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CIMA P1 Sample Question Answers

Question # 1

In short-term decision making, which TWO of the following are relevant costs?

A. Sunk costs
B. Avoidable costs
C. Committed costs
D. Opportunity costs
E. Notional costs

Question # 2

Which one of the following would NOT be included in a decision to close a division of an organization?

A. Head office overheads absorbed on the basis of the number of units produced
B. Sale of unwanted non-current assets
C. Redundancy pay for employees of the division
D. Fixed costs directly attributable to the division

Question # 3

Which of the following would cause an adverse fixed overhead volume variance?

A. Actual output was higher than budgeted
B. Actual output was lower than budgeted
C. Actual expenditure was higher than budgeted
D. Actual expenditure was lower than budgeted

Question # 4

What type of budget is prepared on an annual basis taking current year operating results and adjusting them for expected growth and inflation?

A. Rolling budget
B. Incremental budget
C. Flexed budget
D. Zero-based budget

Question # 5

N prepares budgets on an annual basis by using the budget from the previous year, and then adjusting it for growth and inflation.This is an example of:

A. An incremental budget
B. A rolling budget
C. A flexed budget
D. Zero based budgeting