Management Accounting (P1)
150 questions mapped to the current AICPA & CIMA Operational Level blueprint (2026/27). Covers cost accounting (overhead absorption, process costing, ABC), budgeting and control, short-term decision making (CVP analysis, limiting factors, relevant costs, pricing), and decision making under uncertainty. Switch to Exam Sim mode for a timed CIMA P1 mock exam: 60 questions, 90 minutes.
→ P1 Common Mistakes & Exam Technique: the errors that catch P1 students out, and how to avoid them.
The P1 exam format
| Format | Computer-based objective test. All questions are compulsory. |
|---|---|
| Length | 90 minutes, 60 questions. |
| Scoring | Reported as a scaled score from 0 to 150. Questions are weighted by difficulty, so the scaled score is not a straight percentage of questions answered correctly. |
| Pass mark | 100 out of 150. |
| Case Study | Separate from this exam. The Operational Case Study is sat after the three operational-level objective tests and has its own pass mark of 80 out of 150. |
Always check the current exam format on the AICPA & CIMA website before you sit.
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P1 Formula Sheet: all key formulas on one printable A4 page. Free to download, or see what's on it.
↓ Download PDFSample P1 questions
Three questions from this bank, each with its answer and worked explanation. The quiz above draws from all 150.
In a period where production exceeds sales, which of the following correctly describes the relationship between absorption costing profit and marginal costing profit?
- Absorption costing profit is lower than marginal costing profit
- Absorption costing profit equals marginal costing profit
- The relationship depends on the fixed overhead absorption rate only
- Absorption costing profit is higher than marginal costing profit
Show answer and explanation
Answer: D. When production exceeds sales, closing inventory is higher than opening inventory. Under absorption costing, some of the fixed overhead is carried forward in closing inventory, deferring that cost to a future period and increasing the current period's reported profit. Under marginal costing, all fixed overhead is charged to the period regardless of inventory levels, giving a lower profit. The difference equals the inventory increase in units multiplied by the fixed overhead per unit.
A company spent £50,000 on market research for a new product six months ago. When deciding whether to launch the product, this £50,000 should be:
- Ignored, because it is a sunk cost that has already been incurred and cannot be recovered
- Deducted from expected revenues to reduce the apparent attractiveness of the project
- Added to the launch costs as it is directly related to the project
- Treated as a future cost that will be incurred again if the project is launched
Show answer and explanation
Answer: A. The £50,000 has already been spent and cannot be recovered regardless of whether the launch proceeds. It is a sunk cost and therefore irrelevant to the decision. Only future, incremental cash flows that differ between the available choices should be included in the analysis. Including sunk costs in decisions leads to a form of irrational thinking known as the sunk cost fallacy — committing to a course of action because of past expenditure rather than future expected value.
The purpose of preparing a flexible budget for control purposes is to:
- Set a budget that managers are not allowed to exceed under any circumstances
- Replace the standard costing system entirely with a simpler, less rigorous alternative approach
- Estimate the exact cash flows of the business precisely for the next 12 months
- Provide a comparison against actual performance at the actual activity level, giving a fairer variance analysis basis
Show answer and explanation
Answer: D. A flexible budget adjusts the original (fixed) budget to the actual activity level achieved, so that variances reflect efficiency and spending differences rather than simply the impact of being busier or quieter than planned. Without flexing, an adverse variance may simply mean more was produced than budgeted, not that the process was inefficient. Flexible budgets give a fairer basis for performance assessment by separating volume effects from efficiency and spending effects.
About this question bank
150 questions across 4 syllabus sections, each mapped to a reference in the official CIMA syllabus for P1 and each with a worked explanation. 91 are multiple choice and 59 are numerical, where you work the answer out before choosing it.
- Written to CIMA's 2019 Professional Qualification syllabus.
- Spotted a mistake? Report it and it will be corrected.
| Syllabus section | Questions |
|---|---|
| A: Costing (30%) | 45 |
| B: Budgeting (25%) | 38 |
| C: Short-term Decisions (30%) | 45 |
| D: Uncertainty (15%) | 22 |