IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 1271:

  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.
  D. Sales budget.

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  Explanation

  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 1272:

  The profitability index (present value index)

  A. Represents the ratio of the discounted net cash outflows to cash inflows.
  B. Is the relationship between the net discounted cash inflows less the discounted cash outflows divided by the discounted cash outflows.
  C. Is calculated by dividing the discounted profits by the cash outflows.
  D. Is the ratio of the discounted net cash inflows to discounted cash outflows.
  D. Is the ratio of the discounted net cash inflows to discounted cash outflows.

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  Explanation

  The profitability index, also known as the excess present value index, is the ratio of the present value of future net cash inflows to the initial net cash investment (discounted cash outflows). This tool is a variation of the NPV method that facilitates comparison of different-sized investments.

• Question 1273:

  Geary Manufacturing has assembled the data appearing in the next column pertaining to two products. Past experience has shown that the unavoidable fixed manufacturing factory overhead included in the cost per machine hour averages $10. Geary has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Total machine capacity is 50,000 hours.

  

  With all other things constant, if Geary Manufacturing is able to reduce the direct materials for an electric mixer to $6 a per unit, the company should

  A. Produce 25,000 electric mixers and purchase all other units as needed.
  B. Produce 20,000 blenders and 15,000 electric mixers, and purchase all other units as needed.
  C. Produce 20,000 blenders and purchase all other units as needed.
  D. Purchase all units as needed.
  A. Produce 25,000 electric mixers and purchase all other units as needed.

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  Explanation

• Question 1274:

  A manufacturing company produces plastic utensils for a particular segment at the lowest possible cost. The company is pursuing a cost?

  A. Leadership strategy
  B. Focus strategy
  C. Differentiation strategy
  D. Containment strategy
  B. Focus strategy

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  Explanation

  A cost focus strategy aims at cost leadership in a particular segment, such as a regional market or a specialty product line. The rationale for a focus strategy is that the narrower market can be better served.

• Question 1275:

  The data available for the current year are given below.

  

  using the information presented above, the contribution by Division I was?

  A. $190000
  B. $260,000
  C. $310.000
  D. $380 000
  A. $190000

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  Explanation

• Question 1276:

  Which element of the internal data collection process is most likely to yield up4o-date information about prices?

  A. Marketing intelligence system.
  B. Competitive intelligence system.
  C. Sales information system.
  D. Transaction processing system for the order-to-payment cycle.
  C. Sales information system.

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  Explanation

  Sales information systems using the Internet, extranets, and EDI allow the generation and sharing of very up-to-date information about prices, per-item sales, per-store sales, inventories at any level, and much more.

• Question 1277:

  General Electric has popularized a model for competitive analysis. In this portfolio matrix,

  A. Each of the firm's businesses is represented by a circle proportional to its size.
  B. Business strength and market attractiveness are measured using a multifactor index.
  C. The number of cells vanes with the number of factors used by the firm in its analysis.
  D. The four quadrants represent combinations of high or low market growth rates and business profitability.
  B. Business strength and market attractiveness are measured using a multifactor index.

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  Explanation

  The GE model is a multifactor portfolio matrix with two variables. Business strength or `competitive position (BUS) is on one axis, and market attractiveness (MAT) is on the other. To measure BUS and MAT, the firm must isolate the multiple factors affecting each, quantity them, and create an index. Factors will vary with business. The measurements will provide the values on the axes of the matrix.

• Question 1278:

  What type of synergy exists when products or services have positive complementary effects?

  A. Market synergy.
  B. Cost synergy
  C. Technological synergy
  D. Management synergy
  A. Market synergy.

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  Explanation

  Market synergy arises when products or services have positive complementary effects. Shopping malls reflect this type of synergy.

• Question 1279:

  Flynn Company's budgeted sales for the coming year are expected to be $50,000,000, of which 75% are expected to be credit sales at terms of n/30. Flynn estimates that a proposed relaxation of credit standards will increase credit sales by 25% and increase the average collection period from 20 days to 30 days. Based on a 360-dayyear, the proposed relaxation of credit standards will result in an expected increase in the average accounts receivable balance of

  A. $520,840
  B. $1,822,930
  C. $2,083,340
  D. $3,906,270
  B. $1,822,930

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  Explanation

  Of the $50,000,000 of sales, 75% are expected to be on credit, a total of $37,500,000. Average daily credit sales are therefore $104167 ($37,500,000 + 360 days). If the average collection period is 20 days, the average balance in accounts receivable is $2,083,340 ($104,167 x 20 days). If credit sales increase by 25%, average daily sales will increase to $130,209 ($104,167 x 125%). For an average collection period of 30 days, the average accounts receivable balance will be $3,906,270 ($130,209 x 30 days). Hence, the expected increase in the balance is $1 ,822,930 ($3,906,270 -- $2,083 340).

• Question 1280:

  A firm has daily cash receipts of $100,000 and collection time of 2 days. A bank has offered to reduce the collection time on the firm's deposits by 2 days for a monthly fee of $500. If money market rates are expected to average 6% during the year, the net annual benefit (loss) from having this service is

  A. $3,000
  B. $12,000
  C. $0
  D. $6,000
  D. $6,000

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  Explanation

  If collection time is 2 days, and average daily receipts are $100, 0001 the average cash balance will increase by $200,000 if the bank's system is adopted. At a 6% interest rate, $200,000 will generate $12,000 of interest revenue annually. The $500 monthly charge by the bank will result in an annual expense of $6,000. Thus1 the net annual benefit is $6,000 ($12,000 --$6,000).