IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1221:

  The process of developing plans for a company's expected operations and controlling the operations to help carry out those plans is

  A. Preparing a period budget

  B. Preparing a master budget

  C. Budgetary control

  D. Participative budgeting

  Correct Answer: C

  The budget has the same structure as the organization itself. The complete budget is made up of a hierarchy of smaller budgets, each representing the plan of a division, department, or other unit in the organizational structure. Successful budgeting requires completion of a plan that states organizational goals before the budgeting process. Prevention and detection of deviations from the budget are the control purposes of budgets.

• Question 1222:

  Strategic planning is

  A. Short term.

  B. Operational

  C. Long term

  D. Informal

  Correct Answer: C

  Strategic planning, also called long-term planning, covers periods from 1 to 20 years. Strategic planning is somewhat difficult because of uncertainty about future conditions. Thus, long-term plans are more general and exclude operational detail.

• Question 1223:

  Zero-based budgeting forces managers to

  A. Estimate a product's revenues and expenses over its expected life cycle.

  B. Prepare a budget based on historical costs.

  C. Formulate s budget by objective rather than function.

  D. Justify all expenditures at the beginning of every budget period.

  Correct Answer: D

  Zero-based budgeting is a planning process in which each manager must justify his/her department's full budget for each period. The purpose is to encourage periodic reexamination of all costs in the hope that some can be reduced or eliminated.

• Question 1224:

  After the goals of the company have been established and communicated, the next step in the planning process is development of the

  A. Production budget.

  B. Direct materials budget.

  C. Selling and administrative budget.

  D. Sales budget.

  Correct Answer: D

  The sale budge is the first step in the operating budget process because it is needed to prepare all of the other budgets. For example, the production budget cannot be prepared until the sales department has determined how many units are needed.

• Question 1225:

  Formal written policies are normally recommended. However, the presence of certain in an organization minimizes the need for written policies. One condition that minimizes the need for written policies is

  A. A high division of labor.

  B. A strong organizational culture.

  C. A large span of control.

  D. A strict unity of command.

  Correct Answer: B

  If the culture is strong, the organization's key values are intensely held and widely shared. Substantial training has been expended to achieve this high degree of acceptance, minimizing the need for formal, written policies.

• Question 1226:

  Which one of the following management considerations is usually addressed first in strategic planning?

  A. Outsourcing

  B. Overall objectives of the firm

  C. Organizational structure

  D. Recent annual budgets.

  Correct Answer: B

  Strategic planning is the process of setting overall organizational objectives and drafting strategic plans. It is a process of long-term planning. Setting ultimate objectives for the firm is a necessary prelude to developing strategies for achieving those objectives. Plans and budgets are then needed to implement those strategies.

• Question 1227:

  Intense rivalry among firms in an industry increases when there is

  I. A low degree of product differentiation.

  II.

  Low consumer switching costs

  A.

  I only.

  B.

  II only.

  C.

  Both I and II.

  D.

  Neither I nor II.

  Correct Answer: C

  The degree of product differentiation and the costs of switching from one competitor's product to another increase the intensity of rivalry and competition in an industry. Less differentiation tends to heighten competition based on price, with price cutting leading to lower profits. Low costs of switching product also increase competition.

• Question 1228:

  Which of the following statement is false with respect to best practices analysis?

  A. The balanced scorecard facilitates best practice analysis.

  B. Best practice analysis is a way or method of accomplishing a business function or process that is considered to be superior to all other known methods.

  C. Best practice analysis assumes that a lesson learned from one area of a business can be passed on to other area of the business or between businesses.

  D. The concept of benchmarking is incompatible with best practice analysis.

  Correct Answer: D

  Best practice analysis is a method of accomplishing a business function or process that is considered to be superior to all other known methods. The balanced scorecard facilitated best practice analysis. A lesson learned from one area of a business can be passed on to another area of the business or between

  businesses. The whole concept of benchmarking is aimed at identifying best practices.

• Question 1229:

  An example of an internal nonfinancial benchmark is the

  A. Labor rate of comparably skilled employees at a major competitor's plant.

  B. Average actual cost per pound of a specific product at the company's most efficient plant becoming the benchmark for the company's other plants.

  C. Company setting a benchmark of $50,000 for employee training programs at each of the company's plants.

  D. Percentage of customer orders delivered on time at the company's most efficient plant becoming the benchmark for the company's other plants.

  Correct Answer: D

  Benchmarking "involves continuously evaluating the principle of best-in-class organizations and adapting company processes to incorporates the best of these practices." It "analyzes and measures the key outputs of a business proves or function against the best and also identifies the underlying key actions and root causes that contribute to the performance difference "(SMA 4V). The percentage of orders delivered on time at the company's most efficient plant is an example of an internal nonfinancial benchmark.

• Question 1230:

  Which of the following statements regarding benchmarking is false?

  A. Benchmarking involves continuously evaluating the practices of best-in-class organization and adapting company processes to incorporate the best of these practices.

  B. Benchmarking, in process, usually involves a company forming benchmarking teams.

  C. Benchmarking is an ongoing process that entails quantitative and qualitative measurement of the difference between the company's performance of an activity and the performance by the best in the world or the best in the industry.

  D. The benchmarking organization against which a firm is comparing itself must be a direct competitor.

  Correct Answer: D

  Benchmarking is an ongoing process that entails quantitative and qualitative measurement of the difference between the company's performance of an activity and the performance by a best-in-class organization. The benchmarking organization against which a firm is comparing itself need not be a direct competitor. The important consideration is that the benchmarking organization be an outstanding performer in its industry.