CIMA Operational Level Practice Test

CIMA Operational Level is the first CGMA Professional Qualification level, focused on operational finance, performance, enterprise operations, and practical business decision support.

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

What Operational Level practice should test

• objective-test decisions across enterprise, performance, and financial operations
• cost, budget, process, reporting, and operational-control judgment
• choosing the action that supports reliable day-to-day business decisions
• preparing for the integrated Operational Case Study route

Sample Exam Questions

These questions are written as concise business scenarios because Operational Level objective tests reward application, not only definition recall.

Question 1

Topic: cost behaviour

Output increases by 20 percent. Total variable cost rises by about 20 percent, while total fixed cost is unchanged within the current capacity range. What should happen to fixed cost per unit?

• A. It should fall because the same fixed cost is spread over more units
• B. It should rise because fixed costs always increase with output
• C. It should stay exactly the same per unit
• D. It should become a variable cost

Best answer: A

Explanation: Fixed cost in total is unchanged within the relevant range. When output rises, the fixed cost per unit falls because the same total is allocated over more units.

Question 2

Topic: relevant cost

A company has spare capacity and receives a one-off order. Which cost is most likely relevant to the accept-or-reject decision?

• A. A sunk design cost already incurred last year
• B. Incremental materials required only for the order
• C. Existing head-office rent
• D. Depreciation already charged on old equipment

Best answer: B

Explanation: Relevant costs are future cash flows that change because of the decision. Incremental materials fit that definition; sunk costs and unavoidable fixed costs normally do not.

Question 3

Topic: working capital

Inventory days increase while sales are flat. What is the best first interpretation?

• A. Inventory days can never affect cash flow
• B. Higher inventory days always prove service has improved
• C. The business may be holding slower-moving stock, tying up cash and increasing obsolescence risk
• D. The sales team should stop measuring receivables

Best answer: C

Explanation: Higher inventory days may indicate cash tied up in stock and potential write-off risk. It is not automatically good or bad, but it needs investigation.

Question 4

Topic: internal control

A purchasing clerk can create a new supplier and approve the first invoice from that supplier. What is the control weakness?

• A. Excess inventory
• B. Too many non-financial measures
• C. A pricing variance
• D. Poor segregation of duties

Best answer: D

Explanation: Supplier creation and invoice approval by the same person increases error and fraud risk. The process needs segregation or compensating review.

Question 5

Topic: variance analysis

Materials price variance is favourable, but usage variance is adverse after cheaper materials were purchased. What should management consider?

• A. The favourable price variance is the only relevant evidence
• B. The lower price may have caused quality or wastage problems
• C. Usage variance is never linked to purchasing
• D. All cheaper materials should be banned

Best answer: B

Explanation: Variances should be read together. A lower purchase price can be offset by poorer quality, higher waste, or extra processing time.

Question 6

Topic: business process

A process has a long queue before quality inspection, while upstream machines are idle. What is the most likely operational issue?

• A. Excess cash balances
• B. A tax planning issue
• C. A bottleneck at or near inspection
• D. A shareholder dividend decision

Best answer: C

Explanation: Queueing before one step suggests that step may constrain flow. Operational questions often test whether the candidate can identify the bottleneck from process evidence.

Question 7

Topic: decision support

A manager wants to discontinue a product because its allocated fixed overhead makes it appear loss-making. What should be checked first?

• A. Whether the product name is short
• B. Whether all customer orders use the same margin
• C. Whether all fixed overhead should be treated as variable
• D. Whether the product has positive contribution and whether fixed overhead would actually be avoided

Best answer: D

Explanation: Discontinuation decisions should focus on contribution and avoidable costs. Allocated fixed overhead can make a product look worse than its true decision effect.

Question 8

Topic: performance measurement

A delivery team is measured only on number of deliveries per driver. Complaints about damaged goods increase. What should be added?

• A. Quality and complaint measures
• B. A larger logo on the report
• C. A target to reduce all deliveries
• D. No extra measures because speed is enough

Best answer: A

Explanation: A single productivity measure can encourage poor behavior. Balanced operational measurement includes quality and customer outcome.

Question 9

Topic: financial accounting foundation

An expense is incurred in March but paid in April. Under accrual accounting, when should it normally be recognized?

• A. April only, because cash was paid then
• B. March, when the obligation relates to that period
• C. Never, because no invoice is useful
• D. Only when tax is calculated

Best answer: B

Explanation: Accrual accounting recognizes expenses in the period they relate to, not simply when cash is paid.

Question 10

Topic: risk

A supplier provides a critical component and has no backup source. What is the main operational risk?

• A. Inventory is always too high
• B. A share buyback is required
• C. Single-supplier dependency could disrupt production
• D. Fixed cost per unit will always rise

Best answer: C

Explanation: Reliance on one critical supplier creates continuity risk. The business may need backup sourcing, buffer stock, contract protections, or supplier monitoring.

Question 11

Topic: budget behaviour

A team sets an easily achievable budget target to increase the chance of earning a bonus. What is this called?

• A. Marginal costing
• B. Throughput accounting
• C. A receivables ledger
• D. Budget slack

Best answer: D

Explanation: Budget slack occurs when managers build in easier targets or extra resources, often to protect performance evaluation.

Question 12

Topic: enterprise operations

A new online ordering process reduces manual work but creates more customer data-security exposure. What should management do?

• A. Evaluate process savings together with data controls, access rights, monitoring, and incident response
• B. Ignore security because the process is more efficient
• C. Cancel all online processes
• D. Let customers manage the company’s data controls

Best answer: A

Explanation: Operational improvement should not ignore control consequences. The best answer weighs efficiency with data protection and monitoring.

Related CIMA pages

• Operational Case Study
• Management Level
• CIMA CGMA updates