CIMA Exam CIMAPRA19-P03-1 Topic 5 Question 64 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 64
Topic #: 5

UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.

One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's products

Which of the following are correct?

AThe motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK

BThe possibility of an increase in selling prices due to increased costs should be noted in the stress test report

CUJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

DThe impact of absorbing the increased cost of motors on UJK's profits should be calculated.

EUJK should identify an alternative vendor of suitable motors as part of its stress test

Show Suggested Answer

Suggested Answer: B, C, E

by Elza at Jan 25, 2025, 09:39 AM

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Jodi

2 days ago

I agree with Clare. It's important to be prepared for any potential increase in costs from the motor manufacturer.

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Clare

6 days ago

I think option B is correct. We should definitely consider the possibility of increased selling prices in the stress test report.

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