IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 621:

  Don Adams Breweries is considering an expansion project with an investment of $1,500,000. The equipment will be depreciated to zero salvage value on a straight-line basis over 5 years. The expansion will produce incremental operating revenue of $400,000 annually for 5 years. The company's opportunity cost of capital is 12%. Ignore taxes. What is the book (accounting) rate of return of the investment using the average investment method?

  A. 6. 67%
  B. 13. 33%
  C. 16. 67%
  D. 26. 67%
  B. 13. 33%

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  Explanation

• Question 622:

  FuIford Company applies the target pricing and costing approach. The following information about costs and revenues of Fulford's product are available for the year just ended. Unit sates 60,000 Unit selling price $ 400 Cost of goods sold 13,200.000 Value-chain operating costs excluding production 7,920.000 Fulford plans to increase unit sales to 80000 by reducing the product's unit price to $320. If Fulford desires a unit target operating income of 12%, by what amount must it reduce the full cost per unit?

  A. $32. 00
  B. $38.40
  C. $70.40
  D. $80.00
  C. $70.40

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  Explanation

• Question 623:

  Determining how marketing strategies formulated in accordance with a SWOT analysis will be implemented is the process of

  A. Managing the marketing effort
  B. Planning the marketing program and mix
  C. Choosing target markets
  D. Positioning the market offering
  B. Planning the marketing program and mix

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  Explanation

  Planning the marketing program and mix is the process of determining how marketing strategies formulated I accordance with a SWOT (strengths, weaknesses, opportunities. and threats) analysis may be implemented. It entails deciding what resources should be devoted to the marketing effort and how those resources should be allocated among the elements of the marketing mix(the 4Ps of product, price, place, and promotion)

• Question 624:

  "Controllable costs" are

  A. Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.
  B. Costs which are likely to respond to the amount of attention devoted to them by a specified manager.
  C. Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.
  D. Costs which will be unaffected by current managerial decisions.
  B. Costs which are likely to respond to the amount of attention devoted to them by a specified manager.

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  Explanation

  Controllable costs can be affected by the efforts of a manager.

• Question 625:

  A manager wants to know the effect of a possible change in cash flows on the net present value of a project. The technique used for this purpose is

  A. Sensitivity analysis.
  B. Risk analysis.
  C. Cost behavior analysis.
  D. Return on investment analysis.
  A. Sensitivity analysis.

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  Explanation

  Sensitivity analysis is a technique to evaluate a model in terms of the effect of changing the values of the parameters. It answers "what if" questions. In capital budgeting models, sensitivity analysis is the examination of alternative outcomes under different assumptions.

• Question 626:

  Which of the following are primary phases of any firm's overall marketing process?

  I. Choosing target markets.

  II. Planning the marketing program and mix. Ill. Selecting a sales force.

  IV.

  Designing an inbound logistics process

  A. I, II, and Ill only.
  B. II and Ill only.
  C. land II only.
  D. I, II, and IV only.
  C. land II only.

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  Explanation

• Question 627:

  Formal written policies are normally recommended. However, the presence of certain in an organization minimizes the need for written policies. One condition that minimizes the need for written policies is

  A. A high division of labor.
  B. A strong organizational culture.
  C. A large span of control.
  D. A strict unity of command.
  B. A strong organizational culture.

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  Explanation

  If the culture is strong, the organization's key values are intensely held and widely shared. Substantial training has been expended to achieve this high degree of acceptance, minimizing the need for formal, written policies.

• Question 628:

  It Up is the value of a put option. V is the vatic of a call option, V8 is the value of the stock, and PVE is the present value of the exercise pence, what is the formula for the put- call panty theorem for European options?

  A. V8:PVE-VpVC
  B. Vg+Vp-VC=PVE
  C. VS+PVE=VPVC
  D. PVE=VS-Vp-VC
  B. Vg+Vp-VC=PVE

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  Explanation

  For European options, given market equilibrium for all relevant paces (no arbitrage possibilities), equal exercise prices for the put and the can, and the same expiration date, the put-call panty theorem states that a fixed relationship apples to the market values of the put and call options on a secant. For example, a strategy of selling one call option, buying one share of the stock, and bang one put option should result in a ask-free return. The gain (loss) from the stock and the put should equal the gain (loss) on the call. If Vs is the value of the stock. Vp is the value of the put, `Ic is the value of the call, and PVE is the present value of the exercise price (the time interval is the time to expiration), the formula for put-call parity may be stated as :follows Vs + Vp -- V = PVE

• Question 629:

  Which statement regarding direct marketing is not true?

  A. Comparative shopping using catalogs is a form of direct marketing.
  B. Direct marketing has declined as a result of market degasification.
  C. Customers benefit because selection is expanded and ordering is simplified.
  D. Voice mail is a form of direct marketing.
  B. Direct marketing has declined as a result of market degasification.

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  Explanation

  Direct marketing has grown as a result of market degasification. This fragmentation of markets into many niches reduces the effectiveness of mass marketing. Market degasification has preceded 1鏰use of the growth of diverse promotional media and distribution channels.

• Question 630:

  BCD Corp. outsourced an order for shovel handles to RST Corp. because BCD could not fill the order. By having RST produce the order, BCD was able to realize $10000 in sales profits that otherwise would have been lost. The outsourcing cost added a cost of $1 .000, but BCD was ahead by $9000 when the order was completed. Which of the following statements is correct regarding BCD's action?

  A. The use of resource markets outside of BCD involves opportunity cost.
  B. Accounting profit is total revenue minus explicit costs and implicit costs.
  C. Implicit costs are not opportunity costs because they are internal costs.
  D. Explicit costs are opportunity costs from purchasing shovel handles from a resource market.
  A. The use of resource markets outside of BCD involves opportunity cost.

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  Explanation

  Opportunity cost is the maximum benefit forgone by using a scarce resource for a given purpose. It is the benefit, for example, the contribution to income, provided by the best alternative use of that resource. Thus, outsourcing involves

  opportunity cost. The outsourcer uses resources for purposes other than filling the order and therefore forgoes the benefits it would have received.

  Management accountants are frequently asked to analyze various decision situations, including the following.

  1. Alternative uses of plant space, to be considered in a make/buy decision.

  2. Joint production costs incurred, to be considered in a sell-at-split versus a process- further decision.

  3. Research and development costs incurred in prior months, to be considered in a product-introduction decision.

  4. The cost of a special device that is necessary if a special order is accepted.

  5. The cost of obsolete inventory acquired several years ago, to be considered in a keep- versus-disposal decision.