IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 301:

  Dr. G invested $10.000 in a lifetime annuity for his granddaughter Emily. The annuity is expected to yield $400 annually forever. What is the anticipated internal rate of return for the annuity?

  A. Cannot be determined without additional information.
  B. 4. 0%
  C. 2. 5%
  D. 8.0%
  B. 4. 0%

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  Explanation

• Question 302:

  Cat fur Company has fixed costs of $300.000. It produces two products, X and Y Product X has a variable cost percentage equal to 60% of its $10 per unit selling price. Product Y has a variable cost percentage equal to 70% of its $30 selling price. For the past several years, sales of Product X have averaged 66% of the sales of Product Y. That ratio is not expected to change. How many units of Product Y will Cat fur sell at the breakeven point?

  A. 8,571 units.
  B. 20.454 units.
  C. 23. 377 units.
  D. 25,714 units.
  D. 25,714 units.

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  Explanation

  A composite unit was destined as consisting of 2 units of Product X and 3 units of roduct Y. The breakeven point in composite units is 8,571 A3. According, the units of Product V sold at the breakeven point are equal to 25. 714(8.571.43 x 3).

• Question 303:

  Researchers have proposed various models of the stages of customer responses to marketing communications. An understanding of these stages should occur atthe earliest of which of the following steps in the development of marketing communications?

  A. Choosing communication channels.
  B. Designing messages.
  C. Selecting the media mix.
  D. Defining objectives.
  D. Defining objectives.

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  Explanation

  Marketing communications will be efficient and effective iftarget audiences are properly identified and objectives are clearly defined. The firm's objectives may be to affect any of the customer-response stages, i.e.,to gain attention, alter attitude, or induce action. Thus, customers go through, respectively, cognitive, affective, and behavioral stages (but not necessarily in that order). Understanding these stages and the sequence for a given audience aids planning

• Question 304:

  MS Trucking is considering the purchase of a new piece of equipment that has a net initial investment with a present value of $300,000. The equipment has an estimated useful life of3years. For tax purposes1 the equipment will be fully depreciated a rates of 30%, 40%, and 30% in years one, two, and three, respectively. The new machine is expected to have a $20,000 salvage value. The machine is expected to save the company $170,000 per year in operating expenses. MS Trucking has a 40% marginal income tax rate and a 16% cost of capital. Discount rates for a 16% rate are:

  

  What is the net present value of this project?

  A. $3,278
  B. $5,842
  C. $(568)
  D. $30,910
  B. $5,842

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  Explanation

• Question 305:

  Which one of the following capital investment evaluation methods does not take the time value of money into consideration?

  A. Net present value.
  B. Discounted payback.
  C. Internal rate of return.
  D. Accounting rate of return.
  D. Accounting rate of return.

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  Explanation

  The accounting rate of return (unadjusted rate of return or rate of return on the carrying amount) equals accounting net income divided by the required initial or average investment. The accounting rate of return ignores the time value of money.

• Question 306:

  Butteco has the following cost components for 100,000 units of product for the year Raw materials $200 .000 Direct labor 100,000 Manufacturing overhead 200.000 Selling/administrative expense 150.000 All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling and administrative expenses. The total costs to produce and sell 110.000 units are

  A. $650,000.
  B. $715,000.
  C. $695,000.
  D. $495,000.
  C. $695,000.

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  Explanation

  Raw materials unit costs are strictly variable at $2($200,000 ?100,000 units). Similarly, direct labor has a variable unit cost of $1 ($100,000 - 100,000 units) The $200,000 manufacturing overhead for 100,000 units is 50%. The variable unit cost is $1. Selling costs are $100,000 fixed and $50,000 variable for production of 100,000 units, and the variable unit selling expenses is $50 ($50,000 ?100,000 units). The total unit variable cost is therefore $4 .50 ($2 + $1 + $1 +$.50). Fixed costs are $200,000. At a production level of 110,000 units, variable costs are $495,000 ($4. 50 x 110,000 units). Hence, total costs are $695,000 ($495,000 + $200,000)

• Question 307:

  Drillers Inc. is evaluating a project to produce a high-tech deep-sea oil exploration device. The investment required is $80 million for a plant with a capacity of 15. 000 units a year for 5 years. The device will be sold for a price of $12,000 per unit. Sales are expected to be 12,000 units per year. The variable cost is $7,000 and fixed costs, excluding depreciation, are $25 million per year. Assume Drillers employs straight-line depreciation on all depreciable assets, and assume that they are taxed at a rate of 36%. If the required rate of return is 12%, what is the approximate NPV of the project?

  A. $17,225,000
  B. $21511,000
  C. $26. 780000
  D. $56117000
  B. $21511,000

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  Explanation

  

  

• Question 308:

  Cohasset Company currently manufactures all component parts used in the manufacture of various hand tools. A handle is used in three different tools. The unit cost budget for 201000 handles is RandM Steel has offered to supply 20,000 handles to Cohasset for $1.25 each, delivered. If Cohasset currently has idle capacity that cannot be used, accepting the offer will

  

  A. Decrease the handle unit cost by $05.
  B. Increase the handle unit cost by $ .15.
  C. Decrease the handle unit cost by $15.
  D. Increase the handle unit cost by $.05.
  B. Increase the handle unit cost by $ .15.

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  Explanation

  Since the fixed cost will be incurred whether the company makes or buys the part, the relevant unit cost of making the part is the $1 .10 variable cost ($1 .30 -- $20 fixed overhead). The existence of idle capacity indicates that the firm has no opportunity cost to be considered in the calculation. Thus, accepting the offer would increase costs by$.15 per unit.

• Question 309:

  Future1 Inc. is in the enviable situation of having unlimited capital funds. The best decision rule, in an economic sense, for it to follow would be to invest in all projects in which the

  A. Accounting rate of return is greater than the earnings as a percent of sales.
  B. Payback reciprocal is greater than the internal rate of return.
  C. Internal rate of return is greater than zero.
  D. Net present value is greater than zero.
  D. Net present value is greater than zero.

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  Explanation

  Given unlimited funds1 all projects with a net present value greater than zero should be invested in. Thus, it would be profitable to invest in any company where the rate of return is greater than the cost of capital.

• Question 310:

  The statement of income for Dimmell Co. presented below represented the operating result for the fiscal year just ended. Dimmell had sales of 1,800 tons of product during the current year. The manufacturing capacity of Dimmell's facilities is

  3. 000 tons of product.

  

  The breakeven volume in tons of product for 2002 is ?

  A. 400 tons
  B. 1,100 tons
  C. 900 tons
  D. 550 tons
  B. 1,100 tons

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  Explanation