Summer Special - 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: c4sdisc65

P2 PDF

$69.65

$199

3 Months Free Update

  • Printable Format
  • Value of Money
  • 100% Pass Assurance
  • Verified Answers
  • Researched by Industry Experts
  • Based on Real Exams Scenarios
  • 100% Real Questions

P2 PDF + Testing Engine

$87.15

$249

3 Months Free Update

  • Exam Name: Advanced Management Accounting
  • Last Update: Jun 15, 2024
  • Questions and Answers: 202
  • Free Real Questions Demo
  • Recommended by Industry Experts
  • Best Economical Package
  • Immediate Access

P2 Engine

$78.75

$225

3 Months Free Update

  • Best Testing Engine
  • One Click installation
  • Recommended by Teachers
  • Easy to use
  • 3 Modes of Learning
  • State of Art Technology
  • 100% Real Questions included

P2 Practice Exam Questions with Answers Advanced Management Accounting Certification

Question # 6

A goal congruent transfer price will always:

A.

motivate divisional managers by maximising divisional autonomy.

B.

align the decision making of divisional managers with the objectives of the organization as a whole.

C.

align the decision making of divisional managers with the maximization of divisional profit.

D.

ensure that profits are shared equally between the supplying and receiving divisions.

Full Access
Question # 7

During a Board meeting at a manufacturing company, concerns regarding the analysing of the current inventory management systems and processes are brought up.

Attendees of the meeting have made several claims and suggestions but the managing director admits that he does not know who to believe and so has asked you to let him know which statements of the following

statements are TRUE?

Select ALL that apply.

A.

Standard Costing is ideal for organisations running a JIT inventory system

B.

A JIT system is likely to result in economies of scale

C.

ABC is ideal for organisations running a JIT inventory system

D.

Standard costing is ideal for organisations in a TQM environment

E.

A JIT inventory system reduces inventory costs

Full Access
Question # 8

We have 2 divisions with the following information: Profit before depreciation: B1=$800,000, B2=S1,000,000; Assets: B1 =$2,000,000, B2=S3,000,000; Capital employed: B1 = $1,700,000 and B2 = $2,550,000. 20%

straight-line depreciation is used.

Calculate ROI for each division.

A.

ROI for B1 is 47% and ROI for B2 is 39.2%

B.

ROI for B1 is 25.5% and ROI for B2 is 17.7%

C.

ROI for B1 is 23.5% and ROI for B2 is 23.5%

D.

ROI for B1 is 23.5% and ROI for B2 is 15.7%

Full Access
Question # 9

The following forecast data relate to the first three years of a five year project.

The project will require an initial investment of $30,000 in non-current assets.

All revenue will be received in the year it is earned and all operating costs will be paid in the year they are incurred. Tax will be paid in the following year.

Tax depreciation will be 25% per annum of the reducing balance.

The taxation rate will be 30% of taxable profits.

P2 question answer

What is the forecast after tax cash flow for year 3 (to the nearest $10)?

A.

$45,890

B.

$39,750

C.

$46,000

D.

$38,500

Full Access
Question # 10

A project with a 6 year life generates a positive net present value of $1,100. The discount rate is 8%.

To the nearest $, the equivalent annual benefit is:

A.

$5,085

B.

$238

C.

$177

D.

$693

Full Access
Question # 11

Which of the following is the ideal basis to use for a transfer price when there is a perfect external market?

A.

Actual variable cost

B.

Market price

C.

Standard variable cost

D.

Full cost plus

Full Access
Question # 12

Kaizen costing is being used by an organization to gradually reduce the unit cost of one of its products in order to achieve a 20% mark up on the product's cost.

The selling price of the product must be $72 per unit and this selling price has been maintained for two years.

Two years ago the product's cost was $3 per unit more than its selling price. Kaizen costing has achieved an 8% reduction from the previous period's unit cost in each of the past two years. The organization expects to continue to achieve the same rate of cost reduction next year.

Which of the following statements provides an accurate analysis of the extent to which Kaizen costing has been successful in achieving the required unit cost for the product?

A.

Kaizen costing has successfully achieved the necessary cost reduction.

B.

The current cost is $63.00 per unit and the required unit cost will be achieved next year.

C.

Kaizen costing has not yet achieved the required unit cost of $57.60 because a greater rate of reduction in costs was needed.

D.

The current cost is $63.48 per unit and the required unit cost will be achieved next year.

