CIMA Exam CIMAPRA19-P03-1 Topic 5 Question 64 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 64
Topic #: 5

UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.

One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's products

Which of the following are correct?

AThe motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK

BThe possibility of an increase in selling prices due to increased costs should be noted in the stress test report

CUJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

DThe impact of absorbing the increased cost of motors on UJK's profits should be calculated.

EUJK should identify an alternative vendor of suitable motors as part of its stress test

Show Suggested Answer

Suggested Answer: B, C, E

by Elza at Jan 25, 2025, 09:39 AM

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Ellen

1 months ago

Personally, I'd recommend investing in some self-powering garden tools. Who needs motors when you can just attach a hamster wheel to your lawnmower?

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Jessenia

7 days ago

B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

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Catarina

1 months ago

Option A sounds like the start of a bad superhero movie: 'The Motor Manufacturer and the Angry Garden Machinery Company!'

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Johnathon

1 months ago

A is a bit too confrontational. Diplomacy is key when dealing with suppliers, even in a stressful situation.

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Magda

11 days ago

B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

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Joseph

1 months ago

E is a smart move. Identifying an alternative supplier should be a priority in case the current one becomes unreliable.

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Shalon

3 days ago

D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.

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Quinn

5 days ago

E) UJK should identify an alternative vendor of suitable motors as part of its stress test

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Sommer

10 days ago

B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

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Yuki

2 months ago

C is also a good idea. Estimating the impact on demand if they have to raise prices could give them valuable insights.

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Marylyn

20 days ago

D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.

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Elina

1 months ago

C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

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Hyman

1 months ago

B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

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Yvonne

2 months ago

B and D seem like the most appropriate options. It's crucial to document the potential price increase and its impact on UJK's profits in the stress test report.

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Talia

9 days ago

C) UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

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Juan

16 days ago

I agree, it's important to consider both the potential price increase and its impact on profits.

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Miriam

17 days ago

D) The impact of absorbing the increased cost of motors on UJK's profits should be calculated.

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Ettie

1 months ago

B) The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

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Shaunna

2 months ago

I think we should also look into option D. Calculating the impact of absorbing the increased cost on UJK's profits is crucial for decision-making.

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Jodi

2 months ago

I agree with Clare. It's important to be prepared for any potential increase in costs from the motor manufacturer.

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Clare

2 months ago

I think option B is correct. We should definitely consider the possibility of increased selling prices in the stress test report.

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