Cima P1 Exam Question No 26

Question No 26:

JK has budgeted sales for next year of 24,000 units and inventory levels are expected to remain constant throughout the year. Each unit produced will require 3 labour hours and the budgeted labour rate will be $15 per hour. It is estimated that 10% of units produced will be wasted.
It is expected that 15% of the total hours worked will be paid at overtime rates. 10% of the total hours will be paid at the basic rate plus an overtime premium of 50% of the basic rate. 5% of the total hours will be paid at the basic rate plus an overtime premium of 100% of the basic rate.
The labour cost budget for next year is:

A. $ 1,350,000
B. $ 1,306,800
C. $ 1,188,000
D. $ 1,320,000

Answer: D

Cima P1 Exam Question No 25

Question No 25:

The material yield variance for August is?

A. $200 Adverse
B. $1,740 Adverse
C. $200 Favourable
D. $1,740 Favourable

Answer: B

Cima P1 Exam Question No 24

Question No 24:

The budgeted machine set-up cost per unit of Product S is:

A. $150
B. $1.80
C. $1.50
D. $30

Answer: B

Cima P1 Exam Question No 23

Question No 23:

A five year investment project has a positive net present value of $320,000 when discounted at the cost of capital of 10% per annum. The project includes annual net cash inflows of $100,000 which occur at the end of each of the five years.
The percentage reduction in the annual net cash inflow that would result in the project not being financially viable is:

A. 31.25%
B. 118.5%
C. 84.4%
D. 18.5%

Answer: C

Cima P1 Exam Question No 22

Question No 22:

A company commenced business on 1 August. Total sales revenue in August was $200,000 and is expected to increase at a rate of 2% per month. Credit sales represent 60% of total sales revenue and the remaining 40% is cash sales. The credit period allowed is one month. Bad debts are expected to be 3% of credit sales but the remaining credit sales customers are expected to pay on time.
The estimated receipts in September from cash and credit sales are:

A. $195,552
B. $196,400
C. $198,000
D. $201,600

Answer: C

Cima P1 Exam Question No 21

Question No 21:

A company is considering investing in a project with an expected life of four years. The project has a positive net present value of $280,000 when cash flows are discounted at 12% per annum. The project’s estimated cash flows include net cash inflows of $320,000 for each of the four years. No tax is payable on projects of this type.
The percentage decrease in the estimated annual net cash inflows that would cause the company’s management to reject the project from a financial perspective is, to the nearest 0.1%:

A. 87.5%
B. 21.9%
C. 3.5%
D. 28.8%

Answer: D

Cima P1 Exam Question No 20

Question No 20:

An investment project requires an initial investment of $500,000 and has a residual value of $130,000 at the end of five years. The net present value of the project is $140,500 after discounting at the company’s cost of capital of 12% per annum.
The profitability index of the project is:

A. 0.38
B. 0.54
C. 0.28
D. 0.26

Answer: C