Full Access
Question # 13

For a complex and repetitive task, which of the following correctly describes a steep learning curve?

A.

Repeated training may be required but this will not necessarily result in a reduction in the time taken to complete the task.

B.

After the initial learning period there will be a rapid reduction in the time taken to complete the task.

C.

There will be a long period before there is a reduction in the time taken to complete the task.

D.

After the initial learning period there will be a slow reduction in the time taken to complete the task.

Full Access
Question # 14

The following data are available for an investment centre for the latest period. Where appropriate the data have been adjusted to reflect economic values.

What cost of capital has been used to calculate the EVA?

P2 question answer

Give your answer to the nearest percentage.

Full Access
Question # 15

A positive net present value (NPV) has been calculated for a project to launch a new product. An additional calculation is required to identify the sensitivity of the NPV to changes in the forecast total sales volume.

The present value of which of the following would be used in the calculation?

A.

Contribution

B.

Operating profit

C.

Fixed overheads

D.

Net profit

Full Access
Question # 16

SQ has the opportunity to invest in project X. The net present value for project X is $12,600. Cash inflows occur in years 1, 2 and 3. The company's cost of capital is 14%.

Calculate the annualized equivalent annuity of project X.

Give your answer to the nearest whole $.

.

Full Access
Question # 17

In accordance with a just-in-time (JIT) philosophy, which of the following is regarded as a value added activity?

A.

Inspecting raw material deliveries

B.

Moving work in progress around production facilities

C.

Holding inventory

D.

Dispatching products to customers

Full Access
Question # 18

A small company currently uses an information system that was implemented several years ago and is based entirely on internal data. The company is considering replacing it with a more up to date system. It has been suggested that the new system should include the use of big data.

Which TWO of the following statements are correct?

A.

Big data can provide a small company with useful information in the quest for competitive advantage.

B.

Big data is concerned solely with a dramatic increase in the amount of internal data stored.

C.

Big data can be used by a small company to identify new opportunities.

D.

It is not possible to value the potential benefits to a small company of an improved information system.

E.

Big data is only applicable to large companies which have substantial funds to invest in information systems.

Full Access
Question # 19

$30.328 million is to be invested in a project that will yield annual net cash inflows of $8 million for 5 years.

What is the project's internal rate of return (IRR)?

Give your answer to the nearest whole percentage.

Full Access
Question # 20

In order to support decision making, management accounting information categorizes costs in a variety of ways.

Responsibility accounting primarily distinguishes between costs on the basis that they are either:

A.

sunk or opportunity costs

B.

fixed or variable costs

C.

controllable or uncontrollable costs

D.

relevant or non-relevant costs

Full Access
Question # 21

An organization has carried out a risk assessment for a project.

Which of the following possible outcomes are examples of upside risk?

Select ALL that apply.

A.

The project might be developed more quickly than expected.

B.

The project's costs might be higher than expected.

C.

The project's Economic Value Added might be higher than expected.

D.

The project's environmental damage might be less than expected.

E.

The project's payback period might be greater than expected.

Full Access
Question # 22

Company TTM has the opportunity to invest $60,000 in a project. The project is anticipated to produce annual returns of $12,500 each year for 8 years. The cost of capital is 12%.

What is the net present value of the project? Give your answer to the nearest whole number.

Full Access
Question # 23

SDF makes cars. Demand for one of SDF's most popular models has declined because of a long-running television program. SDF's car is driven by a villainous character in the program and that has created such a negative association that sales have declined so significantly that SDF is planning to discontinue production.

Which of the following statements is correct? Select ALL that apply.

A.

Business risks can arise from unexpected events.

B.

The use of a product in a television program can create upside risks.

C.

SDF should have considered the possibility that sales of this car could be affected by public perception, even though the car's practical attributes are unchanged.

D.

SDF's board should accept full responsibility for permitting this to happen.

E.

SDF's sales department should have prevented the television production company from buying the car.

Full Access
Question # 24

Place the correct category of Value Chain activity against each of the activities described below.

P2 question answer

Full Access
Question # 25

Place each method of analysing risk and uncertainty against the statement that describes it correctly.

P2 question answer

Full Access
Question # 26

S is considering launching a new product.

The variable costs of manufacturing the product will be $6 per unit.

The product must be manufactured in batches of 2,000 units. The machine set up cost for each batch will be $4,000.

Maximum capacity will be 8,000 units each year.

Market research has shown that the unit selling price will affect the demand for the product as follows.

