Operational Level Paper

CIMA P1 Final Mock Examination

You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you will not be allowed, under any circumstances, to open the answer book and start writing or use your calculator during the reading time. You are strongly advised to carefully read ALL the question requirements before attempting the question concerning (that is, all parts and/or sub-questions). The question requirements are contained in a dotted box. ALL answers must be written on answer paper. Answers or notes written on the question paper will not be marked. Answer the ONE compulsory question in Section A. This is comprised of 8 sub-questions. Answer ALL SIX compulsory sub-questions in Section B. Answer BOTH compulsory questions in Section C. Maths Tables and Formulae are provided. The list of verbs as published in the syllabus is given for reference on the inside back cover of this question paper.

CMP1PO11(N) FM Questions 1 Examination prepared for November 2011 & May 2012 sittings

P1 Performance Operations

Exam tips from BPP on how to attempt your exam

Take a moment to focus on the right approach for this exam.

Effective time management

Watch the clock, allow 1.8 minutes per mark. Work out how long you can spend on each question and do not exceed that time. Take a few moments to think what the requirements are asking for and how you are going to answer them.

Effective planning
This paper is in exactly the same format as the real exam. You should read through the paper and plan the order in which you will tackle the questions. Always start with the one you feel most confident about and take time to choose the questions you will answer in sections with choice. Read the requirements carefully: focus on mark allocation, question verbs (included at the end of the exam paper) and potential overlap between requirements. Identify and make sure you pick up the easy marks available in each question.

Effective layout
Present your numerical solutions using the standard layouts you have seen. Show and reference your workings clearly. With written elements try to make a number of distinct points using headings and short paragraphs. You should aim to make a separate point for each mark. Ensure that you explain the points you are making ie why is the point a strength, criticism or opportunity? Give yourself plenty of space to add extra lines as necessary, it will also make it easier for the examiner to mark.

2 CMP1PO11(N) EFM Questions Examination prepared for November 2011 & May 2012 sittings

SECTION A 20 MARKS [Indicative time for answering this section is 36 minutes] ANSWER ALL EIGHT sub-questions
Instructions for answering Section A:
The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off, so that the markers know which sub-question you are answering.

1
1.1

Objective test questions

The value of the benefits sacrificed when one course of action is chosen, in preference to an alternative. It is represented by the foregone potential benefit from the best rejected course of action. This is a definition of a(n): A B C D Sunk cost Avoidable cost Notional cost Opportunity cost

(2 marks)

1.2

A stockbroker buys Treasury Stock for a client. The stockbroker buys UK Gilt Treasury Stock 8.75% 2017 with a nominal value of 10,000 for 141.1852. There is accrued interest of 175 days and the stockbroker charges 1.5% commission. What will be the total cost to the client, to the nearest ? A B C D 13,911 14,751 14,756 13,487

(2 marks)

1.3

A negotiable instrument that provides evidence of a fixed term deposit with a bank. Maturity is normally within 90 days, but can be longer. This is CIMA official terminology for a: A B C D Bill of Exchange Documentary Credit Commercial Paper Certificate of Deposit

(2 marks)

1.4

A bank pays its board members bonuses based on the performance of the bank. The only two possible outcomes, if a bonus is paid, are a probability of 0.3 of a bonus of $500,000 or 0.6 of a bonus of $1m. However, if no bonus is paid, the board members will face fines of $10,000. What is the expected value of payments? A B C D $749,000 $750,000 $751,000 $740,000

(2 marks)

CMP1PO11(N) EFM Questions 3 Examination prepared for November 2011 & May 2012 sittings

CIMA Operational Level Paper P1 Performance Operations Final Mock Examination

Marking scheme and Suggested solutions

CMP1PO11(N) EFM Solutions Examination prepared for November 2011 & May 2012 sittings

SECTION A 1 Objective test answers

Marking scheme
Q1.1 1.5 2 marks for correct answer only 1.6 Packaging Potatoes Mechanically reclaimed meat Onions Total cost Cumulative time for 10 units Cumulative time for 9 units Calculation of difference between above Calculation of each ratio 0.5 0.5 1 0.5 0.5 3 1.7 1 1 1 3 1.8 1 Max 4 Marks

Solutions
1.1 1.2 D B Purchase consideration (10,000@141.1852 per 100) Accrued interest (10,000 x 0.0875 x 175/365) Brokers commission ( 14,119 x 0.015) 14,119 420 212 14,751 This is CIMAs definition of an opportunity cost.

1.3 1.4 1.5

D A B

By definition. (0.3 x $500,000) + (0.6 x $1,000,000) - (0.1 x $10,000) = $749,000 The introduction of TQM will increase prevention costs and reduce the other costs listed.

CMP1PO11(N) EFM Solutions 2 Examination prepared for November 2011 & May 2012 sittings