IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1181:

  Exhibit

  

  The percentage difference between the actual and the budgeted breakeven point in units was that actual was

  A. 500% above budget
  B. 6. 67% below budget.
  C. 6. 67% above budget
  D. 5. 00% below budget.
  A. 500% above budget

  ---

  Explanation

• Question 1182:

  A company manufactures a single product. Estimated cost data regarding this product and other information for the product and the company are as follows: Sales price per unit $40 Total variable production cost per unit $22 Sales commission (on sales) 5% Fixed costs and expenses: Manufacturing overhead $5,598,720 General and administrative $3,732,480 Effective income tax rate 40% The number of units the company must sell in the coming year in order to reach its breakeven point is

  A. 388,800 units.
  B. 518,400 units.
  C. 583,200 units.
  D. 972000 units.
  C. 583,200 units.

  ---

  Explanation

• Question 1183:

  Which one of the following provides a spontaneous source of financing for a firm?

  A. Accounts payable
  B. Mortgage bonds
  C. Accounts receivable.
  D. Debentures.
  A. Accounts payable

  ---

  Explanation

  Trade credit is a spontaneous source of financing because it arises automatically as part of a purchase transaction. Because of its ease in use, trade credit is the largest source of short-term financing for many firms both large and small

• Question 1184:

  A company has just completed the final development of its only product, general recombinant bacteria, which can be programmed to kill most insects before dying themselves. The product has taken 3 years and $6,000,000 to develop. The following costs are expected to be incurred on a monthly basis for the normal production level of 1,000,000 pounds of the new product: Ata sales price of $5. 90 per pound1 the sales in pounds necessary to ensure a $3,000,000 profit the first year would be (to the nearest thousand pounds)

  

  A. 13,017,000 pounds.
  B. 14,000,000 pounds.
  C. 15,000,000 pounds.
  D. 25,600,000 pounds.
  C. 15,000,000 pounds.

  ---

  Explanation

• Question 1185:

  Multichannel marketing

  A. Is ownership of channels by multiple cooperating firms.
  B. Introduces conflict when channels compete for customers.
  C. Tends to increase coverage and cost.
  D. Improves control by customizing the selling process.
  B. Introduces conflict when channels compete for customers.

  ---

  Explanation

  Conflict in the channel may be vertical (between different levels), horizontal (between firms on the same level), or multichannel (between different channels). Channels may compete for the same customers and be unwilling to cooperate, espy dally when they have been added recently.

• Question 1186:

  The modeling technique to be employed in a situation involving a sequence of events with several possible outcomes associated with each event is

  A. Cost-benefit analysis.
  B. Decision tree analysis.
  C. The Monte Carlo method.
  D. Linear programming.
  B. Decision tree analysis.

  ---

  Explanation

  Decision trees may be used to describe complex decision situations. Each branch of the tree represents a different decision, and each twig extending from each branch represents several possible outcomes of the decision.

• Question 1187:

  Which one of the following is least likely to be an objective of a cost accounting system?

  A. Product costing.
  B. Department efficiency.
  C. Inventory valuation.
  D. Sales commission determination.
  D. Sales commission determination.

  ---

  Explanation

  A cost accounting system has numerous objectives, including product costing, assessing departmental efficiency, inventory valuation. income determination, and planning, evaluating, and controlling operations. Determining sales commissions is not an objective of a cost accounting system because such commissions are based on sales, not costs.

• Question 1188:

  Several surveys show that most managers use full product costs, including unit fixed costs and unit variable costs, in developing cost-based pricing. Which one of the following is least associated with cost-based pricing?

  A. Price stability,
  B. Pricejustdication.
  C. Target pricing..
  D. Fixed-cost recovery.
  C. Target pricing..

  ---

  Explanation

  A target price is the expected market price of a product, given the fimi's knowledge of its customers and competitors. Hence, under target pricing, the sales price is known before the product is developed. Subtracting the unit target proflt margin determines the long- term unit target cost. If cost-cutting measures do not permit the product to be made at or below the target cost, it will be abandoned.

• Question 1189:

  Orange Company's controller developed the following direct-costing income statement for Year 1:

  

  Orange Co. based its next year's budget on the assumption that fixed costs, unit sales, and the sales price would remain as they were in Year 1, but with net income being reduced to $300,000. By July of Year 2, the controller was able to predict that unit sales would increase over Year 1 levels by 10%. Based on the Year 2 budget and the new information, the predicted Year 2 net income would be

  A. $300,000
  B. $330,000
  C. $420,000
  D. $585,000
  C. $420,000

  ---

  Explanation

• Question 1190:

  Logistics Corp. is performing research to determine the feasibility of entering the truck rental industry. The decision to enter the market is most likely to be deterred if

  A. Buyer switching costs are high.
  B. Buyers view the product as differentiated.
  C. The market is dominated by a small consortium of buyers.
  D. Buyers enjoy large profit margins.
  C. The market is dominated by a small consortium of buyers.

  ---

  Explanation

  When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in a capital-intensive industry such as trucking.