CIMA Gateway Assessments
Post Exam Guide
November 2012
© The Chartered Institute of Management Accountants 2012
Page 1
General Comments
The paper was reasonably well attempted by some candidates and some very high marks were
achieved. However, the performance of many candidates was quite poor. Again the A1 candidates
achieved the best average mark overall.
It is advised that candidates familiarise themselves with the content of the syllabus and ensure that
they acquire the relevant study materials. They should also ensure that adequate time is spent in
preparation for the examination. It was evident from the marking process that many candidates
were ill–prepared for the examination and had not studied the whole syllabus.
SECTION A – 75 MARKS
ANSWER ALL THREE QUESTIONS
Question 1
(a) Explain what is meant by ‘target cost approach’ and what relationship it has, if any, with life cycle
costing. (6 marks)
(b) Calculate the estimated cost per unit of producing X1 at the steady state of production and advise M
Company as to whether it should proceed with its production. (15 marks)
(c) Discuss TWO possible problems/limitations with M Company’s use of the target cost approach in the
above scenario. (4 marks)
(Total for Question One = 25 marks)
Rationale
This question examines several learning outcomes from Section B of the Performance Management
syllabus:
B1(e) ‘apply learning curves to estimate time and cost for new products and services’.
B1(f) ‘apply the technique of activity–based management in identifying cost drivers/activities.
B1(h) explain how target costs can be derived from target prices and the relationship between target costs
and standard costs‘.
B1(i) ‘discuss the concept of life cycle costing and how life cycle costs interact with marketing strategies at
each stage of the life cycle’.
Suggested Approach
Requirement (a) is a straight forward question requiring the candidate to firstly explain the target cost
approach, briefly explain lifecycle costing and then go on to explain the relationship between the two.
The approach to requirement (b) would be to identify the target cost, calculate the cost driver rates then
calculate the effect of the learning curve. You should then go on to calculate the overhead cost per unit of
X1 followed by the estimated total cost per unit of X1. A recommendation based on this could then be
made.
Requirement (c) requires a discussion of two potential problems of the use of the target cost approach
applied to the company in the scenario.
CIMA Gateway Assessments
Post Exam Guide
November 2012
© The Chartered Institute of Management Accountants 2012
Page 2
Marking Guide
Marks
(a)
Explanation of target cost approach
Relationship with life cycle
(b)
Identification of target cost
Calculation of cost driver rates
Calculation of assembly direct hrs per unit of X1 at the steady state
Calculation of overheads using the cost driver rates
Calculation of the forecast total cost of X1
Recommendation
(c)
Reliance on the learning curve to achieve the target cost
Difficulty of acquiring the data in a changing market
4
2
1
2
4
5
2
1
2
2
Maximum marks awarded
25
Lead Marker‘s Comments
This question was answered quite well by many candidates with improved performance from the G1
candidates compared to May 2012.
With regard to part (a) many candidates were able to explain the target cost approach but fewer were able
to go further and explain the relationship with life cycle costing.
With regard to part (b) most candidates were able to calculate the overhead rates and calculate total
overhead elements for the product, but many candidates were unable to differentiate between overhead
assembly costs charged on direct labour hours and direct labour costs. Again, as with past examinations
many candidates struggled with applying the learning curve formula.
With regard to part (c), this was generally not well answered. Many candidates avoided this section or
made little attempt to offer a well thought answer. Candidates sometimes made comments inappropriate
to the scenario e.g. price skimming policy.
CIMA Gateway Assessments
Post Exam Guide
November 2012
© The Chartered Institute of Management Accountants 2012
Page 3
Question 2(a)
Explain to TP Company how a project management methodology, such as PRINCE2, could have helped
to prevent the failures of the customer relationship information system project. (15 marks)
Rationale
This question assesses candidates‘ ability to explain how a project management methodology such as
PRINCE2 could help prevent project failures. It examines learning outcome B1(b) ‘apply suitable
structures and frameworks to projects to identify common project management issues‘.
Suggested Approach
Answers to part (a) could start by defining PRINCE2 and then go on to explain how the component parts
could have helped to prevent the failures of the customer relationship information system project.
A good answer would explain the features of PRINCE2 with specific reference to how it could help to
prevent the failures in the scenario project.
Marking Guide
Marks
Identification and purpose of methodology e.g. PRINCE2
Help deliver agreed outcomes
On time, within budget, and to quality standards
Explanation of key features of methodology e.g.:
Management structure – team, responsibilities, clear boundaries, reporting lines
A system of plans – stage sign offs, milestones, stakeholders, resources, risk and quality
A set of control procedures – monitoring, review, feedback, mgt by exception
A focus on product based planning – schedules, resourcing, budgets, complexity
Answers need to explain how features could have helped TP Company prevent failures
Maximum marks awarded
1
1
1
Up to 4
Up to 4
Up to 4
Up to 4
15
Lead Marker’s comments
This question was not answered as well as Project Management questions in some previous papers
but, as in the past, the M1 candidates provided the better answers overall.
Many candidates gave too much emphasis on why the project had gone wrong or attempted to
provide solutions to the failures and failed to address the question as to how a project management
methodology could have prevented the failures.
A number of candidates appeared to be totally unprepared for this question.
CIMA Gateway Assessments
Post Exam Guide
November 2012
Question 2(b)
Discuss how each of the two project management techniques, work breakdown structure and Gantt
charts, could have been used to help communication in the customer relationship system project.
(10 marks)
Rationale
This question assesses candidates’ appreciation of the contribution of specific project management tools
to project communication. It examines learning outcome B1(e) ‘apply key tools and techniques, including
the evaluation of proposals‘.
Suggested Approach
This is a straightforward question requiring candidates to demonstrate an understanding of two commonly
used project management tools. Candidates are required to describe a suitable range of points for each
tool explaining how they can be used to help in project communication.
A good answer would explain characteristics of each tool to project communication, as well as a
description of both tools. Weak answers would describe the project management tool but without
reference to communication.
Marking Guide
Marks
WBS:
Description of WBS e.g.:
Analysis of work required in project
Activities broken down to defined deliverables
1
1
