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CIMA Certificate in Business Accounting — BA2: Fundamentals of Management Accounting

Practice Questions120 questions Study Guide

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Exam Review

Key Facts: CIMA P2 Exam

~60

Objective-Test Questions

AICPA & CIMA Management Level Blueprint

90 min

Exam Duration

AICPA & CIMA Management Level Blueprint

100/150

Pass Mark (Scaled)

AICPA & CIMA Objective Test Rules

35%

Capital Investment Weighting

2026-2027 Blueprint

150 hrs

Typical Study Time

AICPA & CIMA Guidance

On-demand

Pearson VUE Booking

AICPA & CIMA

CIMA P2 Advanced Management Accounting is an on-demand, computer-based objective test in the CGMA Professional Qualification management level. It has around 60 objective-test questions in 90 minutes using multiple choice, multiple response, number entry, and drag-and-drop. The 2026-2027 blueprint weights the syllabus as Capital investment decision making 35%, Managing and controlling the performance of organisational units 30%, Managing the costs of creating value 20%, and Risk and control 15%. The pass mark is a scaled score of 100 out of 150.

Sample CIMA P2 Practice Questions

Try these sample questions to review concepts for the CIMA P2 exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A manufacturer wants to design a product so that its expected lifetime cost will allow it to sell at a market-led price and still earn the required margin. Which cost management technique is being applied?

A.Target costing

B.Standard costing

C.Absorption costing

D.Marginal costing

Explanation: Target costing starts from a competitive market price, deducts the required profit margin, and derives a target cost the product must be engineered to meet. It is market-led and applied mainly at the design stage when most cost is committed.

2A product has a forecast market price of $40 and the company requires a 25% margin on selling price. The product currently costs $34 to make. What is the target cost gap?

A.$2

B.$10

C.$6

D.$4

Explanation: Required profit = 25% of $40 = $10, so the target cost = $40 - $10 = $30. The cost gap is current cost minus target cost = $34 - $30 = $4, the amount of cost that must be engineered out.

3Which statement best describes life cycle costing?

A.It charges all overheads to production departments only

B.It allocates joint process costs at the split-off point

C.It values inventory at the lower of cost and net realisable value

D.It accumulates all costs of a product from design through to abandonment

Explanation: Life cycle costing tracks and accumulates every cost a product incurs across its whole life: research and development, design, manufacturing, marketing, distribution and end-of-life disposal. It highlights that a large proportion of cost is committed early, at the design stage.

4Under activity-based costing, what is a cost driver?

A.A fixed overhead that cannot be traced to products

B.The pre-determined absorption rate per labour hour

C.The total cost of a single cost pool

D.A factor that causes the cost of an activity to change

Explanation: A cost driver is the factor that causes the cost of an activity to be incurred or to change, such as number of set-ups, orders or inspections. Driver rates are used to assign activity costs to products that consume those activities.

5An activity costs $80,000 and is driven by the number of machine set-ups. There are 200 set-ups in total, and Product X requires 35 of them. How much set-up cost is assigned to Product X?

A.$10,000

B.$80,000

C.$28,000

D.$14,000

Explanation: The driver rate is $80,000 / 200 = $400 per set-up. Product X uses 35 set-ups, so it is charged 35 x $400 = $14,000 of set-up cost. ABC assigns activity cost in proportion to driver consumption.

6Which technique extends activity-based costing to support decision making by classifying activities as value-adding or non-value-adding?

A.Activity-based management

B.Throughput accounting

C.Kaizen costing

D.Standard costing

Explanation: Activity-based management (ABM) uses ABC information to improve operations and profitability, analysing activities to eliminate or reduce non-value-adding work and to improve value-adding activities. It links cost analysis to operational and strategic decisions.

7Kaizen costing is best described as:

A.A one-off redesign of a product to cut its cost

B.Charging overheads using a single plant-wide rate

C.Pricing a product below cost to enter a market

D.Continuous, incremental cost reduction during the manufacturing phase

Explanation: Kaizen costing aims at continuous, small, incremental cost reductions during the production stage of the life cycle, with targets set period by period. It contrasts with target costing, which acts mainly at the design stage.

8Within Porter's value chain, which of the following is a PRIMARY activity rather than a support activity?

A.Human resource management

B.Procurement

C.Operations

D.Firm infrastructure

Explanation: Porter's primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Operations transforms inputs into the finished product and is therefore a primary value chain activity.

