Cima C01 Exam Question No 40

Question No 40:

A project requires an initial investment of $300,000. The following cash inflows have been estimated for the life of the project:

Year	$
1	50,000
2	120,000
3	200,000

Using a discount rate of 8%, the net present value of the project to the nearest $’000 is $

Yr 0: 300,000 X 1 =	(300,000)
Yr 1: 50,000 x .926 =	46,300
Yr 2: 120,000 x .857 =	102,840
Yr 3: 200,000 x .794 =	158,800
	7,940 rounds to $8,000

Answer: 8,000

Cima C01 Exam Question No 39

Question No 39:

For decision-making purposes, which of the following are relevant costs?
(i) Avoidable cost
(ii) Future cost
(iii) Opportunity cost
(iv) Differential cost

A. (i), (ii), (iii) and (iv)
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i) and (iv) only

Answer: A

Cima C01 Exam Question No 38

Question No 38:

ZK has been asked to quote a price for a special job that must be completed within one week.
The job requires a total of 100 skilled labour hours and 50 unskilled labour hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35-hour week.

Currently, skilled labour has spare capacity amounting to 75 labour hours each week and unskilled labour has spare capacity amounting to 100 labour hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers.
The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by ZK and the current replacement cost for the materials is $4,500. The total scrap value of the materials is $1,000.

What is the relevant cost to ZK of using the materials in inventory on this job?

A. $1,000
B. $3,500
C. $4,500
D. $5,000

Answer: C

Cima C01 Exam Question No 37

Question No 37:

ZK has been asked to quote a price for a special job that must be completed within one week.
The job requires a total of 100 skilled labour hours and 50 unskilled labour hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35-hour week.
Currently, skilled labour has spare capacity amounting to 75 labour hours each week and unskilled labour has spare capacity amounting to 100 labour hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers.
The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by ZK and the current replacement cost for the materials is $4,500. The total scrap value of the materials is $1,000.
What is the total relevant cost to ZK of using skilled and unskilled labour on this job?

A. Nil
B. $375
C. $775
D. $1,540

Answer: B

Cima C01 Exam Question No 36

Question No 36:

W Ltd makes leather purses. It has drawn up the following budget for its next financial period:

Selling price per unit $11.60
Variable production cost per unit $3.40
Sales commission 5% of selling price
Fixed production costs $430,500
Fixed selling and administration costs $198,150
Sales 90,000 units

The margin of safety represents

A. 5.6% of budgeted sales
B. 8.3% of budgeted sales
C. 11.6% of budgeted sales
D. 14.8% of budgeted sales

Answer: B

Cima C01 Exam Question No 35

Question No 35:

This graph is known as a

A. Conventional breakeven chart
B. Contribution breakeven chart
C. Semi-variable cost chart
D. Profit volume chart

Answer: D

Cima C01 Exam Question No 34

Question No 34:

 Point K on the graph indicates the value of

A. Semi-variable cost
B. Total cost
C. Variable cost
D. Fixed cost

Answer: D