Updated Certification In Business Accounting

KUALA LUMPUR: The Chartered Institute of Management Accountants (CIMA) has launched an updated CIME accounting certificate (Cert BA), whose assessments as part of the update program will start in January 2017.

In a statement, the largest professional organization of management accountants in the world says the update consolidates four of five subjects in existing programs.

"The previous business math autonomous subject is now integrated into other subjects, allowing contextual practical application of mathematics.

"The full content of the program was revised and updated after thorough global industry and research in education, ensure its current and relevant," he added.

Executive Director of CIMA Education, Noel Tagoe said Cert BA was designed to bring people and successful businesses by developing skills and unlock talents.

"The update Cert BA is based on extensive research and consultation with employers and educators around the world, ensuring that the program continues to reflect the new challenges facing companies and satisfies their need for qualified professionals committed and specialized, "he added.

Previously, CIMA has introduced a computerized and updated content classification for professional qualification based on rigorous research and the Chartered Global Management Accountant World (AMG) newly created CIMA competency framework.

While the update Cert BA is an independent rating also continues to serve as a prerequisite for professional qualification.

CIMA also said the update now Cert BA more strongly aligned with the professional qualification by integrating the framework CGMA skills and integration of the "three pillars of learning" structure.

CIMA’s Vision For Management Accounting

AICPA and CIMA expand lifelong learning site with competencies in accounting and auditing

AICPA and CIMA expand lifelong learning site with competencies in accounting and auditing:

The Institute of CPA and Charter of Management Accountants (CIMA) announced today that they have expanded their learning and development of professional web sites to include skills in accounting and financial reporting, including insurance, as part of a larger effort to increasing lifelong learning in the accounting profession.
The site AICPA, CIMA and learning skills launched earlier this year to help Chartered Management Accountant World (CGMA®) designation holders to broaden their skills and build rewarding careers.

In recent months, the site was expanded to include other categories of skills such as auditing employee benefit plan, the government audit and - today - accounting and auditing. Other subject areas will be added in the coming months.

With the addition of the new accounting framework and on-site audit, accountants are now able to analyze where they may have a lack of knowledge and obtain instant personalized recommendations on various learning resources to control this area. The new framework has been developed by some of the best experts in the industry.

"Vocational training is not the quantity of time you spend on a computer or how long you sit through a presentation," said Clar Rosso, vice president of learning and competence AICPA members, in a statement. "This is the acquisition of knowledge and experience that you can and take your career to the next level. That is why an approach to skills development makes sense."

A new feature on the site called "verification of knowledge" gives multiple choice questions on specific topics, with a wrong answer activate links to learning resources on this topic AICPA. In addition, professionals can find nearby conferences leveraging location-based searches. The site is also free and easy mobile.

Cima P2 Exam Question 32

Question No 32:

KL is a transport company that has recently won a five-year government contract to provide rail transport services. The company appointed a new Director to take responsibility for the government contract. She has worked in various positions in other rail transport companies for a number of years. She has put together a team of managers by recruiting some of her former colleagues and some of KL’s current managers.

The contract stipulates that the company should prepare detailed budgets for its first year of operations to show how it intends to meet the various operating targets that are stated in the contract. The new Director is undecided about whether she should prepare the budgets herself or whether she should involve her management team, including the newly recruited managers, in the process.

Required:
Produce a report, addressed to the new Director, that discusses participative budgeting.

Note: your report must

A) Explain TWO potential benefits and TWO potential disadvantages of involving the new and existing managers in the budget setting process.

B) Provide a recommendation to the new Director.

(10 marks)

Answer:

A)An original budget is determined by predicting the expected level of activity and using standard costs to determine the expected variable cost for that level of activity. To this would then be added the expected fixed cost.
Standard costs are based on estimated resource requirements and the expected price of those resources for each unit. These values are then multiplied by the expected activity level to determine the expected variable cost of that level of activity.
Budgets are a statement of the total costs, revenues and resource requirements expected for the budgeted level of activity. It is this budget that is approved by the Board of Directors and used as the basis of comparison with actual results. However, it is most likely that the actual level of activity will differ from that budgeted. In such circumstances a simple comparison between the actual results and the original budget would be both meaningless and unfair because some of the costs and the revenues vary with the level of activity. In order to make a fair comparison flexible budgeting must be used.
Flexible budgeting recognises that, within the original budget, there are some costs and revenues that are affected by the level of activity (variable) and others that are not affected by activity levels (fixed). Using this analysis it is possible to produce a flexible budget showing the expected costs and revenues of the actual activity level. This can then be compared with the actual costs and the differences (variances) used as a measure of performance.

B)In order to fairly measure performance actual activity must be compared with the original budget to understand why the actual activity level differed from those budgeted; and actual costs and revenues should be compared with the flexible budget to fairly measure the actual costs and revenues against those expected for the actual activity achieved. Thus it is important to understand the appropriate uses of each of the original and flexed budget and how standard costs are used to compile the original budget and assist in the preparation of the flexed budget for cost comparison purposes.

Tilley: CIMA focus will remain despite new global association

A new association officially holder assembly CIMA and AICPA American Institute not dilute their brands, CIMA CEO Charles Tilley (pictured) has claimed.

In announcing its plans to launch a new partnership next year Accounting Age Tilley said he would seek to better use of resources to promote their joint nomination CGMA.

"It's not the end of them," Tilley said. "We will continue to promote management accounting, strengthening [the offer] for employers, strengthening our research and development are maintaining our objective of MA and the Royal Charter .."

CIMA and the AICPA have worked together since 2012, providing a description of the global management accounting (CGMA) to the appropriate members. The move caused some controversy with a former president of CIMA describing the joint venture foam "marketing". The initial risk has not been put before the members for a vote.

However, the two bodies are clearly very happy with his progress to take another step forward. The association, which is currently unnamed, will allow the structure and better aligned resources to further promote CGMA designation. "This will allow the partnership in action worldwide," Tilley said. "This is the expansion of our global presence."

A consultation will be launched very soon the founding members of CIMA before the decision is put to a vote at the General Meeting of April 2016. If approved, the new partnership, which will be owned 50/50 between the two bodies created in June

There are currently 150,000 accounting management represented by the CGMA designation between the two organizations. The company has seen the introduction of the principles of comprehensive management accounting, reflecting how to deal with the main risks facing accountants and values ​​that must be respected. A competency framework has also been introduced to support the need for higher skill levels, while being objective and ethical

Monday interview: Myriam Madden, CIMA

For Myriam Madden, director of finance and chairman of the Chartered Institute of Management Accountants (CIMA), there was no awareness before leaving school opportunities that the business world could offer.
And they want to travel, she said: "I had that curiosity about business, and I decided I wanted to know more about what makes a successful company."
Madden's career has enabled him to achieve two ambitions, visiting companies around the world and get a sectional view of how they work.
His CV includes leading roles change programs and financial functions in organizations such as Hewlett Packard, HBOS, the Scottish Arts Council, the NHS and Historic Scotland.
She says her desire to make a contribution in the world of business was strengthened when studying for a business degree, and when he looked to the work by CIMA said it appeared to influence key decision makers of the company, such as CEOs and CFO.
The organization is the largest professional organization in the world Management Accountants, trying to help people and companies in the public and private sectors.
Graduate, Madden joined Hewlett Packard in Edinburgh, when the technology giant was looking for graduates with a business background, "he played so much that I wanted to do"
She stayed with the company from 1987 to 2002, working for spin-off Agilent Technologies in telecommunications roles including manager of an agreement to acquire the US, European internal consultant based in London and director of support companies.
Still a resident of Edinburgh to date have already been added to travel a little further, including assignments in the United States and Europe.
While it is clear that there are differences in corporate culture throughout the world, the president of CIMA believes that eventually all the challenges that businesses face are very similar, and accounting management can address these to "on for business success, "regardless of the location of a business.
She was named president of CIMA 2015-16 in the summer and said it was a "fantastic" experience so far, leading to an organization with over 227,000 members and students in more than 170 countries.
One of his goals, he said, was to shake some of the "baggage" that can become a professional organization. "One of my motivations was really draw attention to CIMA as very modern, very dynamic, and meet the needs of the company," says Madden.
It also highlights the ethics and integrity as a key priority and "something that anchors us in all our students from the beginning and our members as they progress through their careers."
He specializes in financial and operational transformation, directed change programs in organizations with different needs and corporate cultures.
These projects can be "very difficult," he admits. "Very often, the obstacles may be the people who buy into the change that needs to be done."
Madden says it is necessary to work in the way of "putting people along this journey ... How to put a frame around it to make it easier to understand?"
Having worked in the public and private sectors, his resume includes part of HBOS between 2002 and 2004, where he led the development of project information tool for financial and operational services. He then joined the Scottish Arts Council, to boost the financial performance in a period of change and simplify the legal structures for a merger. And from May 2012, she was Director of Finance of Historic Scotland.
She said her varied experience has been very useful to him, saying: "I would encourage anyone starting their career to try as many things as you can experience expands and you can also find your own niche.".
Madden and, perhaps not surprisingly, is far from shy about recommending the world of finance and business for young people looking around a career plan.
"I think there is a fund management accounting gives a fantastic start - it just gives you that view across the enterprise," he said.
"Money makes the world, and in fact, you must understand how it makes the world."

Cima P2 Exam Question 31

Question No 31:

Explain how target costing could be of benefit to the company?

Target Costing is useful in a competitive market such as this where a company is not dominant in the market and is forced to accept the market price for its products or services.
Thus Target Costing focuses on the achievement of a unit cost which will earn the company the financial return that it requires.

The starting point for the operation of Target Costing is the unit selling price of the company's product or service. From this is deducted the required profit (to yield the company's required financial return) and the result is the target unit cost that is to be achieved. This target cost is then compared with the expected unit cost to see if the target cost is already being met or if the company needs to consider making changes which will result in a lowering of unit costs.

It may be that the effects of the learning and experience curves will reduce the present cost to the level of the target cost; or it may be that the company can achieve other cost savings provided they do not diminish the quality of the product or service as perceived by the customer.

If these cost savings cannot be made the company may have to lower its required return from the product or service or decide that it is not financially viable for it to sell this product or service in the market.

Thus Target Costing would benefit this company by forcing it to consider its internal processes and costs and to conduct these as efficiently as possible. If despite making theseas efficient as possible the required return from the product cannot be achieved, then the company should cease to make a product that is not viable and therefore would be able to focus its resources on alternative sources of income.

Movers and Shakers: Accountant George Oakes makes CIMA exams top ten list

George Oakes, 25, of Cambridge, has made an impressive feat and won a place in the top 10 worldwide in the last Chartered Institute of Management Accountants examinations case studies.

George is a driver of sales in the finance department of the headquarters of Volvo Construction Equipment in Duxford, and was second in the world in the review, with self-study. He scored 127 out of 150, besting more than 800 other students in the exam worldwide.

Marketing communications agency Mobas Chesterman Group named Ellen and Jessica Folkerts account managers to support the agency with a series of new contracts with customers including Tristel, Anson and Virbac. They will also work with established customers such as Elanco, Toshiba, NHS Blood and Transplant, Mercure, Novotel and Taylor Vinters.

Originally Sciences, which developed the diagnosis of patients with gastrointestinal diseases, has appointed CEO Paul Weinberger. He previously worked for Lumora, Enigma Diagnostics and Roche Diagnostics. It is the founder and CEO of Diasolve medical technology, and serves as a member of the Advisory Committee and Board BIVDA beautiful Diagnosis.

It recognized worldwide civil engineer Robert Mair, a member of the Royal Academy of Engineering and the Royal Society, and Civil and Environmental Engineering head of Cambridge University, and Master of Jesus College 2001-2011, he joined the House of Lords.

Earlier in his career, he spent nearly 30 years in the industry, the founder of Geotechnical Consulting Group in London. At Cambridge, he led a major research group has recently created the Center for intelligent infrastructure and construction, funded by government and industry, which is the pioneer of the innovative use of the latest technology Construction sensor. Mainly specialized in tunnels and underground construction, which is known for introducing new techniques and has acted as a consultant on various projects of high level engineering worldwide. In the United Kingdom, which has actively participated in the design and construction of the extension of the Jubilee line London Underground and Channel Tunnel Rail Link (now HS1).

He is a member of the Expert Group on engineering Crossrail project currently Europe's largest civil engineering. In 2012, he chaired the Royal Society and the Royal Academy of Engineering joint report on the extraction of shale gas. He is Chairman of the Science Advisory Council of the Ministry of Transport.

Stansted Airport exceeded 22 million passengers per year for the first time in more than six years and eight months after the approval of the 20 million per year.

Gravelle Budgens in Cambridge was selected in the Independent Achievers Academy new prices and convenience stores in the UK, in the categories availability and efficient telemetry.

There are over 50,000 of these stores in the country and the sector as a whole is worth £ 37.7bn, £ 5 million contribution to the UK economy. The winners will be announced in London at the end of next month.

Grant Thornton Matt McLoughlin appointed Chief Financial Officer of the company after 11 years with another national law firm, where he began as an apprentice before working in the ranks. Headquartered in Cambridge, and the beginning of his career in Manchester, Matt worked with UK and international buyers and sellers, providing due diligence in transactions across a variety of sectors and sizes, including acquisitions, divestitures and IPOs .

In his new role at Grant Thornton, Matt, who lives in Cambridge, it will focus on the local market and wider East of England, with its extensive experience and expertise to help companies with their ambitious growth plans through fusions and acquisitions.

Houlden Sweeney in Cambridge won the Best Property Consultancy in Cambridgeshire Awards UK property held in Grosvenor Square, London.

Meanwhile, Pure Resourcing Solutions won the People Development in the regional heat of the Chamber of Commerce of British Awards.

Cima P2 Exam Question 30

Question No 30:

Explain TWO disadvantages of "total cost plus" pricing?

Total Cost Plus pricing is a pricing technique based on determining the total cost of a product or service and adding a profit percentage to that total cost to determine the selling price.

In a competitive environment any cost inefficiencies or the use of too great a profit percentage will mean that the company is no longer able to compete and will start to lose its market share. As this happens and output volumes fall, then the total unit cost will rise due to the sharing of fixed costs among a smaller number of units. The total cost plus pricing formula will then result in increased selling prices thereby reducing still further the company's ability to compete.

Therefore one disadvantage of this approach to pricing is that it does not consider the nature of the market and as a result can lead to loss of sales and of course profits.
A second disadvantage is that the company is not motivated to save cost because if it does so this simply results in a lower selling price. Indeed if the market supports a total cost plus price then by increasing costs the size of the profit is increased!

Cima P2 Exam Question 29

Question N 29:

 Discuss the motivational factors in involving functional managers in the setting of functional budgets?

If functional managers are involved in setting their own functional budget then this should have a positive motivational effect on their attempts to achieve it. These is because they will own the budget and accept it as being a fair target, seeing it as a personal failure if they do not achieve the target that they set (and therefore believed was achievable).
The difficulty with involving managers in the budget setting process is that if their performance is to be measured by comparing the actual results with the budget they have set then they may be tempted to set an easy budget by building in budget slack. This will prevent them from performing as well as they might do if a harder, but fair and achievable, budget had been set by someone else.

Cima P2 Exam Question 28

Question No 28:

Explain how target costing could be of benefit to the company.
Target Costing is useful in a competitive market such as this where a company is not dominant in the market and is forced to accept the market price for its products or services.
Thus Target Costing focuses on the achievement of a unit cost which will earn the company the financial return that it requires.

The starting point for the operation of Target Costing is the unit selling price of the company's product or service. From this is deducted the required profit (to yield the company's required financial return) and the result is the target unit cost that is to be achieved. This target cost is then compared with the expected unit cost to see if the target cost is already being met or if the company needs to consider making changes which will result in a lowering of unit costs.

It may be that the effects of the learning and experience curves will reduce the present cost to the level of the target cost; or it may be that the company can achieve other cost savings provided they do not diminish the quality of the product or service as perceived by the customer.

If these cost savings cannot be made the company may have to lower its required return from the product or service or decide that it is not financially viable for it to sell this product or service in the market.
Thus Target Costing would benefit this company by forcing it to consider its internal processes and costs and to conduct these as efficiently as possible. If despite making theseas efficient as possible the required return from the product cannot be achieved, then the company should cease to make a product that is not viable and therefore would be able to focus its resources on alternative sources of income.

Cima P2 Exam Question 27

Question No 27:

If materials are in inventory, how are they costed?

•  In continual use - current replacement cost
• No other use (won't replace) - current resale value
• Scarce (can't replace) - opportunity cost   

Cima P2 Exam Question 26

Question No 26:

What are the two standard cost options and what is standard cost?

• Selling division measured on performance vs standard.
• Buying division profitability not impacted by flux in transfer price
• Full cost
• Full cost plus
• Variable cost plus

Cima P2 Exam Question 25

Question No 25:

Recommend, with reasons, TWO non-financial performance measures that SFG could use to evaluate the performance of the hotel managers?

