CIMA November 2014 exam expert opinion and rating - what the expert think

Operational Level 

E1 ( 9/10) 

The last hurrah under the 2010 syllabus! Perhaps the examiner decided to take pity on those caught by transitional arrangements and opted for what can only be described as a gentle stroll through the metaphorical autumnal English countryside, id est – very pleasant!
Contemporary themes continue to feature, this time round Section B (Part C) addressed the advantages of web-based applications (Apps). Whilst many students will be all too familiar with ‘Apps’ this question is likely to have caught some off-guard. 

Section A threw in one or two awkward questions including brand equity and the notion of driving and restraining forces in the context of introducing an information system.
With the exception of web-based applications, discussed above, Section B offered up core syllabus themes, which providing students directly addressed the requirement, rather than simply ‘dumping’ knowledge on to the page, would have scored well. 

Section B (Part F) required students to ‘Describe briefly, the primary activities of a value chain’. A somewhat vague requirement which may have thrown less astute candidates, however ‘primary activities’ was a direct reference to Porters Value Chain.

In contrast with May 2014 & Sept 2014 sittings, Nov 2014 Section C offered by far the most favourable questions covering outsourcing, workforce reductions, motivation, capacity planning, branding and the product life cycle! Arguably capacity planning strategies would have been one of the less favourable topics, however a life line was thrown since the examiner referred in the body of the text to ‘level capacity’, ‘demand management’ and ‘chase demand strategies’!

P1 ( 7 /10 )

P1 November 2014 paper was a good exam as expected by most of candidates typically set in a stereotyped way.

Section A had mainly specific questions covered from syllabus apart from Q1.5 which asked for breakeven (assumed knowledge of C01 or P2) many candidates might not have expected this.

Section B had good questions from the syllabus ranging from cash budgets to working capital and risk and uncertainty, most candidates should be prepared of.

Section C was the best for many students, covering a simple question from mostly basic variance analysis with a little touch of planning and operational ones, and investment appraisal as expected. Variance question was mostly involving basic variances, along with operation statement, and investment appraisal had basic relevant cash-flows.

Overall the paper was a good mixture of computations along with theoretical understanding required. 

Management level 

E2  - 9/10

This is the last of an era as the E2 examination will not be examined in this format and the examiner did not disappoint those who needed to pass E2 to avoid the integrated case study.
The paper reflected the previous ones and the mark allocation reflected the syllabus weighting, 30% of the questions were based on Strategy, 35% on Project Management and 35% Managing Relationships.

Types of strategy (a core area) had been examined in the last three sittings and therefore it was not surprising that there was no question on types of strategy.
Section A: The three questions from strategy were corporate social responsibility, transaction cost theory and five forces. Even though TCT is not core to strategy in E2 the last time it was examined was May 2013 and therefore was due.

Q4 was on leadership but being restricted to a particular style (ACL) may pose a challenge to some students.
Q2 was ten marks for critical path analysis without a network diagram was a novelty but doable.
Section B: Question 6 was 25 mark management of relationship question in popular areas; teams and conflict.
Q7 was a repeat question on project management and most students would have seen and practiced that question before and should excel.
Overall a good examination paper.

F2 - 10 /10

There were no surprises with this examination and many students will be pleased with the content that was tested. All questions were on mainstream topics (as they usually are) and there were no inclusions that were designed to catch students out. Questions were clearly expressed and this must rate as a high quality examination team. Well done !.

P2  - 5/10 

Overall. A difficult one to generalise on.

All questions were either unarguably in the syllabus, and/ or the same topics have been examined before.
So no, “where did that come from”, type surprises. I suspect, however, that the pass rates will be low, with questions 2, 5, 6 and 7 causing very serious problems for many students.
(Conversely, I was personally delighted with this exam, as I was very lucky in what I covered for revision). 

Q1 to 5: All entirely straightforward, on topics right at the heart of the syllabus, and examined in very similar styles in previous exams.
However, I notice on cima sphere that students were moaning about: 
- Learning curves
Some were confused as the question didn’t give the labour rate per hour. However, I think it’s totally reasonable to expect P2 students to realise that, if labour cost is a direct function of hours, then the learning curve can be applied to either hours or cost.
- Some were unprepared for sales mix and sales quantity variances. 
Whilst not strictly speaking in the syllabus, both have been examined before. (Luckily, I did cover them on both tuition and revision courses).

