IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1241:

  A company wishes to determine what advertising mix of radio, television, and newspapers offers the optimal desired result in increased sales and improved public image. Which of the following techniques is most appropriate to use?

  A. Synaptic.
  B. Value analysis.
  C. Brainstorming.
  D. Forced relationship.
  B. Value analysis.

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  Explanation

  Value analysis is a methodical approach primarily designed to optimize performance of an activity at a minimum cost. Emphasis is on the cost-benefit criterion.

• Question 1242:

  A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% to 60%. The company estimates that projected sales will be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are $50 million, calculate the dollar impact on accounts receivable of this proposed change in credit policy. Assume a 360day year.

  A. $3. 819,445 decrease.
  B. $6,500,000 decrease.
  C. $3,333,334 decrease.
  D. $ 18.749778 increase.
  C. $3,333,334 decrease.

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  Explanation

  If sales are $50 million, 70% of which are on credit1 total credit sales will be $35 million. The receivables turnover equals 4. 8 times per year (360 days + 75-day collection period). Receivables turnover equals net credit sales divided by average receivables. Accordingly, average receivables equal $7,291 ,667 ($35,000,000 + 4. 8). Under the new policy, sales will be $47. 5 million ($50,000,000 x 95%), and credit sales will be $28.5 million ($47,500,000 x 60%). The collection period will be reduced to 50 days, resulting in a turnover of 7. 2 times per year (360 + 50). The average receivables balance will therefore be $3,958,333 ($28,500,000 + 7. 2), a reduction of $3,333,334_($7,291,667 -- $3,958,333).

• Question 1243:

  In the decision-making process, dentil\ting alternative courses of action can be accomplished by many methods. Which of the following is a method of idea generation that reports the first thought to come to mind in response to a given stimulus?

  A. Creative leap.
  B. Brainstorming.
  C. Forced relationship.
  D. Free association.
  D. Free association.

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  Explanation

  Identifying alternative courses of action can be primary or secondary, or it can be creative. One of the creative methods is free association. Free association is a method of idea generation that reports the first thought to come to mind in response to a given stimulus. The objective is to express the content of consciousness without censorship or control.

• Question 1244:

  When evaluating projects, breakeven time is best described as

  A. Annual fixed costs ?monthly contribution margin.
  B. Project investment + annual net cash inflows.
  C. The point where cumulative cash inflows on a project equal total cash outflows.
  D. The point at which discounted cumulative cash inflows on a project equal discounted total cash outflows.
  D. The point at which discounted cumulative cash inflows on a project equal discounted total cash outflows.

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  Explanation

  Breakeven time is a capital budgeting tool that is widely used to evaluate the rapidity of new product development. It is the period required for the discounted cumulative cash inflows for a project to equal the discounted cumulative cash outflows. The concept is similar to the payback period, but it is more sophisticated because it incorporates the time value of money. It also differs from the payback method because the period covered begins at the outset of a project, not when the initial cash outflow occurs.

• Question 1245:

  A firm may seek marketing information using its internally collected data. An approach that uses advanced statistical and mathematical methods to find hidden relationships in the data is

  A. Data mining.
  B. Data warehousing.
  C. Multidimensional data analysis.
  D. Electronic data interchange (EDI).
  A. Data mining.

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  Explanation

  A firm with a decision-support system (DSS) may exploit advanced database technology to analyze vast amounts of data. One approach is online analytical processing, or multidimensional data analysis. It allows a user to have multiple perspectives of the same data. Another approach is data mining. It allows a user to discover hidden relationships in the data, such as associations (links to a given event), sequences of events, classifications (descriptions of the group to which an item belongs, or clusters (new groupings not previously known). Consequently, a firm might detect trends or underserved customer market segments. Data mining requires advanced statistical and mathematical methods, for example, predictive modeling, neural networking, and automatic interaction detection.

• Question 1246:

  The degree of operating leverage for Carlisle Company is

  A. 24
  B. 178
  C. 1.35
  D. 1.2
  B. 178

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  Explanation

• Question 1247:

  Consider aworld consisting of only two countries and prior to the introduction of the euro, Canada and Italy. Inflation in Canada in 1 years was 5%, and in Italy 10%. Which one of the following statements about the Canada exchange rate (rounded) during that year will be true?

  A. Inflation has no effect on the exchange rates.
  B. The Canada dollar will appreciate by 5%.
  C. The Canada dollar will depreciate by 5%.
  D. The Canada dollar will depreciate by 15%.
  B. The Canada dollar will appreciate by 5%.

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  Explanation

  Because Italy has experienced the greater inflation, its currency should depreciate in relation to Canada's. For example, if Canada trades 100 units of a product to Italy for pre- inflation price of $100 ( the domestic price in Canada), and Italy pays with 10,000 units of an Italian product that sells domestically for 10,000 pre-inflation lira, the exchange rate without regard to inflation is 100 lira per $1 (10,000 lira / $100). Allowing for the inflation, the 100 units of the Canadian product would sell for $105. The 10,000 units of the Italian product would sell for 11,000 lira. Thus, the new exchange rate will be 104. 76 lira per $1 (11,000 lira / $105), and the price of the Canadian dollar will increase by 4. 76% (rounded to 5%)

• Question 1248:

  SWOT analysis is concerned primarily with which of the following two factors?

  A. The internal environment and the external environment
  B. Market share and market growth
  C. Product profitability and economic resources
  D. Customers' and competitors' profiles
  A. The internal environment and the external environment

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  Explanation

  A SWOT analysis is a process whereby a firm identifies its own strengths and weaknesses (the internal environment) and the opportunities and threats facing it (the external environment)

• Question 1249:

  A company uses portfolio theory to develop its investment portfolio. If the company wishes to obtain optimal risk reduction through the portfolio effect, it should make its next investment in an investment that

  A. Correlates negatively to the current portfolio holdings.
  B. Is uncorrelated to the current portfolio holdings.
  C. Is highly correlated to the current portfolio holdings.
  D. Is perfectly correlated to the current portfolio holdings.
  A. Correlates negatively to the current portfolio holdings.

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  Explanation

  A common general definition is that risk is an investment with an unknown outcome but a known probability distribution of returns (a known mean and standard deviation). An increase in the standard deviation (variability) of returns is synonymous with an increase in the riskiness of a project. Risk is also increased when the project's returns are positively (directly) correlated with other investments in the company's portfolio; that is, risk increases when returns on all projects rise or fall together. Consequently, the overall risk is decreased when projects have low variability and are negatively correlated (the diversification effect).

• Question 1250:

  Total production costs of prior periods for a company are listed as follows. Assume that the same cost behavior patterns can be extended linearly over the range of 3,000 to 35,000 units and that the cost driver for each cost is the number of units produced.

  

  The company is concerned about its current operating performance that is summarized as follows.

  

  How many additional units should have been sold in order for the company to break even?

  A. 32,000
  B. 16,000
  C. 12,800
  D. 8,000
  D. 8,000

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  Explanation