CIMA CIMAPRO19-P01-1 Exam : Management Accounting

Your company operates using TQM. As the accountant you have been tasked with producing a quality report so that management can understand how well their new range of products is being received and how the quality of the products has improved. In order to produce the report you have requested information from different departments, but you soon realise not all the information is relevant. You have information regarding the following:
Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit Which pieces of information are relevant to your report? Select ALL that apply.

• A. Customer returns and refunds
• B. Number of defects per unit
• C. Cost of downtime
• D. Environmental costs
• E. Training costs

Which of the following are examples of feedforward control?
Select ALL that apply.

• A. Labour costs for individual jobs are forecast. The forecasts are used as the basis to determine the correct selling price to be quoted to the customer.
• B. A target is set for the cash balance at the period end. The balance shown in the cash forecast is compared with the target and action is taken to ensure that the target balance is achieved.
• C. Actual inventory volumes are compared with planned volumes and control action is taken to correct any differences.
• D. The sales volume for the next quarter is forecast and compared with the planned volume. If there is a forecast shortfall action is taken to correct the difference.

A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.

• A. The sales forecast for year 2 Quarter 4 = 25,100 units
• B. The sales forecast for year 2 Quarter 4 = 35,100 units
• C. The sales forecast for year 2 Quarter 4 = 22,600 units
• D. The sales forecast for year 2 Quarter 4 = 38,100 units

'A zero-based budgeting system involves establishing decision packages that are then ranked in order of their relative importance in meeting the organization's objectives'.
Which of the following is true regarding he difficulties that a not-for-profit organization may experience when trying to rank decision packages.
Select ALL true statements.

• A. The activities that are being proposed in a budget are described in variable packages. There will often be more less than one decision package proposed for an activity.
• B. Some of these packages will be mutually inclusive and will require management to select the best solution to the issue involved.
• C. Some of these packages will be inclusive and will require operations to select the best solution to the issue involved.
• D. Management may decide to accept packages even though the activity was done last year. In this way the organization is said to be starting from a 100% cost base with each package given due consideration.
• E. Each decision package is evaluated. Its costs are compared to its benefits and net present values or other measures calculated.
• F. In a public sector body, for example, decision packages will relate to very disparate activities.
• G. In a public sector body, for example, decision packages will relate profit making activities.
• H. Management may decide to reject packages even though the activity was done last year. In this way the organization is said to be starting from a zero base with each package given due consideration.
• I. The activities that are being proposed in a budget are described in decision packages. There will often be more than one decision package proposed for an activity.

A time series (TS) is made up of two main components i.e. trend (T) and the seasonal variation (SV).
The equation that represents the seasonal variation under the additive model is: