CIMA Exam CIMAPRA17-BA2-1 Topic 1 Question 74 Discussion

Actual exam question for CIMA's CIMAPRA17-BA2-1 exam

Question #: 74
Topic #: 1

A company's policy is to hold closing inventory each month equal to 10% of the next month's budgeted sales volume. The budgeted sales volumes of product Q for months 1 and 2 are 1,660 units and 2,300 units respectively.

The production budget for product Q for month 1 is:

A1,596 units

B1,494 units

C1,724 units

D1,890 units

Show Suggested Answer

Suggested Answer: B

by Lai at Jul 05, 2024, 07:06 AM

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Lonna

5 months ago

Haha, I bet the person who came up with option D has never actually worked in a real company before. 1,890 units? Come on, that's just ridiculous.

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Slyvia

3 months ago

Yeah, I think option A makes more sense given the policy.

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Kristofer

3 months ago

B) 1,494 units

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Shenika

4 months ago

I agree, option D does seem a bit high.

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Isadora

4 months ago

A) 1,596 units

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Lavera

5 months ago

C is the correct answer. I can't believe anyone would think the production budget for month 1 would be less than the budgeted sales for that month. That's just basic inventory management.

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Carlee

3 months ago

Exactly, it's important to have enough inventory to meet the demand.

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Margo

4 months ago

C is the correct answer. I can't believe anyone would think the production budget for month 1 would be less than the budgeted sales for that month. That's just basic inventory management.

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Dante

4 months ago

A) 1,596 units

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Lawana

4 months ago

Exactly, it's important to have enough inventory to meet demand without overstocking.

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Jeannine

4 months ago

C is the correct answer. I can't believe anyone would think the production budget for month 1 would be less than the budgeted sales for that month. That's just basic inventory management.

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Alfreda

5 months ago

A) 1,596 units

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Merilyn

5 months ago

The answer has to be C. It's a straightforward calculation based on the given information. I'm surprised anyone would even consider the other options.

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Dion

5 months ago

Yes, it's a simple calculation based on the company's policy.

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Katy

5 months ago

I agree, the answer is definitely C.

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Jules

5 months ago

I believe the correct answer is A) 1,596 units because the closing inventory for month 1 should be 10% of the next month's budgeted sales volume, which is 2,300 units for month 2.

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Felice

5 months ago

I'm not sure, but I think the answer might be C) 1,724 units. Can someone explain the rationale behind this answer?

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Lavelle

5 months ago

I agree with Bernardine, because 10% of 2,300 units is 230 units, so the closing inventory for month 1 would be 2,300 - 230 = 2,070 units.

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Delsie

5 months ago

I'm pretty sure the answer is C. The company's policy is to hold closing inventory each month equal to 10% of the next month's budgeted sales volume, so for month 1 the closing inventory would be 10% of 2,300 units, which is 230 units. Adding the 230 units to the 1,494 units from the previous question gives us 1,724 units for the production budget in month 1.

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Donte

4 months ago

Yes, that makes sense. The closing inventory for month 1 would be 230 units.

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Stephania

5 months ago

I think you're right, the answer is C.

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Bernardine

6 months ago

I think the answer is A) 1,596 units.

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