Q6: All straightforward, apart from part b. This had a single limiting factor, plus two products whose prices could be varied, causing a corresponding change in their demands. 
This is a rare, and tricky, problem (only been examined once before, in September 2013 Q6c). It was very badly answered back then (as in “very, very,very, badly answered”). It is not an algebraic MC = MR type problem (that comes up in part c). 
A tabular approach is needed, ranking the incremental contribution at each price. (I had done the September 2013 question on both full-time and revision. Whether my students recognised it, however, remains to be seen).
I suspect that many candidates will have spent far too long getting about nil marks on part b, and will therefore have missed much easier marks in c and d.

Q7: This looked, at first sight, like a very basic transfer pricing question. 
However, the question didn’t give the volume of inter-divisional trading, nor did it give any directions as to how that output decision would be made.
So, arguably, a ‘dodgy’ question, that I guess will probably have been answered badly. The best answers would assume that output is to be decided by BB (the buying division). Ie Offer the units to BB at the given transfer price, then see what output decision BB would make. From there on, the question is indeed very basic.

Strategic Level 

E3 -  3 /10

This paper was an improvement on the diabolical one from May but still insists on examining periphery rather than mainstream. Questions were clearer this time but the tendency to pick dated models rather than the current, syllabus related versions has to raise a question as to how this paper has been controlled in its development and construction. Was it a fair paper? No, it was poor but students will have muddled through as they would all have been in the same position so perhaps you could view it as fair in that respect.

F3 8 /10 

The Final F3 exam was a somewhat pleasant paper which focused heavily on the Financing aspect of the syllabus, and much to my surprise, minimized the requirements of Investment Decisions and Project Control. 

Section A did not include the anticipated international investment appraisal / valuation task, rather a relatively straight forward profit forecast and link to the expected and actual impact upon share price. The second element required some straightforward ratios and discussion around alternative financing methods of script dividend and sale & leaseback.

In section B of the exam, candidates were hopefully able to locate two questions that they found acceptable. Q2 required a valuation of a company that was subject to a takeover bid, and then discussion around synergy and the impact upon both sets of shareholders. Q3 presented candidates with a challenge of reducing a company’s level of gearing and the associated implications of a rights issue, private placement and redeemable preference shares, whilst Q4 was a calculation centric with both WACC, NPV and Adjusted present vale included.

I would hope that a reasonable student would have been delighted with the paper, and produced the required response to succeed.

P3 6 /10

Q1 was based on the preseen and two of the three topics (food allergies and cocoa futures) could well have been predicted by students.
Some students might have had trouble in Q1a which asked for internal controls with reasons and THEN asked for benefits of the controls. I suspect many students will have repeated themselves here

Careful reading was required in part c) which looked at controls over cash. The question stated quite clearly that no fraud was suspected, the controls were just unpopular with managers.
Q2 was the “straightforward” common sense question which appears on most P3 exams. A company had discovered it was breaching its own guidelines. The question looked at why this might cause problems and also at the company’s decisions to take no action about either of the issues.

Q3 looked at the advantages/disadvantages to a business of being structured in different ways. Again, not a particularly technical question, the key was to discuss how each structure could be applied to the company. Similarly, students were expected to discuss specific reasons why cost or profit centers might be more suitable in this situation. This again illustrates that simple learning of facts without thinking about application is not sufficient in the strategic papers.

Q4 was the most technical of the questions (and probably the least popular) looking at speculating on the foreign currency markets (rather than hedging which is the usual situation).

The key to success was managing time properly and asking the questions set, relating knowledge to the facts in the scenario. Students who did both of these should be confident of success.

T4  - 8 /10

The last of the T4 provided a good test of candidate’s application skills and was a fair examination with plenty of content that would offer the student the chance to demonstrate their ability in both terms of knowledge and information. Good exam.

courtesy -

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