Question 1

Which of the following statements about the use of traditional budgeting compared with a beyond budgeting approach is correct?

Options :

A : If the organization has devolved decision making, beyond budgeting is not appropriate because it does not allow the same level of empowerment as traditional budgeting.

B : If the organization-s products are subject to rapid technological change, beyond budgeting would allow managers to respond more quickly than under traditional budgeting.

C : If there is a dynamic external environment with fast moving opportunities, beyond budgeting will inhibit the organization-s ability to take advantage of these opportunities whereas traditional budgeting will not.

D : If the organization-s culture is such that a top down budgeting system is desired then this is better achieved by adopting beyond budgeting rather than traditional budgeting.

Answer: B

Question 2

The following summarised financial statements have been prepared by JNM's North subsidiary for the year just ended:

Calculate the North subsidiary's Residual Income, assuming that JNM's cost of capital is 10%.
Give your answer to the nearest $ million.

Options :

A : A

Answer: A

Question 3

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?

Options :

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.

Answer: C

Question 4

When considering a capital investment, relevant costs for decision making have which THREE of the following features?

Options :

A : They are future costs.

B : They are committed costs.

C : They are incremental costs.

D : They are unavoidable costs.

E : They are cash flows.

Answer: A,C

Question 5

Which of the following statements are correct with regard to responsibility centres?
Select ALL that apply.

Options :

A : Revenue centre managers have a lower level of decision-making authority than profit centre managers.

B : Revenue centre managers and profit centre managers are accountable for controllable costs only.

C : Profit centre managers and investment centre managers are responsible for the majority of operating costs incurred.

D : Investment centre managers have a higher level of managerial authority than profit centre managers.

E : Managers of profit centres have authority over the level of investment in working capital but managers of cost centres do not.

Answer: A,C,D

Higher Test Marks with Free Online CIMAPRO19-P02-1-ENG Exam Practice

Buying Options: