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All P2 Test Inside CIMA Questions

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Total 184 questions

Advanced Management Accounting Questions and Answers

Question 17

Which of the following is the ideal basis to use for a transfer price when there is a perfect external market?

Options:

A.

Actual variable cost

B.

Market price

C.

Standard variable cost

D.

Full cost plus

Question 18

Which of the following statements about learning curves is correct?

Options:

A.

The learning index for an 80% learning curve is calculated as log 2 divided by log 0.8.

B.

The learning index for an 80% learning curve is calculated as log 0.8 divided by log 2.

C.

A 90% learning curve indicates a faster rate of learning than an 80% learning curve.

D.

The learning index will always have a positive value.

Question 19

IOP's product is manufactured using a production process that is known to have a defect rate of 10%.

IOP's quality control department has developed a test that has a 98% probability of classifying a non-defective item correctly and a 2% probability of classifying a non-defective item as defective.

The same test has a 95% probability of classifying a defective item correctly and a 5% probability of classifying a defective item as non-defective.

Calculate the proportion of IOP's output that will be classified as non-defective by the quality control department's test.

Give your answer to one decimal place.

Options:

Question 20

A very large organization is financed by both debt and equity. It evaluates all projects on the basis of their net present value (NPV) using an organization wide weighted average cost of capital as the discount rate.

For a small project, which TWO of the following would affect the project's cash flows AND the discount rate?

Options:

A.

Taxation rates

B.

Inflation rates

C.

Depreciation rates

D.

Changes in working capital

E.

The project's terminal value

Page: 5 / 8
Total 184 questions