Page 291 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Exam style questions and answers

43 C, D, E

Controls are always important to help a company achieve their aims, the earlier
they start the easier it will be to set the right control environment.

It is impossible to provide absolute assurance & eliminate all risk.

The management will always have ultimate responsibility for internal controls in
an organisation.

44 C, E

Dong benefit to Timings

SP 50

VC Tick (10.50)

VC Tock (10)

Cont 29.50

Ding benefit to Timings

SP 20

VC S (10.50)

Cont 9.50

Dong makes more contribution so Timings would be happy for the internal
transfer to happen.

For Tick to want to sell Dings internally they must make the same contribution
as they do externally. Internal VC are $8.50 (10.50-2=8.50), so as long as the
TP is $18 they would be happy to sell internally.

A is incorrect per the logic above.

B is incorrect, Tock would make $20 contribution per Dong at the price so would
be happy.

C is correct, Tick would only make $9 contribution per transfer which is less
than for an external sale.

D is incorrect, at a price of $18 or more Tick would be happy to make the
transfer, so they would sell up to their 100,000 capacity if Tock requested.

E is correct per the above workings.

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