CIMA Exam CIMAPRA19-P03-1 Topic 5 Question 69 Discussion

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

Question #: 69
Topic #: 5

You are theManagementAccountant for P, a food manufacturing company with an annual sales revenueof $5 million.

You discover that theProductionManager's records are inconsistent. Raw materials purchased do notagree to the total recorded for transfers to productionplus wastage.There isan averageshortfall of 2% of purchases.

You investigated and discovered that there are often mistakes made during manufacturing that results in food that is safe to eat, but cannot be sold because of visual flaws. TheProductionManager is supposed to scrap all such damaged product and write all such losses off as waste, but you discovered that he has been giving the damaged food to a charity that assists homeless people. No records are made of such gifts in order to conceal the losses due to manufacturing errors.

What should you do?

ADo nothing, this is a good cause and the amount is insignificant.

BInstigate disciplinary action, this is both theft and poor management.

CInstigatea confidential, but documented,review with the Production Manager andtell him to stop.

DInstigate a review of the production process to potentially reduce the amount of wastage.

EInstigate a process whereby edible but unsellable items can be given to the charity officially.

Show Suggested Answer

Suggested Answer: C, D, E

by Norah at Apr 30, 2025, 12:59 PM

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