IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 351:

  Bakker Industries sells three products (Products 611, 613. and 615) that it manufactures in a factory consisting of one department Both labor and machine time are applied to the products. Bakker's management is planning its production schedule for the next several months. There are labor shortages in the community. Some of the machines will be out of service for extensive overhauling. Available machine and labor time for each of the next 6 months is listed below What is product 615's contribution per machine hour?

  

  A. $54.50

  B. $58

  C. $109

  D. $167

  Correct Answer: A

  The contribution per machine hour of a given product is found by initial' calculating the contribution margin. Product 615 has a selling price of $167 and variable costs of $58. This gives a contribution margin of $109 ($167 --$58). The contribution per machine hour is then found by dividing the contribution per unit by the machine hours required to produce the product, or $109 divided by 2 hours to give a contribution per machine hour of $54.50.

• Question 352:

  Bakker Industries sells three products (Products 611.613. and 615) that it manufactures in a factory consisting of one department Both labor and machine time are applied to the products. Bakker's management is planning its production schedule for the next several months. There are labor shortages in the community. Some of the machines will be out of service for extensive overhauling Available machine and labor time for each of the next 6 months is listed below. Monthly Capacity Availability What is the excess (deficiency) for labor hours?

  

  A. (100) hours

  B. 300 hours.

  C. 700 hours

  D. 1.800 hours.

  Correct Answer: B

  The excess (deficiency) for labor hours in a given department is found by initial' multipl'4ng the labor hours required to produce a product by the demand for that product. The totals would then be 1.000 for product 611,400 for product 613, and 2.000 for product 615. The totals are then added together to get 3,400 hours. This number is then subtracted from labor hours available, 3,700. to get an excess of 300 labor hours.

• Question 353:

  Bakker Industries sells three products (Products 611. 613. and 615) that it manufactures in a factory consisting of one department Both labor and machine time are applied to me products. Bakker's management is planning its production schedule for the next several months. There are labor shortages in the community. Some of the machines will be out of service for extensive overhauling. Available machine and labor time for each of the next 6 months is listed below.

  

  What is the excess (deficiency) for machine hours?

  A. (700) hours

  B. (400) hours

  C. 0 hours,

  D. 1,100 hours.

  Correct Answer: B

  The excess (deficiency) for machine hours ma given department is found by initially multiplying machine hours required per unit for that product by demand for that product. In this case, the total would be 1,000 for 611.400 for 613. and 2,000 for 615. The next step is to add these numbers together to get 3,400, and subtract that from machine hours available, 3,000. Therefore, the excess (deficiency) for machine hours would be a 400--hour deficiency (3,000 hours -- 3,400 hours).

• Question 354:

  A company sells two products, X and Y. The sales mix consists of a composite unit of 2 units of X for even 5 units of Y (2:5). Fixed costs are $49,500 The unit contribution margins for X and Y are $2.50 and $1.20. respectively. If the company had a profit of $22,000. the unit sales must have been?

  

  A. 5.000 12,500

  B. 13.000 32,500

  C. 23.800 59,500

  D. 32.500 13,000

  Correct Answer: B

• Question 355:

  A company sells two products, X and Y. The sales mix consists of a composite unit of 2 units of X for every 5 units of V (2.5). Fixed costs are $49.500. The unit contribution margins for X arid V are $2.50 and $1.20. respectively. Considering the company as a whole, the number of composite units to break even is?

  A. 1.650

  B. 4.500

  C. 8,250

  D. 22,500

  Correct Answer: B

  The composite breakeven point for a multiproduct firm is computed by dividing total fixed costs by a composite contribution margin Composite contribution margin 2($250) + 5($1 .20) $11 BEP $49,500 + $11 = 4.500 composite units

• Question 356:

  The ratio of fixed costs to the unit contribution margin is the?

