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CIMA Exam CIMAPRO19-P01-1 Topic 5 Question 98 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam
Question #: 98
Topic #: 5
[All CIMAPRO19-P01-1 Questions]

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine.

The company's existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department's support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The company's accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department:

Calculate the annual profit per machine for each of the three sizes of machine, using the current basis for charging the costs of support activities to machines.

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Suggested Answer: A

Contribute your Thoughts:

Alesia
2 months ago
I'm going to have to dig deep into the activity-based costing information to figure this one out. Can't just rely on the multiple-choice options here.
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Luann
2 months ago
Hold up, how did they come up with these numbers? I need to see the full workings to make sure the answer is accurate.
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Joanne
1 months ago
Accountant implements activity-based costing system to calculate annual profit per machine.
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Adaline
1 months ago
Service Manager suggests copy charge should reflect costs accurately.
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Abel
2 months ago
Sales department sells machines and consumables, service department provides after sales service.
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Nikita
3 months ago
The profit per machine for the medium machine is $1376? That can't be right, I'm sure the calculations are more complex than that.
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Kenneth
2 months ago
I think the new costing system will provide a better understanding of the costs and profits per machine.
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Tyisha
2 months ago
The company's accountant decided to implement an activity-based costing system to more accurately reflect the costs involved.
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Dante
2 months ago
I agree, the calculations must be more complex than just a simple profit per machine.
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Vincent
3 months ago
I believe implementing an activity-based costing system will provide a more precise cost allocation.
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Simona
3 months ago
I agree, the Service Manager's suggestion makes sense.
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Vincent
3 months ago
I think the current costing system is not accurate.
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