IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1001:

  The gross profit Reade Company for each of the years ended December 361, Year 2 and Year 1, was as follows:

  

  Assuming that Year 2 selling prices were 10% lower, what was the decrease in gross profit caused by the charge in selling prices?

  A. $8,000
  B. $72,000
  C. $79,200
  D. $ 88,000
  D. $ 88,000

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  Explanation

  With a 10% decrease in prices in Year 2, that year's sales were 90% of the amount at Year 1 prices. Dividing Year 2 sales of $ 792,000 by 90% gives $880,000 of sales at Year 1 prices. Thus, sales and gross profit were $88,000

  ($880,000-$792,000) lower because of the 10% decrease in selling price.

• Question 1002:

  Delphi Company has developed a new project that will be marketed for the first time during the next fiscal year. Although the Marketing Department estimates that 35,000 units could be sold at $36 per unit, Delphi's management has allocated only enough manufacturing capacity to produce a maximum of 25,000 units of the new product annually. The fixed costs associated with the new product are budgeted at $450,000 for the year, which includes $60,000 for depreciation on new manufacturing equipment. Data associated with each unit of product are presented as follows Delphi is subject to a40% income tax rate.

  

  The number of units of the new product that Delphi Company must sell during the next fiscal year in order to break even is

  A. 20.930
  B. 18,140
  C. 22,500
  D. 25,500
  C. 22,500

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  Explanation

• Question 1003:

  The Frame Supply Company has just acquired a large account and needs to increase its working capital by $100,000. The controller of the company has identified the four sources of funds given below.

  1. Pay a factor to buy the company's receivables, which average $125,000 per month and have an average collection period of 30 days. The factor will advance up to 80% of the face value of receivables at 10% and charge a fee of 2% on all

  receivables purchased. The controller estimates that the firm would save $24,000 in collection expenses over the year. Assume the fee and interest are not deductible in advance.

  2. Borrow $110,000 from a bank at 12% interest. A 9% compensating balance would be required.

  3. Issue $110,000 of 6-month commercial paper to net $100,000. (New paper would be issued every 6 months.)

  4. Borrow $125,000 from a bank on a discount basis at 20%. No compensating balance would be required.

  Assume a 360-day year in all of your calculations. Should CyberAge use trade credit and continue paying at the end of the credit period?

  A. Yes, if the cost of alternative short-term financing is less.
  B. Yes, if the firm's weighted-average cost of capital is equal to its weighted-average cost of trade credit.
  C. No, if the cost of alternative long-term financing is greater
  D. Yes, if the cost of alternative short-term financing is greater
  D. Yes, if the cost of alternative short-term financing is greater

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  Explanation

  The company is currently paying an annual rate of 25. 2% (see previous question) to obtain trade credit and pay at the end of the credit period. This policy should be continued if trade credit is the only source of financing, or if other sources are available only at a higher rate.

• Question 1004:

  The likelihood that customer loyally is not based on any appraisal of the brand's value is

  A. Relationship equity.
  B. Value equity
  C. Customer equity.
  D. Brand equity.
  A. Relationship equity.

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  Explanation

  Relationship equity is one of the drivers of customer equity. It is the likelihood that customer loyalty is not based on any appraisal of the brand's value. Sub drivers are programs to build customer loyally, recognition, community, and knowledge. Relationship equity is most significant when the supplier-customer relationship 5 vital or when a customer may simply be habit-bound.

• Question 1005:

  If the average age of inventory is 90 days, the average age of accounts payable is 60 days, and the average age of accounts receivable is 65 days, the number of days in the cash flow cycle is

  A. 215 days
  B. 150 days.
  C. 95 days.
  D. 85 days
  C. 95 days.

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  Explanation

  The cash flow cycle begins when the firm pays for merchandise it has purchased and ends when it receives cash from the sale of the merchandise. Inventory is held for an average of 90 days prior to sale, but the average age of accounts payable is 60 days. Therefore, the average time between outlay and sale is 30 days. Receivables are collected an average of 65 days after sale. Thus, the length of the cash flow cycle is 95 days (30 + 65)

• Question 1006:

  The Delphi technique is used during which step of the decision-making process?

  A. Defining the problem.
  B. Obtaining information.
  C. Identifying alternative courses of action.
  D. Evaluating the different problem solutions.
  C. Identifying alternative courses of action.

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  Explanation

  The Delphi technique is used in identifying alternative courses of action. It is an approach in which the manager solicits opinions on a problem from experts in the field, summarizes the opinions, and feeds the summaries back to the experts.

• Question 1007:

  Capital Invest, Inc. uses a 12% hurdle rate for all capital expenditures and has done the following analysis for four projects for the upcoming year:

  

  Which project(s) should Capital Invest, Inc. undertake during the upcoming year assuming it has no budget restrictions?

  A. All of the projects.
  B. Projects 1, 2, and 3.
  C. Projects 2, 3,and 4.
  D. Projects 1, 3, and 4.
  C. Projects 2, 3,and 4.

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  Explanation

  A company using the NPV method should undertake all projects with a positive NPV, unless some of those projects are mutually exclusive. Given that Projects 2, 3, and 4 have positive NPVs, they should be undertaken. Project 1 has a negative NPV.

• Question 1008:

  The capital asset pricing model (CAPM) computes the expected return on a security by adding the risk-free of return to the incremental yield of the expected market return, which is adjusted by the company's beta. Compute DQZ's expected rate or return.

  A. 9.20%
  B. 12. 20%
  C. 7. 20%
  D. 12. 00%
  A. 9.20%

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  Explanation

• Question 1009:

  II a US, manufacturers price in the U.S. market is below an appropriate measure of costs, and the seller has a reasonable prospect of recovering the resulting loss in the future through higher prices or a greater market share, the seller has engaged in

  A. Collusive pricing.
  B. Dumping.
  C. Predatory pricing
  D. Price discrimination
  C. Predatory pricing

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  Explanation

  Predatory pricing is intentionally pricing below cost to emanate competition and reduce supply. Federal statutes and many state laws prohibit the practice. The U.S. Supreme Court has held that pricing is predatory when two conditions are met (1) the seller's price is below an appropriate measure of its costs, and (2) it has a reasonable prospect of recovering the resulting loss through higher prices or greater market share.

• Question 1010:

  Marketing research may rely on primary or secondary sources of information. Which research approach gathers primary information through moderated discussions?

  A. Surveys.
  B. Focus groups.
  C. Experimentation.
  D. Evidence of purchasing behavior.
  B. Focus groups.

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  Explanation

  Focus group discussions are guided by a moderator and recorded for later analysis. This approach collects information about participant's attitudes toward a product, company, service, etc. Consumer goods 1,research has popularized the use of focus groups.