IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 361:

  When an organization is operating above the breakeven point, the degree or amount that sales may decline before losses are incurred is called the?

  A. Residual income rate.

  B. Marginal rate of return,

  C. Margin of safety.

  D. Target (hurdle) rate of return.

  Correct Answer: C

  The margin of safety is me excess of budgeted revenues over breakeven revenues. It is considered in sensitivity analysis

• Question 362:

  Barney Corporation sells sets of encyclopedias. Barney sold 4,000 sets last year at $250 a set if the variable cost per set was $175 and the fixed costs for Barney were $100000. What is Barney's degree of operating leverage (DOL)?

  A. 0.67

  B. 0.75

  C. 1.5

  D. 3.0

  Correct Answer: C

  The degree of operating leverage (DOL) can be calculated from the formula [Q(P - V)] [Q(P V) - F], if 0 is the number of units sold, P is the unit selling price. V is the unit variable cost, and F is the fixed cost. Thus, the DOL is {(4.000 x $75) [(4,000 x $75) 100,000]}

• Question 363:

  Stuffed Animals, Inc. has decided to focus strictly on producing and selling one type of teddy bear. For the upcoming year, Stuffed Animals, Inc. hopes to make a 25% profit on sales fixed costs are set at $51,000. and variable costs are $9.50 per unit. If teddy bears are sold at $15 each, how many bears must be sold to meet the profit goal?

  A. 5.514

  B. 9,273

  C. 13,600

  D. 29,143

  Correct Answer: D

• Question 364:

  The budget data for the Bid well Company appear below

  

  If fixed costs increased $31 .500 with no other cost or revenue factors changing, the breakeven sales in

  units is

  A. 34,500 units

  B. 80,500 units.

  C. 69,000 units.

  D. 94,150 units.

  Correct Answer: B

  The breakeven point equals fixed costs divided by the contribution margin per unit. The new total for fixed costs is $241,500, and the contribution margin per unit is still $3 The breakeven point is 80,500 units.

• Question 365:

  The budget data for the Bid well Company appear below.

  

  If the Bid well Company is subject to an effective income tax rate of 40%, the number of units Bid well must sell to earn an after-tax profit of $90,000 is?

  A. 100,000 units.

  B. 120.000 units

  C. 102.858 units.

  D. 145,000 units

  Correct Answer: B

  Because the tax rate is 40%, the $90.000 after-tax profit is 60% of pre-tax income. Thus, toll earn an income of $90,000 after tax, the pre-tax income must be $150000 ($90,000 .6), Dividing the fixed costs of $210,000 plus the desired before-tax income of $150,000 by the $3 contribution margin per unit gives a breakeven point of 120,000 units,

• Question 366:

  The budget data for the Bid well Company appear below.

  

  Budgeted operating income $ 90,000. The Bid well Company's breakeven sales in units are?

  A. 30,000 units.

  B. 91,000 units

  C. B0,000units

  D. 70,000 units.

  Correct Answer: D

  The breakeven point in units is found by dividing the fixed costs ($210,000) by contribution margin per unit ($3). Variable costs are $700,000 at 100,000 units, or $7 per Unit. Selling price is $10 per unit. Dividing $210,000 by $3 per unit results in a breakeven point of 70,000 units

• Question 367:

  Oradell Company sells its single product at a price of $60 per unit and incurs the following van able costs per unit of product:

  

  Oradell's annual fixed costs are $880.000, and Oradell is subject to a 30% income tax rate. If prime costs increased by 20% and all other values remained the same. Oradell Company's contribution margin (to the nearest whole percent) is?

  A. 30

  B. 76

  C. 20

  D. 24

  Correct Answer: D

• Question 368:

  Oradell Company sells its single product at a price of $60 per unit and incurs me following variable costs per unit of product

  

  Oradell's annual fixed costs are $880,000. and Oradell is subject to a 30% income tax rate The annual sales revenue required by Oradell Company in order to achieve after- tax net income of $224,000 for the year is

  A. $3,600,000

  B. $3,312,000

  C. $1,656,000

  D. $3,110,400

  Correct Answer: A

• Question 369:

  Oradell Company sells its single product at a price of $60 per unit and incurs the following variable costs per unit of product Oradell's annual fixed costs are $880.000, and Oradell is subject to a 30% income tax rate. The number of units of product that Oradell Company must sell annual' to break even is?

  

  A. 22,000 units

  B. 44,000 units.

  C. 35.200 units.

  D. 30,800 units.

  Correct Answer: B

  The breakeven point in units equals fixed costs divided by the contribution margin per unit at a selling price of $60 per unit and with variable costs of $40 per unit, the unit contribution margin is $20. Thus, the breakeven point is 44,000 units ($880,000 $20).

• Question 370:

  Oradell Company sells is single product at a price of $60 per unit and incurs the following variable costs per unit of product

  

  Oradell's annual fixed costs are $880,000, and Oradell is subject toe 30% income tax rate .A production and sales volume of 4.000 units of product per month would result in an annual after-tax income (loss) Oradell Comp of?

  A. $80000

  B. $(800.000)

  C. $56000

  D. $(560.000)

  Correct Answer: C