P2 question answer

Which unit selling price will maximise annual profit?

A.

$8.00

B.

$11.00

C.

$15.00

D.

$20.00

Full Access
Question # 27

One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:

A.

determined

B.

wasted

C.

under absorbed

D.

amortised

Full Access
Question # 28

How does beyond budgeting NOT help to resolve the weaknesses of traditional budgeting? Select ALL that apply.

A.

Managers are set goals and targets to achieve rather than abiding by strict budgets and variances.

B.

Managers have a much larger scope of business goals that when achieved, will increase shareholder value.

C.

Managers are given more freedom and control over their business units under Beyond budgeting.

D.

Managers focus on keeping costs low in the short term to ensure maximised profits.

E.

Managers are given incentives to meet or undercut budgets.

F.

Managers are encouraged to designate responsibility to others to lessen their workload so they may concentrate on important tasks.

Full Access
Question # 29

A group consists of two divisions, Alpha and Beta, both of which are profit centers. Alpha sells a product to the external market and also sells it as an intermediate product to Beta.

Beta then processes further before selling the final product to the external market. The current group transfer pricing policy requires Alpha to charge Beta with the variable cost of production.

Which of the following statements is valid?

A.

A two-part tariff would provide a more effective basis for assessing divisional performance.

B.

A dual pricing approach to transfer pricing would increase Beta's total profit and reduce Alpha's.

C.

If Alpha has unfulfilled external demand then the transfer price should always be set at variable cost.

D.

Transfer prices only affect the assessment of performance of investment centres, not of profit centres.

Full Access
Question # 30

Which of the following statements about modified internal rate of return (MIRR) and internal rate of return (IRR) is correct?

A.

MIRR uses a more realistic reinvestment assumption than IRR.

B.

MIRR favours projects with long payback periods whereas IRR does not.

C.

MIRR and IRR will always rank competing projects in the same order.

D.

A project's MIRR will always be higher than its IRR.

Full Access
Question # 31

A risk averse decision maker will:

A.

accept a risk if it is accompanied by a satisfactory potential return.

B.

avoid all risks.

C.

accept a risk if the expected value of the potential outcomes is positive.

D.

always select the course of action that has the lowest risk.

Full Access
Question # 32

Using the Value Chain model for a manufacturing company, place the correct primary activity classification against each of the activities described.

P2 question answer

Full Access
Question # 33

Residual income is an appropriate performance measure for which type of responsibility centre?

A.

Cost centre

B.

Revenue centre

C.

Investment centre

D.

Profit centre

Full Access
Question # 34

An organization's transfer pricing system involves:

• The transferring division receiving $20 per unit; an amount equal to its variable costs.

• The receiving division paying an additional $30,000 every month to the transferring division.

Which transfer pricing system is the organization using?

A.

Dual transfer prices

B.

Two part tariff

C.

Cost-plus

D.

Variable cost plus opportunity cost

Full Access
Question # 35

Using Porter's value chain, place the tokens to correctly categories the following activities of a manufacturing company.

P2 question answer

Full Access
Question # 36

Under the absorption costing system, which simply allocates our entire amount of production overheads based on machine hours, we have found that out of our 4 products, 2 are profitable, 1 breaks even and 1 is

making a loss.

Model D the most recent addition to the range is making a large loss after the price of a major component rose dramatically. Model A is only just breaking now too as costs have risen. The only two products making profit

are Models B and C. These two require the least about of machine hours so this makes sense.

However, the management have a few reservations. They cannot understand how B is so profitable. It requires several more stages of production than the other models and a whole day longer to be customised by an

expert.

Select the correct answer from the list below that can help to explain this situation.

A.

ABC would show that only a small amount of our overheads are based on machine hours.

B.

ABC could have shown that some products are selling poorly and should be discontinued.

C.

ABC would show that if overheads are shared equally that model B would be less profitable.

Full Access
Question # 37

Which of the following statements about learning curves is correct?

A.

The learning index for an 80% learning curve is calculated as log 2 divided by log 0.8.

B.

The learning index for an 80% learning curve is calculated as log 0.8 divided by log 2.

C.

A 90% learning curve indicates a faster rate of learning than an 80% learning curve.

D.

The learning index will always have a positive value.

Full Access
Question # 38

A company is considering investing $150,000 in a project which will generate the following contributions during the first three years.

Tax depreciation allowance is 25% each year of the reducing balance.

P2 question answer

The taxation rate is 30% of taxable profits and tax is payable in the year after that in which it arises.