One measure could consider customer satisfaction such as number of complaints and / or recommendations. In the short term saving money by cutting back on customer service might lead to long term loss of business due to a declining reputation.
Another measure might look at the number of new accommodation and events packages offered by the hotel. In the short term these would cost money to set up but in the long term they may lead to new business by achieving a competitive edge.   

Cima P2 Exam Question 24

Question No 24:

Explain why non-financial performance measures are important in the service sector?

The modern service sector is extremely competitive and as a consequence if a business is to succeed it needs to ensure that it is both efficient and that is satisfies the needs of its guests. Financial performance is important but this is described as a "lagging measure" in that it reports on what has happened. Failing to meet targets can mean that profits are not achieved and that inadequate current returns are obtained. However, short term action to improve current financial performance might, in the long term, be at the expense of the company's interests. This is why modern thinking suggests that non-financial measures may be more appropriate in assessing performance. Non-financial "leading" measures indicate how well the company is doing things that can lead to future profits.

Cima P2 Exam Questions 25

Question No 25:

Explain why non-financial performance measures are important in the service sector.

The modern service sector is extremely competitive and as a consequence if a business is to succeed it needs to ensure that it is both efficient and that is satisfies the needs of its guests. Financial performance is important but this is described as a "lagging measure" in that it reports on what has happened. Failing to meet targets can mean that profits are not achieved and that inadequate current returns are obtained. However, short term action to improve current financial performance might, in the long term, be at the expense of the company's interests. This is why modern thinking suggests that non-financial measures may be more appropriate in assessing performance. Non-financial "leading" measures indicate how well the company is doing things that can lead to future profits.

Cima P2 Exam Questions 23

Question No 23:

Explain, the importance of calculating planning and operational variances for responsibility centers.

The market size is not within the control of the sales manager and therefore variances caused by changes in the market size would be regarded as planning variances. However, variances caused by changes in the selling prices and consequently the selling price variances and market shares would be within the control of the sales manager and treated as operating variances. The market size variance compares the original and revised market sizes. This is unchanged for DVD players so the only variance that occurs relates to the Blu-ray players and is: 500 players x $95 = $47,500 F It is important to make this distinction because as can be seen from the scenario the measurement of the manager's performance is distorted if the revised market size is ignored. The favorable volume variance of $19,000 referred to in the sales manager's e-mail is made up of two elements, one of which, the market size, is a planning variance which is outside their control. It is this that has caused the overall volume variance to be favorable, and thus the manager is not responsible for the overall favorable performance

Cima P2 Exam Questions 22

Question No 22:

What is the differences between Target Costing and Kaizen Costing?

One of differences is that Target Costing applies before production commences whereas Kaizen Costing applies once production has commenced. Another difference is that although both Target Costing and Kaizen Costing involve making changes to improve results, Target Costing looks at making significant changes in order to reduce the expected cost until it reaches the Target Cost necessary to achieve the Target Profit from the given selling price. Kaizen Costing deals with making a number of further small improvements as a result of involving everyone in the process.

Cima P2 Exam Questions 21

Questions No 21:

Explain how JYT could use Kaizen Costing to improve its future performance?

Kaizen Costing is a system that is used once production has commenced. Kaizen means improvement and it is applied by continually striving to improve. However, Kaizen does not look for large significant improvements; instead it is based around making small improvements continuously. It is a group effort in which everyone is involved. It should become part of every employee's daily routine to constantly look for ways to improve the workflow within the organization. Kaizen is based around a continuous circle of Plan, Do, Check, Act. Plan refers to the need to set a target for improvement as without a benchmark success cannot be measured. Do refers to the implementation of the plan. Check is the determination of whether the plan improved the process. Act means standardize the improved procedure so that it can be repeated.

Cima P2 Exam Question No 20

Question No 20:

Explain how JYT could use Target Costing

Target Costing is a system that is used when the company is unable to dictate the selling price of its products and (like JYT) is forced to accept the market price of the item it is planning to market. Once the specification of the product has been completed, then the company determines the price that the market is prepared to pay for its product. This may be discovered by market research or by considering the prices of similar items that are already available. The company then subtracts its profit target from this price to determine its cost target. If the expected product costs already meet the target cost over the life cycle of the product, taking account of any cost reductions that may occur, for example due to the benefits of the learning and experience curves, then production commences. However, it is more likely that at this initial stage the expected product costs exceed the target costs and as a result major product / process changes are made in order to achieve the target cost. If it is not possible to achieve the target cost by making these changes then the product is abandoned.

