CIMA CIMAPRO15-P01-X1-ENG Value Pack (Frequently Bought Together)

A company is preparing its annual budget and is estimating the number of units of Product A 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:
y = a + bx where
y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1 Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:
Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

• A. The expected sales for year 2 Quarter 4 was 33000 units
• B. The expected sales for year 2 Quarter 4 was 32000 units
• C. The expected sales for year 2 Quarter 4 was 32700 units
• D. The expected sales for year 2 Quarter 4 was 40000 units

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

• A. 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.
• B. The budget provides an external benchmark against which performance against which performance can be evaluated.
• C. Budgeting forces an organization's management to look ahead and set performance targets.
• D. 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.
• E. 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.
• F. Another benefit of budgeting is to set targets to motivate managers and optimize their performance.
• G. The budget acts as a variable mechanism, with actual results being compared with budget.

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

Identify, using graphical linear programming, the weekly production schedule for products J and L that will maximize the profits of JRL during the next four weeks.

• A. Optimum plan (including major customer order) is therefore:
  W 1, 000 units
  R 600 units
  X 2,000 units
• B. Optimum plan (including major customer order) is therefore:
  W 950 units
  R 750 units
  X 2,300 units
• C. Optimum plan (including major customer order) is therefore:
  W 900 units
  R 650 units
  X 2,000 units
• D. Optimum plan (including major customer order) is therefore:
  W 900 units
  R 700 units
  X 2,100 units
• E. Optimum plan (including major customer order) is therefore:
  W 910 units
  R 800 units
  X 2,200 units

LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled 120,960 kilometers. Total costs were $194,400.
LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled.
LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates:
* All costs will be 3% higher than the previous year due to inflation
* Efficiency will remain unchanged
* A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled.
Calculate the following costs to be included in the forthcoming year's budget:
(i) the total variable costs related to the number of parcels delivered.
(ii) the total variable costs related to the distance travelled.

• A. Parcel related cost for next year = $115,306; Distance related costs for next year = $31,590
• B. Parcel related cost for next year = $112,308; Distance related costs for next year = $79,590
• C. Parcel related cost for next year = $112,118; Distance related costs for next year = $59,699
• D. Parcel related cost for next year = $105,306; Distance related costs for next year = $30,590
• E. Parcel related cost for next year = $109,118; Distance related costs for next year = $89,699

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine.
The company's existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department's support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The company's accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department:

Calculate the annual profit per machine for each of the three sizes of machine, using the current basis for charging the costs of support activities to machines.

• A. The profit per machine for the medium machine was: $1350
• B. The profit per machine for the medium machine was: $1250
• C. The profit per machine for the medium machine was: $1376
• D. The profit per machine for the medium machine was: $1276