IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 391:

  A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $1 2.000. At this selling price, the company earns a profit equal to 10% of total dollar sales By reducing its selling price to $9 per unit, the manufacturer can increase its unit sales volume by 25%. Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged It the selling price were reduced to $9 per unit, the profit would be

  A. $3,000

  B. $4,000

  C. $5,000

  D. $6,000

  Correct Answer: A

• Question 392:

  Panyer Co is a producer of a tank component. This product, J.5, has the following selling price and costs per unit

  

  Panyer has again received a special, one-time offer for 2.000 units of J-5. Panyer is now operating at full capacity. 10,000 units, at a total cost of $2,300,000. To produce this order would cause a 20% increase in fixed costs what is the minimum price that is acceptable for this one-time, special order?

  A. $205

  B. $260

  C. $230

  D. $300

  Correct Answer: C

  To determine the minimum price per unit, while at full capacity, the differential costs must be found. The total cost of producing 12.000 units is $2,760,000 {(12.000 units x $205 variable cost) + [(10,000 units x $25 fixed cost) x I .2]}. Thus, the total differential cost is $460,000 ($2,760.000 -- $2,300,000), and the unit differential cost is $230 ($460,000 2.000 units).

• Question 393:

  Panyer Co. is a producer of a tank component. This product, J-5, has the following selling price and costs per unit

  

  Panyer has recently received a special, one-h me order for 2.000 units of J-5. Panyer currently has enough excess capacity for this order. what should be the minimum price charged by Panyer?

  A. $155

  B. $205

  C. $230

  D. $300

  Correct Answer: B

  With the assumption that idle capacity is sufficient to manufacture 2.000 extra units, the goal is to find a minimum price that will not affect the price or quantity of other units sold. This minimum price is equal to the sum of the variable costs. $205

• Question 394:

  The Childers Company sells widgets. The company breaks even at an annual sales volume of 75.000 units Actual annual sales volume was 100,000 units, and the company reported a profit of $200,000. The annual fixed costs for the Childers Company are

  A. $800,000

  B. $600,000

  C. $75,000

  D. Insufficient information to determine amount of fixed costs

  Correct Answer: B

• Question 395:

  Tonykinn Company is contemplating marketing a new product. Fixed costs will be $800000 for production of 75.000 units or less and $1 .200.000 if production exceeds 75,000 units The variable cost ratio is 60% for the first 75,000 units. Variable costs will decrease to 50% of sales for units in excess of 75.000. If the product is expected to sell for $25 per unit, how many units must Tonykinn sell to break even?

  A. 120,000

  B. 111,000

  C. 96.000

  D. 80.000

  Correct Answer: B

• Question 396:

  The statement of income for Dimmell Co presented below represents the operating results 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 Ignore the facts presented in ar other question and now assume Dimell estimates that the per ton selling price would decline 10% next year variable costs would increase $40 per ton and the fixed costs would not change What sales volume in dollars would be required to earn an atter4ax net income of $94500 next year

  

  A. $1,140,000

  B. $825,000

  C. $1,500,000

  D. $1,350,000

  Correct Answer: D

• Question 397:

  The statement of income for Dimmell Co. presented be represents the operating results for me fiscal year just ended. Dirnmell had sales of 1.800 tons of product during the current year the manufacturing capacity of Dimmells facilities is 3000 tons of products.

  

  Dimmell is considering replacing a highly labor intensive process with an automatic machine. This would result in an increase of $58,500 annually in manufacturing fixed costs The variable manufacturing costs would decrease $25 per ton The new breakeven volume in tons would be?

  A. 990 tons.

  B. 1.224 tons

  C. 1.554 tons

  D. 612 tons

  Correct Answer: B

• Question 398:

  The statement of income for Dimmell Co. presented below represents the operating results 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.

  

  Dimell plans to market its product in a new territory Dimmell estimates that an advertising and promotion program costing $81,500 annually would need to be undertaken for the next 2 or 3 years In addition, a $25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Dimell's current after-t income of $94.500?

  A. 307.5 tons.

  B. 1,0950 tons

  C. 273 333tons

  D. 1,5450 tons.

  Correct Answer: A

  Given that $61,500 is required for advertising and promotion, these are fixed costs that will have to be covered by the CM for sales in the new market of $200 each. The UCM for regular sales was $225 ($500 selling price x 45%), and there is a $25 additional variable commission expense for sales in the new territory. The 45% CM is computed by dividing the $405,000 CM by the $900,000 of sales. Thus, the new unit contribution of $200 is divided into $61,500 of incremental fixed costs, resulting in additional sales from the new program of 307.5 tons at the breakeven point.

• Question 399:

  The statement of income for Dimmell Co presented below represents the operating results for me fiscal year just ended Dimmell had sales of I .800 tons of product during the current year. The manufacturing capacity of Dimmers facilities is 3,000 tons of product.

  

  Dimmell has a potential foreign customer that has offered to buy 1.500 tons at $450 per ton. Assume that all of Dimmell's costs would be at the same levels arid rates as in 2002. Whet net income after taxes would Dimmell make if it took this order and rejected some business from regular customers so as not to exceed capacity'?

  A. $297,500

  B. $252.000

  C. $211,500

  D. $256,500

  Correct Answer: C

• Question 400:

  The statement of income for Dimmell Co presented below represents the operating resifts for the tsar 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.

  

  If the sales volume is estimated to be 2,100 tons in the next year, aid if the prices and costs stay at the same levels and amounts next year. The after-tax net income that Dimmell can expect for 2003 is

  A. $135.000

  B. $110,250

  C. $283,500

  D. $184.500

  Correct Answer: A