  A. Breakeven point

  B. Profit margin.

  C. Operating profit

  D. Contribution margin ratio.

  Correct Answer: A

  The breakeven point is the level of sales at which revenues equal the sum of variable and fixed costs. Consequently. the contribution margin equals fixed costs at the breakeven point. Because this relationship is true, the breakeven point in units sold can be determined by dividing fixed costs by the difference between unit selling price and unit variable cost (unit contribution margin)

• Question 357:

  Donne Corporation manufactures and sells T-shirts imprinted with collage names and slogans. Last year. the shirts sold for $750 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20.000 shirts to break even. The net income last year was $5,040. Donnelly's expectations for the coming year include the following: The sales price of the T-shirts will be $9 Variable cost to manufacture will increase by one-third Fixed costs will increase by 10% The income tax rate of 40% will be unchanged

  121. If Donnelly Corporation wishes to earn $22,500 in net income for the coming year, the company's sales volume in dollars must be?

  A. $213.750

  B. $257.625

  C. $207.000

  D. $229.500

  Correct Answer: D

  An after-tax net income of $22,500 equals a pretax income of $37.500 [$22,500 + (140% tax rate)] With a

  UCM of $6 contributing toward the $153,000 total of fixed cost ($115,500) and desired profit ($37,500).

  25,500 units ($153,000 $6) must be sold.

  At $9 per unit, sales revenue is $229,500.

• Question 358:

  Donnelly Corporation manufactures and sells T-shirts imprinted with collage names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit, The company needed to sell 20.000 shirts to break even. The net income last year was $5,040. Donnelly's expectations for the coming year include the following: The sales price of the T-shirts will be $9 Variable cost to manufacture will increase by one-third Fixed costs will increase by 10% The income tax rate of 40% will be unchanged

  Sales for the coming year are expected to exceed last year's by 1000 units. If this occurs. Donnelly's sales volume in the coming year will be?

  A. 22,600 units.

  B. 21,960units.

  C. 23.400 units.

  D. 21,000 units.

  Correct Answer: A

  Because last year's after-tax profit was $5,040, pretax net income must have been $8.400 [$5,040 ?(1 -40% tax rate)] Because fixed costs have been fully recovered at the BEP, all of the UCM beyond that sales level is included in pretax net income. The UCM was $5.25, so the units sold in excess of the 20,000-unit BEP equaled 1,600 ($8,400 ?$5.25). If 21.600 total units were sold last year, an increase of 1.000 units results in sales of 22,600 units

• Question 359:

  Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year. the shirts sold for $750 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20.000 shirts to break even. The net income last year was $5,040. Donnelly's expectations for the coming year include the following: The sales price of the T-shirts will be $9 Variable cost to manufacture will increase by one-third Fixed costs Will increase by 10% The income tax rate of 40% will be unchanged

  The number of T-shirts Donnelly Corporation must sell to break even in the coming year is?

  A. 17.500

  B. 19.250

  C. 20,000

  D. 22.000

  Correct Answer: B

  The breakeven point (BEP) in units equals fixed cost divided by UCM. Fixed cost for the previous year was $105,000 (20,000 units at breakeven x $5.25 UCM). Fixed cost for the current year is $1 15.500 ($105,000 x 110%) The new UCM is $6 ($9 selling price $3 variable cost). Accordingly, the BEP is 19,250 units ($115.500. $6).

• Question 360:

  Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year. the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20.000 shirts to break even. The net income last year was $5,040 Donnelly expectations for me coming year include the following: The sales price of the T-shirts will be $9 Variable cost to manufacture Will increase by one-third Fixed costs will increase by 10% The income tax rate of 40% will be unchanged

  The selling price that would maintain the same contribution margin rate as last year is?

  A. $9.00

  B. $8.25

  C. $10.00

  D. $9.75

  Correct Answer:

  Last year, unit variable cost was $225, so the unit contribution margin (UCM) was $5.25 ($7.50 price --$2.25). and the contribution margin rate (CMR) was 70% ($5.25. $7.50). If variable costs increase by one-third, the new variable cost will be $3 [$2.25 x (4 3)]. If a 70% CMR is desired, the $3 variable cost will be 30% of sales, and the unit sales price will be $10 ($3 30%)