Cima C01 Exam Question No 20

Question No 20:

The term “budget slack” refers to the

A. Extended lead time between the preparation of the functional budgets and the master budget.
B. Difference between the budgeted output and the break even output.
C. Additional capacity available which can be budgeted for.
D. Deliberate over-estimation of costs and under-estimation of revenues in a budget.

Answer: D

Cima C01 Exam Question No 19

Question No 19:

The following extract is taken from the overhead budget of X:

Budgeted activity                50%         75%
Budgeted overhead         $100,000     $112,500

The overhead budget for an activity level of 80% would be
A. $115,000
B. $120,000
C. $136,000
D. $160,000

Answer: A

Cima C01 Exam Question No 18

Question No 18:

A flexible budget is?

A. A budget which by recognizing different cost behavior patterns is designed to change as the volume of activity changes.
B. A budget for a defined period of time which includes planned revenues, expenses, assets, liabilities and cash flow.
C. A budget which is prepared for a period of one year which is reviewed monthly, whereby each time actual results are reported, a further forecast period is added and the intermediate period forecasts are updated.
D. A budget of semi-variable production costs only.

Answer: A

Cima C01 Exam Question No 17

Question No 17:

What is the divisionalisation and controlling people
Centralization - Advantages?
The following details have been extracted from the receivables records of X:
Invoices paid in the month after sale             60%
Invoices paid in the second month after sale        20%
Invoices paid in the third month after sale         15%
Bad debts                         5%
Credit sales for June to August 2011 are budgeted as follows:
June                             $100,000
July                             $150,000
August                             $130,000
Customers paying in the month after sale are entitled to deduct a 2% settlement discount.
Invoices are issued on the last day of the month.
The amount budgeted to be received in September 2011 from credit sales is:

A. $115,190
B. $116,750
C. $121,440
D. $123,000

Answer: C

Cima C01 Exam Question No 16

Question No 16:

Based on the data below, what is the amount of the overhead under-/over-absorbed?

Budgeted overheads                      $493,200
Budgeted machine hours             10,960 
Actual machine hours                  10,493
Actual overheads                          $514,157

A. $20,957 under-absorbed
B. $21,015 over-absorbed
C. $21,015 under-absorbed
D. $41,972 under-absorbed

Answer: D

Cima C01 Exam Question No 15

Question No 15:

Fixed costs are conventionally deemed to be:

A. Constant per unit of output
B. Constant in total when production volume changes
C. Outside the control of management
D. Those unaffected by inflation

Answer: B

Cima C01 Exam Question No 14

Question No 14:

Which ONE of the following statements is true?

A. The total variable cost varies with a measure of activity.
B. A variable cost is an unavoidable cost.
C. A variable cost is not relevant for decision-making.
D. A variable cost becomes fixed in the long run.

Answer: A