IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1051:

  Multi Frame Company has the following revenue and cost budgets for the two products it sells: The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is budgeted at $975,000. Assume that the company plans to maintain the same proportional mix. In numerical calculations, Multi Frame rounds to the nearest cent and unit.The total number of units needed to break even if the budgeted direct labor costs were $2 for plastic frames instead of $3 is

  A. 154O28 units.
  B. 144444 units.
  C. 156,000 units.
  D. 146177 units.
  B. 144444 units.

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  Explanation

  If the labor costs for the plastic frames are reduced by $1 1the composite unit contribution margin will be $27 [($10--$2--$3) + (3)($15--$3--$5)]. Hence1 the new breakeven point is 144,444 units [4 units x ($975 .000 FO + $27)].

• Question 1052:

  Starr Company uses material requirements planning (MRP) and manufactures a product with the following product structure tree.

  

  Starr has just received an order for 100 units of X, the finished product. The company has 20 units of X, and 50 units of E in inventory. How many units of E must Starr Starr purchase in order to fill the order?

  A. 1,000
  B. 830
  C. 800
  D. 550
  D. 550

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  Explanation

  Is correct. Starr already has 20 units of the finished product in inventory so 80 will need to be manufactured to fill this order. The amount of subunit B that must be purchased is [(80* 5 )-100 on hand ] =300. The amount of Subunit E that must be Purchased is therefore [(300* 2)-50 on hand] =550.

• Question 1053:

  The following information regarding a change in credit policy was assembled byte Wilson Wax Company. The company has a required rate of return of 10% and a variable cost ratio of 60%.

  

  The pretax cost of carrying the additional investment in receivables, using a 360-dayyear, would be

  A. $5,760.
  B. $9,600.
  C. $8,160.
  D. $960.
  A. $5,760.

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  Explanation

  The first step is to determine the average investment in receivables under each policy. Under the old policy, average daily sales are $10,000 ($3 600,000 + 360 days). Given a 30-day average collection period, the average receivables balance is $300,000 ($10000 x 30 days). Under the new policy, average daily sales are $11,000 ($3,960,000 + 360 days), and the average receivables balance is $396,000 ($1 1,000 x 36 days). Hence, the average balance is $96,000 higher under the new policy. Because the compass incremental (variable) costs are 60% of sales, the extra investment is only $57,600 ($96,000 x 60%). The interest rate, or required rate of return, is 10%. Thus, the incremental carrying cost is $5,760 ($57,600 x l0%).

• Question 1054:

  Many retail stores have found that it is more profitable to sell a product carrying the store's brand name as opposed to the more well-known brands. This is an example of a

  A. Manufacturer's brand
  B. National brand
  C. Private brand
  D. Co-brand
  C. Private brand

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  Explanation

  When a manufacturer agrees to place a retail store's own name on a product, it is referred to a s a private brand.

• Question 1055:

  A firm that manufactures refrigerators sold ice boxes in urban areas of less developed countries. Many residents lacked electricity to power refrigerators but could purchase blocks of ice from local vendors for use in ice boxes. According to Keegan's model of adaptation strategies, this firm adopted a strategy of

  A. Product adaptation.
  B. Dual adaptation.
  C. Backward invention.
  D. Forward invention.
  C. Backward invention.

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  Explanation

  Using a product invention strategy, a new product is created specifically for a certain country or regional market. A product may either include advancements for developed countries or have certain elements removed in places where a lower cost is a key selling point. Thus, an ice box, a precursor of the modern refrigerator, is a backward invention.

• Question 1056:

  When purchasing temporary investments, which one of the following best describes the risk associated with the ability to sell the investment in a short period of time without significant price concessions?

  A. Interest-rate risk.
  B. Purchasing-power risk.
  C. Financial risk.
  D. Liquidity risk.
  D. Liquidity risk.

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  Explanation

  Liquidity risk is the possibility that an asset cannot be sold on short notice for its market value. If an asset must be sold at a high discount, it is said to have a substantial amount of liquidity risk.

• Question 1057:

  The flow of materials and services from the original sources to final consumers is the

  A. Value chain
  B. Product chain
  C. Supply chain
  D. Value process
  C. Supply chain

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  Explanation

  The supply chain usually encompasses more than one firm. Firms seeking to improve performance and reduce costs must analyze all phases of the supply chain as well as the value chain.

• Question 1058:

  Corbin, Inc. can issue 3-month commercial paper with a face value of $1,000,000 for $980,000. Transaction costs will be $1, 200. The effective annualized percentage cost of the financing, based on a 360-day year, will be

  A. 8.16%.
  B. 8.66%.
  C. 8.00%.
  D. 2. 00%.
  B. 8.66%.

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  Explanation

  The total cost to the company will be $21 .200 ($20,000 discount + $1 .200 transaction cost), and the net amount available will be $978,800. The annualized amount of the costs is $84,800 (4 x $21,200). Accordingly, the annual interest cost will be and66% 84,800_- $978,800).

• Question 1059:

  What is the weighted average cost of capital for a firm using 65% common equity with a return of 15%. 25% debt with a return of 6%. 10% preferred stock with a return of 10%. and a tax rate of 35%?

  A. 10.333%
  B. 11275%
  C. 11325%
  D. 12. 250%
  C. 11325%

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  Explanation

• Question 1060:

  The capital budget is a(n) A. Plan to ensure that sufficient funds are available for the operating needs of the company

  B. Exercise that sets the long-range goals of the company including the consideration of external influences

  C. Plan that coordinates and communicates a company's plan for the coming year to all departments and divisions

  D. Plan that assesses the long-term needs of the company for pant and equipment purchases

  Correct Answer. D
  D

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  Explanation

  Capital budgeting is the process of planning expenditures for long-lived assets. It involves choosing among investment proposals using a ranking procedure. Evaluations are based on various measures involving rate of return on investment.