CIMA Exam CIMAPRO19-P01-1 Topic 5 Question 65 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 65
Topic #: 5

A company makes and sells three products A, B and C.

The selling prices and costs of the three products, using a traditional absoprtion costing system, are shown in the table below.

The company has undertaken an analysis of overhead costs using activity-based costing (ABC).

The revised overhead costs for products A, B and C are $6, $32 and $55 respectively.

When comparing the figures obtained under the two costing methods, which of the following statements are true?

Select ALL that apply.

AProduct B makes a profit under both methods, but the profit is lower using ABC.

BThe product that is the most profitable under traditional absorption costing makes a loss under the ABC methodology.

CProduct C is currently overpriced based on cost plus pricing and the selling price should be reduced.

DActivity-based costing results in a lower level of overhead costs for the company.

EProduct A shows a profit under ABC but had appeared loss making under traditional absorption costing.

Show Suggested Answer

Suggested Answer: A, D, E

References:

by Laticia at Feb 05, 2023, 03:44 AM

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4 hours ago

I think option A is true because Product B makes a profit under both methods.

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