100% Free CIMA CIMAPRA19-P02-1-ENG Practice Test Questions and Answers 2026

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Total 205 Questions | Updated On: May 21, 2026

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Question 1

A company is classifying its quality costs to prepare a quality cost report. Which of the following are conformance costs?Select ALL that apply.

A : Internal Failure Costs

B : External Failure Costs

C : Prevention Costs

D : Appraisal Costs

Answer: C,D

Question 2

Division A is an investment centre with assets of $7.3 million. The following is an extract from the annual budget for division A:The cost of capital is 14%.Calculate the residual income for division A.

A : $808,000

B : $1,727,800

C : $358,000

D : $2,008,000

Answer: A

Question 3

A company manufactures and sells a range of products. Relevant data for one unit of a particular product are as follows.The company is using target costing to ensure that it achieves a contribution of 40% of the market selling price.In order to achieve the target cost, by how much does the company need to reduce the variable cost per unit?

A : $ 2.10

B : $ 0.50

C : $ 1.40

D : $ 2.60

Answer: B

Question 4

GHY has two subsidiaries. GHY-Motor manufactures car engines and GHY-Build designs and assembles cars. In the car industry it is common for manufacturers to buy parts, including engines, from other manufacturers.GHY has granted GHY-Motor and GHY-Build full autonomy. GHY-Build is considering using an engine from another company for a new model that it is designing. GYY-Motor has a suitable engine, but it charges more than GHY-Build's preferred supplier.Which of the following statements is correct? Select ALL that apply.

A : GHY should consider permitting GHY-Motor to charge part of the selling price on engines sold to GHY-Build to head office.

B : Forcing GHY-Motor to grant a discount to GHY-Build could lead to dysfunctional behavior.

C : There could be significant non-financial issues associated with GHY-Build-s decision to buy another engine.

D : Parent companies should never grant subsidiaries full autonomy on matters such as intra-group sales.

E : The threat of dysfunctional behavior is largely theoretical and managers can be trusted to maximise shareholder wealth.

Answer: A,B,C

Question 5

How does beyond budgeting NOT help to resolve the weaknesses of traditional budgeting? Select ALL that apply.

A : Managers are set goals and targets to achieve rather than abiding by strict budgets and variances.

B : Managers have a much larger scope of business goals that when achieved, will increase shareholder value.

C : Managers are given more freedom and control over their business units under Beyond budgeting.

D : Managers focus on keeping costs low in the short term to ensure maximised profits.

E : Managers are given incentives to meet or undercut budgets.

F : Managers are encouraged to designate responsibility to others to lessen their workload so they may concentrate on important tasks.

Answer: A,D

Page: 1 / 41

Total 205 Questions | Updated On: May 21, 2026

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