CIMA Management Level Practice Test

CIMA Management Level is the CGMA Professional Qualification level for managing performance, financial management, project decisions, and organizational management.

Use these 12 original sample questions for initial self-assessment. If CIMA Management Level is the Finance Prep route you want next, use the Notify me form on this page.

What Management Level practice should test

• interpreting performance, project, risk, finance, and management-accounting scenarios
• choosing decisions that improve control, resource allocation, and business outcomes
• separating management recommendation from raw calculation
• preparing for the integrated Management Case Study route

Sample Exam Questions

These questions focus on management-level decision quality: numbers matter, but the strongest answer usually connects the number to risk, implementation, and business consequence.

Question 1

Topic: project appraisal

A project has a positive net present value, but most cash inflows depend on a new customer segment the company has never served. What should management do before approval?

• A. Approve because positive net present value is always sufficient
• B. Review demand assumptions, sensitivity, capability gaps, and implementation risk before committing
• C. Reject because all new segments are unacceptable
• D. Ignore market assumptions because finance has calculated the number

Best answer: B

Explanation: A positive appraisal result is useful but not complete. Management-level judgment asks whether the assumptions are reliable and whether the business can execute the project.

Question 2

Topic: transfer pricing

One division wants a low transfer price to improve its margin, while the selling division has external customers willing to pay more. What should the group consider?

• A. The buying division’s margin only
• B. The selling division’s preference only
• C. Group profit, capacity constraints, market price, divisional incentives, and goal congruence
• D. Whether the transfer price looks simple

Best answer: C

Explanation: Transfer pricing should support group performance and fair divisional evaluation. The correct answer considers the full group, not only one division’s reported profit.

Question 3

Topic: risk management

A project team identifies a high-impact cyber risk but rates it low priority because it has not happened before. What is the weakness?

• A. Past absence of incidents does not prove the risk is low, especially if impact is high
• B. Cyber risk can never affect project value
• C. Only frequency matters in risk evaluation
• D. High-impact risks should always be ignored

Best answer: A

Explanation: Risk assessment should consider likelihood and impact, plus the quality of evidence behind both. A high-impact risk may deserve mitigation even if past incidents are limited.

Question 4

Topic: pricing and contribution

A product has strong contribution per unit but uses a scarce machine hour that could be used by another product. What should determine production priority?

• A. Contribution per unit only
• B. Selling price only
• C. Total fixed overhead allocation
• D. Contribution per unit of the scarce resource

Best answer: D

Explanation: When a resource is scarce, the relevant ranking is contribution per limiting factor, not contribution per unit.

Question 5

Topic: performance evaluation

A manager improves profit by delaying maintenance and reducing staff training. What is the evaluation problem?

• A. The profit measure may encourage short-term behavior that damages capability and risk control
• B. Profit is never useful
• C. Maintenance and training should never be measured
• D. The manager should be rewarded automatically

Best answer: A

Explanation: Management Level questions often test whether performance measures drive dysfunctional behavior. Profit needs context from risk, service, and capability indicators.

Question 6

Topic: financing decision

A company is considering more debt to fund expansion. Which factor is most relevant to financial risk?

• A. The colour of the annual report
• B. Interest cover and cash-flow resilience under adverse scenarios
• C. Whether competitors use the same bank
• D. Whether debt always reduces risk

Best answer: B

Explanation: Debt can support expansion but adds fixed financing commitments. Interest cover and downside cash-flow resilience show whether the company can service the debt.

Question 7

Topic: responsibility accounting

A cost centre manager is criticized for increased energy prices, even though usage volume fell and price changes were outside the manager’s control. What is the issue?

• A. Energy prices should never be reported
• B. Usage volume is irrelevant
• C. The manager is being judged on uncontrollable costs
• D. Cost centres should be profit centres

Best answer: C

Explanation: Responsibility accounting should evaluate managers on factors they can influence. Separating price effects from usage effects improves fairness and decision quality.

Question 8

Topic: make-or-buy decision

A supplier offers to make a component at a lower unit price. The internal team uses spare capacity and has quality knowledge that may be lost if production stops. What should be evaluated?

• A. Quoted unit price only
• B. Avoidable costs, quality, supplier risk, capability loss, and alternative use of capacity
• C. The supplier’s marketing material only
• D. Whether outsourcing always improves control

Best answer: B

Explanation: Make-or-buy decisions depend on avoidable cost and strategic capability, not just quoted price. Quality and dependency risk can change the recommendation.

Question 9

Topic: working capital finance

Receivables collection slows after the company accepts larger customers with stronger bargaining power. What is the best management response?

• A. Accept all slow payments because large customers are valuable
• B. Stop selling to all large customers
• C. Ignore receivables because revenue has been recorded
• D. Review customer profitability, credit terms, cash-flow effect, and collection controls

Best answer: D

Explanation: Higher revenue may not be valuable if it weakens cash flow and profitability. Management-level reasoning links commercial strategy with working-capital risk.

Question 10

Topic: balanced scorecard

A service business focuses only on quarterly profit. Customer retention and employee training quality are falling. Which balanced-scorecard perspective helps reveal the issue?

• A. Customer and learning-and-growth perspectives
• B. Inventory valuation only
• C. Tax compliance only
• D. Share nominal value only

Best answer: A

Explanation: The balanced scorecard broadens performance evaluation beyond financial results. Customer retention and employee capability are leading indicators of future performance.

Question 11

Topic: uncertainty

A forecast has a single expected profit figure, but small changes in material prices could make the project loss-making. What should management request?

• A. A shorter title for the forecast
• B. Removal of all assumptions
• C. Sensitivity or scenario analysis
• D. Approval without discussion

Best answer: C

Explanation: Sensitivity and scenario analysis show how robust a decision is when key assumptions change. This is central to management-level recommendation quality.

Question 12

Topic: management recommendation

A manager recommends closing a department because it reports a loss after allocated head-office charges. The department provides services that other divisions would need to buy externally if it closes. What is missing?

• A. The manager’s preferred font
• B. Whether the department name should change
• C. A rule that all loss-making departments close
• D. Avoidable cost analysis and replacement-service cost

Best answer: D

Explanation: Allocated overhead can mislead closure decisions. The analysis should focus on avoidable costs and the cost of replacing the service.

Related CIMA pages

• Management Case Study
• Strategic Level
• CIMA CGMA updates