IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Practice Questions and Exam Preparation

IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Questions & Answers

• Question 41:

  Explain the difference between the ROI method and the Rl method in performance evaluation

  Essay

  Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.

  In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.

  The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.

  The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting. Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.

  Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

  

  A. See the Answer below in Explanation details.
  B. PlaceHolder
  C. PlaceHolder
  D. PlaceHolder
  A. See the Answer below in Explanation details.

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  Explanation

  ROI method evaluates performance by dividing operating income by assets employed, showing percentage return, while RI method evaluates performance by deducting the required return on assets from operating income, showing absolute dollar value created. For 20X7, Airline Catering ROI = 200 ÷ 2,000 = 10% and RI = 200 - (12% × 2,000) = -40. Food-To-Go ROI = 5 ÷ 20 = 25% and RI = 5 - (12% × 20) = 2.6. Airline Catering has lower ROI but much larger scale, while Food-To-Go has higher ROI and positive RI. ROI favors Food-To-Go, while RI highlights the absolute value shortfall of Airline Catering and the positive value created by Food-To-Go.

• Question 42:

  To prevent cyoeratiacks. a company recently implemented penetration testing wnich one of tne following statements b玸t descnbes this test-

  A. An authorized attempt to break through the company's firev.au
  B. A series of attempts to flood the company's network with traffic
  C. An email testing employee compliance with phishing guidelines
  D. A staged break-in of the company s server room after business hours
  A. An authorized attempt to break through the company's firev.au

• Question 43:

  Mauer Company's master budget for next year indicates the following

  

  A. $40,500,000
  B. $39,950,000
  C. $37.950,000
  D. $30,000,000
  C. $37.950,000

• Question 44:

  Personal Solutions manufactures nand-new personal computers and communications devices The company uses a Job-order costing system and applies manufacturing overhead to products on the oasis of machine hours The following estimates were used in preparing the predetermined overhead rate at the beginning of the year.

  

  During the year, weak sales led to a reduction in production and a buildup or inventory Production records provided the following information.

  

  Finished goods inventory included applied overhead of $100.000 while cost of goods sold included applied overhead of $300,000. There was no work-in-process inventory at year end how should the under-applied manufacturing overhead be handled at year end-

  A. $12.500 of the under-applied manufacturing overhead should be charged to finished goods inventory and S37 500 should be charged to Cost of Goods Sold
  B. All of the under-applied manufacturing overhead should be charged to Cost of Goods Sold for the year.
  C. All of the under-applied manufacturing overhead should be earned over until the subsequent year and used to adjust the estimated predetermined rate for that year
  D. $12.500 of the under-applied manufacturing overhead should be charged to finished goods inventory and S37.500 should be treated as a period cost
  A. $12.500 of the under-applied manufacturing overhead should be charged to finished goods inventory and S37 500 should be charged to Cost of Goods Sold

• Question 45:

  What is the best type of accounting system control to help prevent improper manipulation of data and to ensure the continued, satisfactory use of the hardware and software-

  A. Processing controls such as limiting access
  B. Output controls such as a maximum check
  C. input controls such as a limit check
  D. Throughput controls such as a hash total
  C. input controls such as a limit check

• Question 46:

  A company has developed a core competency in data mining. Which one of the following best describes this core competency-

  A. Ability to derive valid information from large databases using statistical techniques
  B. Expertise in extracting data from large volumes of unstructured text using query tools
  C. SQL mastery for structuring data as a oasis for applying data analytics
  D. Ability to develop recommendations for action based on the analysts of large data sets
  A. Ability to derive valid information from large databases using statistical techniques

• Question 47:

  Ingle Inc. has adopted a quality management program that considers all defects as avoidable and unnecessary The goal of this program is to have zero defects ingle uses a process costing system and has recognized the cost of normal and abnormal spoilage on its financial statements How will the new quality management program affect the accounting for normal and abnormal spoilage-

  A. All spoilage will be recognized as normal spoilage
  B. All spoilage will be recognized as abnormal spoilage
  C. All spoilage will be assigned to ending finished goods inventory
  D. There will be no effect
  B. All spoilage will be recognized as abnormal spoilage

• Question 48:

  What is ZF's expected variable overhead cost per pound of food produced- Snow your calculations Essay Zhiliang Foods Inc. (ZFI) is a privately-held food distributor ZFI has two production departments' the Meat Department is labor-intensive. while the Bakery Department is highly automated ZFI applies a single overhead allocation rate, using the

  number of pounds produced as an allocation base for the whole company The expected annual overhead costs of ZFI for 100 million pounds produced are as follows (-in millions).

  

  ZFI has one payroll administrator in its Human Resources department, but most of the payroll related work is outsourced to a payroll service provider ZFI's payroll administrator is responsible for tracking the list of current employees and maintaining the most up-to-date employee information, including bank accounts for payroll direct deposits.

  Each pay period, the payroll administrator emails the information for all current employees' hours worked to the payroll service provider. The service provider then processes the payroll, makes direct deposits to employees' bank accounts, mails payroll stubs to employees' homes and emails payroll reports to ZFI's payroll administrator. The payroll administrator then makes payroll journal entries to ZFI's accounting system based on the payroll reports received ZFI's accountant prepares a bank reconciliation each month to ensure ZFI s payroll payments on ZFI's bank statement match the amounts shown on the payroll reports from the service provider.

  ZFl's management is evaluating the purchase of data encryption software and human resources management software next year. The human resource management software is expected to provide various human resources and payroll-related functions.

  In addition, the human resource software can generate a report to indicate the monthly employee turnover rate and the average service length of employees who have resigned. The system can also generate a report to indicate the main reasons for resignations and identify current employees who are at risk of resigning. The system will recommend actions to help retain these employees, such as more training opportunities or a pay raise.

  A. See the Answer below in Explanation details.
  B. PlaceHolder
  C. PlaceHolder
  D. PlaceHolder
  A. See the Answer below in Explanation details.

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  Explanation

  Step 1. Identify variable overhead costs From the total overhead costs of $200 million: Rent = 10 --> fixed Depreciation = 60 --> fixed Administrative salaries = 40 --> fixed Factory utilities = 30 --> variable Production payroll = 20 --> variable Other variable overhead costs = 40 --> variable

  Total variable overhead costs = 30 + 20 + 40 = $90 million.

  Step 2. Total production volume

  Expected annual production = 100 million pounds.

  Step 3. Variable overhead cost per pound = Total variable overhead ÷ Production volume = 90 ÷ 100 = $0.90 per pound.

• Question 49:

  Hill Corporation sola some of its accounts receivable including one from Custom Company, to Dale incorporated without recourse, Because of this transaction.

  A. Dale incorporated has no recourse against mil Corporation
  B. Hill Corporation has no recourse against Dale Incorporated
  C. Custom Company has no recourse against Hill Corporation
  D. Custom Company has no recourse against Dale incorporated
  A. Dale incorporated has no recourse against mil Corporation

• Question 50:

  A company's controller is preparing to allocate service department costs. The controller would like to use a cost allocation method that would be most accurate. The method the controller would most likely use is the ______

  A. dual allocation method
  B. reciprocal method
  C. direct method
  D. step-down method
  B. reciprocal method