To the nearest $10, what is the forecast total project cash flow in year 3?

A.

$82,840

B.

$74,400

C.

$85,650

D.

$71,430

Full Access
Question # 39

LL produces an item, the Z, for which the demand curve is estimated to be:

P = 10 - 0.0001Q

where, P is the unit price in $ and Q is the annual sales volume in units;

Marginal revenue (MR) = 10 - 0.0002Q

The variable cost of producing the Z is $2 per unit. The annual fixed costs of production are $110,000.

What is the profit maximizing output level?

A.

50,000 units

B.

45,000 units

C.

40,000 units

D.

35,000 units

Full Access
Question # 40

A company is considering two mutually exclusive projects, an analysis of which is given below:

P2 question answer

The company's cost of capital is 12%.

Assuming an objective of maximising shareholders' wealth, which project would be recommmended?

A.

Project B because it has the higher net present value.

B.

Project B because it has the shorter payback period.

C.

Project A because it has the higher accounting rate of return.

D.

Project A because it has the higher internal rate of return.

Full Access
Question # 41

Company D is about to launch an innovative and unique product which may face direct competition within three years. The company needs to achieve a rapid payback on all investments because it has limited access to external finance.

Which is the most appropriate pricing strategy for company D's new product, and for what reason?

A.

Market skimming because it exploits areas of the market which are sensitive to price.

B.

Penetration pricing because it can be used to rapidly build sales volume in mature markets.

C.

Market skimming because it enables high prices to be charged to buyers who want the product as soon as possible.

D.

Penetration pricing because it can be used to rapidly build sales volume in high growth markets.

Full Access
Question # 42

TTR Ltd plans to purchase a new plant for $1,000m on the 1st of January 20X6. The annual sales expected from the production of this plant is S400m per year. The plant has an expected life of five years. The financial

accountant has computed the NPV of the project at $61.42m considering a discount rate of 10%.

The marketing director wants to know the percentage drop in revenue that the sales team can afford before the project becomes unviable. Which of the following indicates the percentage required by the marketing

director?

A.

4.05%

B.

5.05%

C.

4.5%

D.

10%

Full Access
Question # 43

Which of the following statements regarding multinational transfer pricing is INCORRECT?

A.

Transfer prices affect tax liabilities and royalties because of different laws in countries.

B.

If transfer prices are inflated, this will increase profits of buying division.

C.

Companies have incentives to set transfer price to increase revenues in low-tax countries.

D.

Companies have incentives to set transfer price to increase costs in high-tax countries.

Full Access
Question # 44

Which of the following correctly defines the expected value of a project?

A.

The weighted average of the possible outcomes of the project.

B.

The actual amount of incremental wealth that the project will generate.

C.

The most likely amount of incremental wealth that the project will generate.

D.

The present value of the positive cash flows that the project will generate.

Full Access
Question # 45

A company manufactures and sells a range of products. Relevant data for one unit of a particular product are as follows.

P2 question answer

The company is using target costing to ensure that it achieves a contribution of 40% of the market selling price.

In order to achieve the target cost, by how much does the company need to reduce the variable cost per unit?

A.

$ 2.10

B.

$ 0.50

C.

$ 1.40

D.

$ 2.60

Full Access
Question # 46

Which of the following statements is correct?

A.

Risk can be quantified and probabilities can be assigned reliably to the possible outcomes.

B.

Uncertainty cannot be quantified and probabilities can be assigned reliably to the possible outcomes.

C.

Risk cannot be quantified and probabilities cannot be assigned reliably to the possible outcomes.

D.

Uncertainty can be quantified and probabilities can be assigned reliably to the possible outcomes.

Full Access
Question # 47

The discount rate at which the net present value (NPV) is zero is known as the

A.

accounting rate of return

B.

risk adjusted discount rate

C.

internal rate of return

D.

breakeven point

Full Access
Question # 48

The Chief Executive of a large manufacturing company has made the following comment.

"All of our competitors are using both just-in-time(JIT) and Total Quality Management (TQM) whereas we have never used either. Consequently we are lagging behind our competitors because their levels of inventory and quality costs are significantly below ours. I want to see JIT fully implemented, both for purchasing and for production, in 4 weeks' time and TQM fully implemented 4 weeks after that."

Which of the following provide appropriate advice to the Chief Executive?

Select ALL that apply.

A.

Full implementation of JIT is unlikely to be successful unless a TQM environment has first been established.

