Cima C01 Exam Question No 23

Question No 23:

The principal budget factor is the?

A. Factor which limits the activities of the organisation and is often the starting point in budget preparation.
B. Budgeted revenue expected in a forthcoming period.
C. Main budget into which all subsidiary budgets are consolidated.
D. Overestimation of revenue budgets and underestimation of cost budgets, which operates as a safety factor against risk.

Answer: A

Cima C01 Exam Question No 22

Question No 22:

RS is currently preparing the production budget for Product A and the material purchase budget for material X for the forthcoming year. Each unit of Product A requires 5 kgs of material X.
The anticipated opening inventory for Product A is 5,000 units and the company wishes to increase the closing inventory by 30% by the end of the year.

The anticipated opening inventory for material X is 50,000 kgs and in order to avoid stock outs the required closing inventory has been increased to 60,000 kgs.
The Sales Director has confirmed a sales requirement of 70,000 units of Product A. What will be the purchases budget for material X?

A. 347,500 kgs
B. 350,000 kgs
C. 357,500 kgs
D. 367,500 kgs

Answer: D

Cima C01 Exam Question No 21

Question No 21:

RS is currently preparing the production budget for Product A and the material purchase budget for material X for the forthcoming year. Each unit of Product A requires 5 kgs of material X.
The anticipated opening inventory for Product A is 5,000 units and the company wishes to increase the closing inventory by 30% by the end of the year.
The anticipated opening inventory for material X is 50,000 kgs and in order to avoid stock outs the required closing inventory has been increased to 60,000 kgs.
The Sales Director has confirmed a sales requirement of 70,000 units of Product A.
How many units of Product A will need to be produced?

A. 68,500 units
B. 71,500 units
C. 76,500 units
D. 80,000 units

Answer: B

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