9A just-in-time (JIT) production system primarily aims to:

A.Maximise inventory buffers to avoid stockouts

B.Spread fixed costs over the largest possible output

C.Charge each product a uniform overhead rate

D.Produce goods only as demanded, minimising inventory and waste

Explanation: JIT is a demand-pull system that produces or purchases items only as they are needed, minimising inventory holding, waste and the costs of carrying stock. It depends on reliable suppliers, short set-ups and high quality.

10Total quality management (TQM) treats the cost of quality as comprising prevention, appraisal, internal failure and external failure costs. Increased spending on which category typically reduces failure costs the most?

A.Internal failure costs

B.External failure costs

C.Prevention costs

D.Opportunity costs

Explanation: TQM holds that investing in prevention costs (training, design for quality, supplier development) stops defects arising and so reduces both internal and external failure costs. Prevention is generally the most cost-effective category to increase.

About the CIMA P2 Exam

CIMA P2 Advanced Management Accounting is a management level objective test in the CGMA Professional Qualification. It covers managing the costs of creating value, capital investment decision making, managing and controlling the performance of organisational units, and risk and control, assessed through around 60 objective-test questions in 90 minutes.

Exam sponsor: AICPA & CIMA / Pearson VUE. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Questions

60 questions

Time Limit

90 minutes

Passing Score

Scaled score of 100 out of 150

Exam / Certification Fees

Objective-test fee set per region by AICPA & CIMA and Pearson VUE; confirm the current management level fee schedule

Exam sponsor website

Reported exam pass rate: Published periodically by AICPA & CIMA. AICPA & CIMA report objective-test pass rates globally rather than a fixed single figure; candidates should check the current CGMA exam statistics for the latest P2 result. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Managing the costs of creating value

Cost management and transformation: activity-based costing and management, target and life cycle costing, kaizen, value chain analysis, JIT, total quality management, throughput accounting, and supply chain cost management.

35%

Capital investment decision making

Relevant cash flows, taxation and inflation, NPV, IRR, MIRR, payback, equivalent annual cost, capital rationing, sensitivity and expected value analysis, decision trees, real options, and pricing strategies.

30%

Managing and controlling the performance of organisational units

Responsibility centres, controllable profit, ROI, residual income, EVA, the balanced scorecard, benchmarking, performance reporting, goal congruence, and transfer pricing methods.

15%

Risk and control

Risk versus uncertainty, risk responses (TARA), risk mapping and registers, risk-adjusted discount rates, certainty equivalents, simulation, internal control, internal audit, ethics, and governance.

Preparing for the CIMA P2 Exam

What You Need to Know

Passing score: Scaled score of 100 out of 150
Exam length: 60 questions
Time limit: 90 minutes
Exam / certification fees: Objective-test fee set per region by AICPA & CIMA and Pearson VUE; confirm the current management level fee schedule Official sources

Using Our Practice Resources

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

CIMA P2: Suggested Study Strategy

1Prioritise capital investment decision making, the largest area at 35%, including NPV, IRR, tax, inflation, and capital rationing computations.

2Practise number-entry questions to the required rounding, because P2 includes fill-in-the-blank items, not only multiple choice.

3Master transfer pricing and divisional performance measures (ROI, residual income, EVA) and the goal-congruence problems they create.

4Learn the risk decision criteria (expected value, maximin, maximax, minimax regret) and when each applies.

5Drill the distinction between target costing, kaizen costing, and life cycle costing across the product life cycle.

6Sit full 90-minute timed mocks so your pacing matches roughly 90 seconds per question.

Frequently Asked Questions

How many questions are on the CIMA P2 exam?

CIMA P2 is an objective test with around 60 questions to be answered in 90 minutes. Item types include multiple choice, multiple response, number entry (fill-in-the-blank), and drag-and-drop, drawn from all four syllabus areas.

What is the CIMA P2 pass mark?

CIMA objective tests, including P2, are marked on a scaled score from 0 to 150, and candidates must achieve 100 or more to pass. The scaled score is not a simple percentage of questions correct.

What does the CIMA P2 syllabus cover?

The 2026-2027 management level blueprint weights P2 as capital investment decision making 35%, managing and controlling the performance of organisational units 30%, managing the costs of creating value 20%, and risk and control 15%.

How long should I study for CIMA P2?

Most candidates spend around 150 hours preparing for a CIMA objective test such as P2, though this varies with prior management accounting knowledge and study intensity.

Is CIMA P2 computer-based and on-demand?

Yes. P2 is a computer-based objective test that can be booked on demand at Pearson VUE test centres, with online proctoring available in some territories, so candidates do not have to wait for fixed exam windows.

How does P2 fit into the CIMA qualification?

P2 is one of three management level objective tests, alongside E2 and F2. Passing all three management level objective tests gives access to the management level case study examination.