DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO
© The Chartered Institute of Management Accountants 2013
CIMA Gateway Assessment
CIMA
Gateway Assessment
21 May 2013 – Tuesday Afternoon Session
Instructions to candidates
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 are not allowed,
under any circumstances, to open the answer book and start writing or use
your calculator during this reading time.
You are strongly advised to carefully read ALL the question requirements
before attempting the question concerned (that is, all parts and/or sub–
questions). The question requirements for Section A are highlighted in a
dotted box.
ALL answers must be written in the answer book. Answers or notes written
on the question paper will not be submitted for marking.
You should show all workings as marks are available for the method you use.
ALL QUESTIONS ARE COMPULSORY.
Section A comprises three questions on pages 2 to 7.
Section B comprises one question containing 12 objective test sub–questions
on pages 8 to 12.
Maths tables and formulae are provided on pages 13 to 16. These are
detachable for ease of reference.
The list of verbs as published in the syllabus is given for reference on page
19.
Write your candidate number, the paper number and the examination subject
title in the spaces provided on the front of the examination answer book. Also
write your contact ID and name in the space provided in the right hand
margin and seal to close.
Tick the appropriate boxes on the front of the answer book to indicate which
questions you have answered.
TURN OVER
CIMA Gateway Assessment
2
May 2013
SECTION A – 75 MARKS
[You are advised to spend no longer than 45 minutes on each question in this section]
ANSWER ALL THREE QUESTIONS
Question One
F is a family run wholesale company which buys flowers in bulk from growers in several countries.
These flowers are then repackaged into standard boxes and sold to a range of customers
including large retail supermarkets. The company does not sell direct to the public.
F has always calculated an overall company profit and, as the level of profit was acceptable to the
owners, the management has not seen the need to change this approach. However, recent
months have seen both increasing costs and pressure from the large supermarkets to reduce
selling prices. The new Managing Director has therefore decided that the existing approach to
calculating profit is no longer sufficiently informative.
Before the company can even consider the request from the supermarkets to lower prices, the
Managing Director believes that F should use customer profitability analysis to ascertain the profit
that the company is earning from each of its supermarket customers.
Although F makes up different combinations of flowers for delivery to customers, an average
selling price per box of €5.60 will be acceptable to undertake the necessary investigation. The
average direct cost per box is €2.
The following activity data have been collected for the latest period for the four large supermarkets
that F supplies.
B
C
D
Boxes of flowers sold (000s) 85 54 72 125
Number of visits by sales team
10
30
65
Number of orders received 120 300 90 100
Number of deliveries
60
150
250
Average miles per delivery 35 60 50 20
Discount on average selling price
–
1%
5%
The costs of the above activities were:
Visits by sales team 273,000
Order processing
Delivery 539,000
Packing (box handling)
May 2013
3
CIMA Gateway Assessment
Due to the success of the customer profitability analysis of its large supermarket customers, the
Managing Director has decided to extend the analysis to all of the company’s customers. The
company accountant has stated that the results of the analysis, if presented graphically, would
follow a Pareto Curve.
.
Section A continues on page 4
TURN OVER
Required
(c) Explain the general concept that underlies the Pareto Curve and the implications for
the profitability of F. (6 marks)
(Total for Question One = 25 marks)
Required
(a) Prepare a customer profitability analysis to identify the profit/loss made by the
company in supplying each of the four supermarkets.
(13 marks)
(b) Based on your results in part (a) discuss THREE recommendations that the company
could consider to improve the profitability of the supermarket customers. (6 marks)
CIMA Gateway Assessment
4
May 2013
Question Two
TP Company is a retailer of sports and leisure clothing, with shops in all major cities of Country F.
As part of its expansion plan it has decided to develop a website to enable its customers to place
orders online. The Board of TP Company views this as an important development and has set up
a project for the design and implementation of a website that is convenient and easy for
customers to use. B has been appointed project manager, with the remit of delivering the project
in six months.
The project is now three months into its six month lifecycle and it has become apparent that it is
facing significant problems. B has not met with the project board but he recently sent an email to
representatives of the project board stating that the project will not be delivered on time and due
to increasing costs, is unlikely to be within budget. An investigation into why these problems have
arisen revealed that project control has been inadequate.
The members of the project team are also very unhappy. They are complaining that there has
been a lack of visibility of B, that they are unaware of any project deadlines and are unclear about
which project activities each of the team members should be undertaking.
Section A continues on page 6
Required:
(a) Discuss what actions B should have taken to make sure that good project control was
in place for the website project. (12 marks)
(b) Explain to B the factors he should consider to ensure that any project team he
manages in the future is effective.
(13 marks)
(Total for Question Two = 25 marks)
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