IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 251:

  Which of the following is not an attribute of a probability distribution?

  A. The total probability associated with all possible occurrences equals 1. B. It can be modeled by means that provide the probability for every possible outcome.
  C. Only one outcome is possible.
  D. It concerns a random variable.
  C. Only one outcome is possible.

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  Explanation

  In a probability distribution, the probability of any event(s) is bounded by U (no chance) and I (certainty). The total probability of all possible outcomes must add up to 1. Also, a probability distribution models a random variable through the use of a formula or graph that provides the probability associated with the occurrence of certain values of the random variable. If only one outcome is possible, the variable is not random but rather constant and known with certainty.

• Question 252:

  The Stewart Co. uses the economic order quantity (EOQ) model for inventory management.A decrease in which one of the following variables would increase the EOQ?

  A. Annual sales.
  B. Cost per order.
  C. Safety stock level.
  D. Carrying costs.
  D. Carrying costs.

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  Explanation

• Question 253:

  Which one of the following would increase the networking capital ofa firm?

  A. Cash payment of payroll taxes payable.
  B. Purchase of a new plant financed by a 20-year mortgage.
  C. Cash collection of accounts receivable.
  D. Refinancing a short-term note payable with a two-year note payable.
  D. Refinancing a short-term note payable with a two-year note payable.

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  Explanation

  Networking capital equals current assets minus current liabilities. Refinancing a short- term 11note with a two-year note payable decreases current liabilities, thus increasing working capital.

• Question 254:

  A firm is introducing a new product. Given a limited advertising budget and a low purchase frequency, the firm should adopt which micro timing approach for its advertising expenditures?

  A. Pulsing.
  B. Continuity.
  C. Righting.
  D. Concentration.
  C. Righting.

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  Explanation

  The micro timing issue is how to schedule advertising outlays for best effect during a short time period. Variables considered in choosing the pattern are buyer turnover (entry of new buyers), purchase frequency, and the forgetting rate. The higher these rates1 the greater the continuity of advertising should be. Righting is intermittent advertising with periods of no activity. Righting is useful when funding is low, purchases are infrequent, or when goods are seasonal.

• Question 255:

  Below are data conceding the hours spent by a manufacture's two products in its tow processes: Assembly Painting Product A 21 14 Product B 32 8

  The constraint is

  A. Product A
  B. Product B in Assembly
  C. The assembly activity
  D. Cannot be determined form the information given.
  C. The assembly activity

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  Explanation

  In theory of constraints (TOC) analysis, the constraint (bottleneck) operation is the slowest part of the process. It can usually be identified as the one where work-in-Process backs up the most of this manufacturer's two operations, the one that requires the most total time is assembly.

• Question 256:

  A company has 100,000 outstanding common shares with a market value of $20 per share. Dividends of $2 per share were paid in the current year and the company has a dividend payout ratio of 40%. The price to earnings ratio of the company is

  A. 2. 5
  B. 4
  C. 10
  D. 50
  B. 4

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  Explanation

  The P-E ratio equals the share price divided by EPS. If the dividends per share equaled $2 and the dividend-payout ratio was 40%, EPS must have been $5 ($2 ?4). Accordingly, the P-E ratio is 4 ($20 share price ?$5 EPS).

• Question 257:

  A data warehouse

  I. Contains data that may be read and rewritten.

  II. Maintains data on multiple platforms Ill. Contains historical data.

  IV . Contains current operating data.]

  A. I and Ill only.
  B. lll, andl Vonly.
  C. Ill and IV only.
  D. II and Ill only.
  C. Ill and IV only.

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  Explanation

  A data warehouse contains not only current operating data but also historical inforrnabon from throughout The organization. Thus, data from all operational systems are integrated, consolidated, and standardized into an organization-wide database into which data are copied periodically. These data are maintained on one platform and can be read but not changed. Graphics and queer' software and inimical tools assist users, accordingly. data mining is facilitated by a data warehouse.

• Question 258:

  The Dickins Corporation is considering the acquisition of a new machine at a cost of $180,000. Transporting the machine to Dickins' plant will cost $12,000. Installing the machine will cost an additional $18.000. It has a 10-year life and is expected to have a salvage value of $10,000. Furthermore, the machine Es expected to produce 4. 000 units per year with a selling price of $500 and combined direct materials and direct labor costs of $450 per unit. Federal tax regulations permit machines of this type to be depreciated using the straight-line method over 5 years with no estimated salvage value Dickins has a marginal tax rate of 40%. What is the net cash flow for the tenth year of the project that Dickins should use in a capital budgeting analysis?

  A. $200,000
  B. $158,000
  C. $136,800
  D. $126,000
  D. $126,000

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  Explanation

  The company will receive net cash inflows of $50 per unit ($500 selling price -- $450 of variable costs), a total of $200.000 per year for 4. 000 units. This amount will be subject to taxation, as will the $10,000 gain on sale of the irwestrnent, resetting in taxable income of $210,000. No depreciation will be deducted in the tenth year because the asset was fully depreciated after 5 years. Because the asset was fully depreciated (book value was $0), the $10,000 received as salvage value is fully taxable. At 40%, the tax on $210,000 is $84,000. After subtracting $84000 of tax expense from the $210,000 of inflows the net inflows amount to $126,000.

• Question 259:

  A manufacturer contemplates a change in technology that would reduce fixed costs from $800,000 to $700 .000. However, the ratio of variable costs to sales will increase from 68% to 80%.Whatwill happen to break-even level of revenues?

  A. Decrease by $301,470.50
  B. Decrease by $500,000
  C. Decrease by $1,812,500
  D. Increase by $1,000,000
  D. Increase by $1,000,000

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  Explanation

• Question 260:

  In belk Co.'s just-in-time production system,costs per setup were reduced from $28 to $2. in the process of reducing inventory levels,belk found that there were fixed facility and administrative costs that previously had not been included in changes on belk's economic lot size and relevant costs?

  Lot size Relevant costs

  A. Decrease Increase
  B. Increase Decrease
  C. Increase Increase
  D. Decrease Decrease
  D. Decrease Decrease

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  Explanation

  The economic lot size for a production system is similar to EOQ.example,the cost per set- up is equivalent to the cost per order (a numberator vaue in the EOQ model).hence,a reduction in the setup costs reduces the economic lot size as well as the relevant costs.the fixed facilty and administrative costs,however,are not relevant.the basis EOQ model includes variable costs only.