IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1011:

  The costs described in situations land IV are

  A. Prime costs.
  B. Sunk costs.
  C. Discretionary costs.
  D. Relevant costs.
  D. Relevant costs.

  ---

  Explanation

  Incremental costing can be used in making decisions regarding the acceptance of special orders and make-or-buy decisions. Many quantitative and non quantitative factors are involved in such decisions. The first step is to determine which

  costs are relevant to the decision. A relevant cost is any cost that will differ depending upon the decision made. The costs described in situations I and IV are relevant costs. In situation I, the cost can be avoided if the special order is not

  accepted. In situation IV, an opportunity cost is associated with the "make" alternative.

  Management accountants are frequently asked to analyze various decision situations, including the following:

  I. The cost of a special device that is necessary if a special order is accepted. II. The cost proposed annually for the plant service for the grounds at corporate headquarters. Ill. Joint production costs incurred, to be considered in a sell-at-split versus a process- further decision.

  IV.

  The costs associated with alternative uses of plant space, to be considered in a make/buy decision.

  V.

  The cost of obsolete inventory acquired several years ago, to be considered in a keep- versus-disposal decision.

• Question 1012:

  Positioning the market offering most likely require

  A. Establishing the offering in the minds of customers
  B. Entering a target market
  C. Anticipating or countering a competitor's move in a market
  D. Providing value to costumers
  A. Establishing the offering in the minds of customers

  ---

  Explanation

  Positioning is the process of designing the offering so that it will have a distinct and favorable place in the minds of customers, Thus, the firm's value proposition (the combination of benefits offered) should give customers in the target market good reason to purchase the offering.

• Question 1013:

  When a market leader attempts to increase demand in the market through the attraction of new customers, there are three strategies from which to choose. The focus of a market- penetration strategy is to

  A. Target customers in new locations where the product or service has not previously been offered.
  B. Pursue customers who have never before used the product or service although it was available for purchase in their locality.
  C. Respond to a competitive move through effective retaliation.
  D. Pocus on customers who might use the product or service.
  D. Pocus on customers who might use the product or service.

  ---

  Explanation

  The dominant firm in a market pursues a market-leader strategy. The leader should attempt to increase total demand in the market because the market leader will gain the most. Demand will increase if the firm attracts new users, encourages new uses of the product or service, or promotes increased use of the product or service. Three strategies may be used to attract new users. A market-penetration strategy focuses on customers who might use the product or service. A new-market segment strategy pursues customers who have never used the product or service. A geographical-expansion strategy targets users in previously unnerved localities.

• Question 1014:

  Maple Motors buys axles in order to produce automobiles. Maple carries an average credit balance of $25,000,000 with its axle supplier. The axle supplier provides credit terms of 1/10 net 25. The nominal annual cost of Maple not taking the trade discount is closest to which one of the following? Assume a 360-day year.

  A. 14. 4%
  B. 14. 5%
  C. 24. 0%
  D. 24. 2%
  D. 24. 2%

  ---

  Explanation

• Question 1015:

  The positive incremental effect that the brand name has on customer purchasing behavior is brand

  A. Valuation
  B. Equity
  C. Bonding
  D. Identify
  B. Equity

  ---

  Explanation

  According to Kotler (Marketing Management), brand equity is "the positive differential effect that knowing the brand name has on customer response to the product or service." It may be measure by the incremental price a customer will pay for the product. An effect of brand equity is customer preference for the brand when another product is essentially identical

• Question 1016:

  Assume that the probability distribution of Nap's is normal. The firm considers true risk occurring if the project results in a NPV that is zero or less. If the expected NPV is $1,000 and the standard deviation of NPV is $500, what is the probability that the project has an NPV of 0 or less?

  A. Less than 3%.
  B. Greater than 3%, but less than 9%.
  C. Greater than 9%, but less than 16%.
  D. Greater than 16%.
  A. Less than 3%.

  ---

  Explanation

  Since three standard deviations incorporate over 99% of all observations, and two standard deviations incorporate over 95% of observations, it means less than 5% will not be included within two standard deviations, and this is divided between both ends of the normal curve. Therefore, less than 2. 5% of the observations will be in the negative portion of the curve.

• Question 1017:

  Which of the following do not gather customer satisfaction information?

  A. Employee surveys.
  B. Customer surveys.
  C. Complaint and suggestion systems.
  D. Exit interviews.
  A. Employee surveys.

  ---

  Explanation

  Customer satisfaction is the relation between the offering's perceived performance and the customer's expectations. High customer satisfaction tends to create high customer loyalty that results in repurchases. Customer satisfaction information is gathered by: (1) complaint and suggestion systems such as websites and hotlines; (2) customer surveys; (3) lost customer analysis (e.g., exit interviews and determination of the customer loss rate); and (4) testing of the treatment customers receive when purchasing the firm's (or competitors') products (ghost shopping).

• Question 1018:

  Costs are allocated to cost objects in many ways and for many reasons. Which one of the following is a purpose of cost allocation?

  A. Evaluating revenue center performance.
  B. Measuring income and assets for external reporting.
  C. Budgeting cash and controlling expenditures.
  D. Aiding in variable costing for internal reporting.
  B. Measuring income and assets for external reporting.

  ---

  Explanation

  Cost allocation is the process of assigning and reassigning costs to cost objects. It is used for those costs that cannot be directly associated with a specific cost object. Cost allocation is often used for purposes of measuring income and assets for external reporting purposes. Cost allocation is less meaningful for internal purposes because responsibility accounting systems emphasize controllability', a process often ignored in cost allocation.

• Question 1019:

  Which one of the following factors might cause a firm to increase the debt in TTS financial structure?

  A. An increase in the corporate income tax rate.
  B. Increased economic uncertainty
  C. An increase in the federal funds rate.
  D. An increase in the price-earnings ratio.
  A. An increase in the corporate income tax rate.

  ---

  Explanation

  An increase in the corporate income tax rate might encourage a compare to borrow because interest on debt is tax deducible, `4iereas dividends are not Accordingly, an increase in the tax rate means that the after-tax cost of debt capital will decrease, Given equal interest rates, a firm with a high tax rate 4lI have a lower after- tax cost of debt capital than a firm with a low tax rate.

• Question 1020:

  In marketing research, basic decisions about whether to gather information from surveys or from observing customers' behaviors are part of which stage of the research process?

  A. Defining the problem and research objectives.
  B. Developing the research plan.
  C. Collecting the information.
  D. Analing the information.
  B. Developing the research plan.

  ---

  Explanation

  The six phases of marketing research are define the task, develop a research plan, collect data, anal we the data, report the relevant findings, and make a decision. Deciding on the appropriate tools for data gathering is part of developing the research plan.