B.

Implementing TQM from scratch within 8 weeks should be feasible for a large manufacturing company, but implementing JIT within 4 weeks is unlikely to be feasible.

C.

Total quality costs are likely to begin declining immediately once the process of implementing TQM has commenced.

D.

JIT offers the long run prospect of significantly reducing inventory.

E.

It would be possible to implement TQM without implementing JIT.

F.

It is not possible to implement JIT for production without first implementing JIT for purchasing.

Full Access
Question # 49

When making an investment decision, which THREE of the following are reasons why receiving $1 today is preferable to receiving $1 in the future?

A.

Uncertainty

B.

Inflation

C.

Taxation

D.

Re-investment opportunities

E.

Depreciation

Full Access
Question # 50

A not-for-profit organization measures performance using the three Es. If the organization has made optimum utilization of available resources then it should be described as:

A.

Efficient

B.

Effective

C.

Economic

D.

Enterprising

Full Access
Question # 51

A company expects to sell 3,600 units of Product A at a selling price of $750 per unit during the forthcoming year. The currently expected variable cost per unit is $860 per unit. The company requires a return of 15% during the forthcoming year on its investment of $2.4 million in Product A. Absorbed general overheads are expected to amount to $40 per unit.

What is the target cost for each unit of product A in the forthcoming year?

A.

$650

B.

$250

C.

$900

D.

$850

Full Access
Question # 52

The following cost of quality report has been prepared for the latest period.

P2 question answer

What is the difference between the cost of conformance and the cost of non-conformance?

Full Access
Question # 53

An organization employs a dual pricing basis for the transfer of components between its divisions. This means that:

A.

each division has a separate transfer price for a single transaction.

B.

the transfer price is based on marginal cost with a separate charge to allow for fixed costs.

C.

the transfer price is based on the cost of the product plus a mark-up for profit.

D.

the transfer price is based on the market price less a discount.

Full Access
Question # 54

A company makes three products, E, F and G. Total overheads for the year are expected to be $1.2 million, with the following split between cost pools:

Cost driver information has been estimated as follows:

P2 question answer

The company plans to make 10,000 units of product E in the year, with an expected direct cost of $0.60 per unit. This annual production of product E is expected to require 20 quality inspections, 28 purchase requisitions, and 400 kilogrammes of materials.

What is the overhead cost per unit of product E?

A.

$0.10

B.

$0.70

C.

$3.57

D.

$4.17

Full Access
Question # 55

Which THREE of the following conditions are required for a sustained learning curve to apply?

A.

Labor intensive production

B.

Continuous production

C.

A complex production process

D.

Frequent machine maintenance

E.

Continuous product development

F.

Frequent staff rotation

Full Access
Question # 56

An investment appraisal has identified that a project has a positive net present value when discounted at the company's cost of capital. If the cost of capital is now increased, indicate whether each of the following appraisal measures will increase, decrease or stay the same.

P2 question answer

Full Access
Question # 57

A firm of accountants uses an activity-based costing system. The firm's costing system permits staff to indicate specific tasks undertaken for clients, such as requesting missing information. The amount charged for a request for missing information is based on the following analysis.

Each request takes an average of 15 minutes of professional staff time. Professional staff are charged out at $100 per hour.

Administrators then process the information request and prepare a standard letter. The average time administration staff spend on each information request is 20 minutes. The cost of administration staff at the firm is $75,600 per year. Administration staff work for a total of 6,000 hours per year. The cost of printing and posting a letter is $1.

Calculate the cost of an information request.

Give your answer to 2 decimal places.

Full Access
Question # 58

Which of the following factors would prevent a learning curve being observed for a task?

A.

The task has a significant automated element.

B.

The task is repetitive.

C.

The task has a significant manual element.

D.

There is a low rate of labor turnover of the staff carrying out the task.

Full Access
Question # 59

An organization produces only two products. Each month it produces 1,000 units of product A and 10,000 units of product B.

Using traditional absorption costing the products have very similar unit costs. However when costs are calculated using activity-based costing (ABC), product A's unit cost is significantly higher than that of product B.

Which of the following factors has the potential to cause this difference?

Select ALL that apply.

A.

ABC cost calculations are not simply volume-related.

B.

ABC costs are driven only by the volume of output.

C.

ABC considers only marginal costs.

D.

ABC uses multiple cost drivers to trace overhead costs to products.

E.

ABC considers only direct costs.

Full Access