Cima P2 Exam Question No 19

Question No 19:

Explain the likely changes that will occur in the unit selling prices AND in the unit production costs, compared to the preceding stage.

Unit selling prices
These are likely to be reducing for a number of reasons:
The product will become less unique as competitors use reverse engineering to introduce their versions of the product
PT may wish to discourage competitors from entering the market by lowering the price and thereby lowering the unit profitability
The price needs to be lowered so that the product becomes attractive to customers in different market segments thus increasing demand to achieve growth in sales volume.
Unit production costs
These are likely to reduce for a number of reasons:
Direct materials are being bought in larger quantities and therefore PT may be able to negotiate better prices from its suppliers thus causing unit material costs to reduce
Direct labour costs may be reducing if the product is labor intensive due to the effects of the learning and experience curves
Other variable overhead costs may be reducing as larger batch sizes reduce the cost of each unit
Fixed production costs are being shared by a greater number of units.

Cima P2 Exam Question No 18

Question No 18:

Explain the likely changes that will occur in the unit selling prices AND in the unit production costs, compared to the preceding stage.(ii) Maturity stages of the new product's life cycle.

Unit selling prices
These are unlikely to be reducing any longer as the product has become established in the market place. This is a time for consolidation and while there may be occasional offers to tempt customers to buy the product the selling price is likely to be fairly constant during this period.
Unit production costs
Direct material costs are likely to be fairly constant in this stage. They may even increase as the quantities required diminish compared to those required in the growth stage, with the consequential loss of negotiating power.
Direct labour costs are unlikely to be reducing any longer as the effect of the learning and experience curves has ended. Indeed the workers may have started working on the next product so that their attention towards this product has diminished with the result that direct labour costs may increase.
Overhead costs are likely to be similar to those of the end of the growth stage as optimum batch sizes have been established and are more likely to be used in this maturity stage of the product life cycle where demand is more easily predicted.

Cima P2 Exam Question No 18

Question No 18:

Explain the likely changes that will occur in the unit selling prices AND in the unit production costs, compared to the preceding stage.

Unit selling prices
These are likely to be reducing for a number of reasons:
The product will become less unique as competitors use reverse engineering to introduce their versions of the product
PT may wish to discourage competitors from entering the market by lowering the price and thereby lowering the unit profitability
The price needs to be lowered so that the product becomes attractive to customers in different market segments thus increasing demand to achieve growth in sales volume.
Unit production costs
These are likely to reduce for a number of reasons:
Direct materials are being bought in larger quantities and therefore PT may be able to negotiate better prices from its suppliers thus causing unit material costs to reduce
Direct labour costs may be reducing if the product is labour intensive due to the effects of the learning and experience curves
Other variable overhead costs may be reducing as larger batch sizes reduce the cost of each unit
Fixed production costs are being shared by a greater number of units.

Cima P2 Exam Question No 17

Question No 17:

Explain TWO reasons why the company might decide NOT to use this optimum selling price

•  There are many reasons why this price may not be used (candidates are expected to explain two).
• There may be inaccuracies in the demand forecasts at different prices because the model assumes that demand is driven solely by price. In fact there are many different factors that influence demand; these include advertising, competitor actions and changing fashions / tastes.
• The model also assumes that the relationship between price and demand is static whereas in reality it is regularly changing.
• There may be inaccuracies in the determination of the marginal cost, the assumption that marginal cost equals variable cost may itself be invalid, but even if this is acceptable then the assumption that all variable costs vary with volume is unrealistic. Some of these costs may be driven by factors other than volume. Again there is an assumption the unit variable cost is unchanging once it has been determined   

Cima P2 Exam Question No 16

Question No 16:

What is Marginal costing?

Marginal costing is a method that values inventory at its variable production cost only. Fixed production costs are not included in the cost of each object and are simply written off in full against profit at the end of the period.Often the marginal cost is also the relevant cost so this can be very useful in short term decision making, by pricing a product at a price higher than its variable costs you will be ensuring a positive short term cash flow of your business. However marginal pricing does not fully take into account fixed costs which ultimately will have to be paid off in the long run for the business to be sustainable.

Cima P2 Exam Question No 15

Question No 15:

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



Answer: