CIMA Exam CIMAPRA17-BA2-1 Topic 1 Question 76 Discussion

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

Question #: 76
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 Vinnie at Jul 18, 2024, 05:29 AM

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Genevive

4 months ago

Haha, I bet the exam writers thought they were being sneaky with this one. But you guys have it figured out. This is like basic inventory management 101.

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Karrie

4 months ago

Ah, I see! That makes sense. The production budget for month 1 needs to account for the sales volume and the closing inventory for the next month. Good catch, Santos!

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Santos

4 months ago

Wait, isn't the production budget for month 1 the sum of the sales volume for month 1 and the closing inventory for month 2? So the answer should be option C, 1,724 units.

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Bettina

3 months ago

That makes sense, thanks for clarifying!

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Ben

3 months ago

So, the answer would be option C, 1,724 units.

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Ling

3 months ago

I think you're right, the production budget for month 1 should include the sales volume for month 1 and the closing inventory for month 2.

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5 months ago

Hmm, this seems straightforward. The policy states that the closing inventory should be 10% of the next month's sales, so we just need to calculate that for each month.

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Allene

4 months ago

B) 1,494 units

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Dusti

5 months ago

A) 1,596 units

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Denise

5 months ago

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

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