditure on appraisal costs.
The high level of internal failure costs is the result of a lack of expenditure on prevention costs.

Answer(s): C

Show Answer Next Question

QUESTION: 142

CORRECT TEXT
A company uses activity based costing. The total production overheads of $16,050 for the next period are for set up costs of $6,450 and quality inspection costs of $9,600. The company produces two products, Product F and Product G. Details relating to the next period are as follows:

A new customer has offered to purchase Product F for $28.00 per unit. The only costs incurred would be those shown above.

What is the profit per unit of Product F that would be gained by accepting the offer? Give your answer to two decimal places.

$3.90

Answer(s): A

Show Answer Next Question

CIMA P2 Exam
Advanced Management Accounting (Page 4 )

QUESTION: 138

QUESTION: 139

QUESTION: 140

QUESTION: 141

QUESTION: 142

Join the P2 Discussion

CIMA P2 Exam Advanced Management Accounting (Page 4 )

QUESTION: 138

QUESTION: 139

QUESTION: 140

QUESTION: 141

QUESTION: 142

Join the P2 Discussion

CIMA P2 Exam
Advanced Management Accounting (Page 4 )