IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 691:

  A firm sells the same product in different countries and uses the same promotion methods. According to Keegan's model of adaptation strategies, this firm has adopted a strategy of

  A. Straight extension.
  B. Product adaptation
  C. Product invention.
  D. Dual adaptation
  A. Straight extension.

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  Explanation

  Using a straight extension strategy, a higher profit potential exists because virtually no changes are made in the products or its promotion. There is a downside potential if foreign consumers are not familiar with this type of product or do not readily accept it.

• Question 692:

  The least risky method of entering a market in a foreign country is by:

  A. Indirect exports
  B. Licensing
  C. Direct exports
  D. Direct investments
  A. Indirect exports

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  Explanation

  An indirect export strategy operates through intermediaries; such as home-country merchants who buy and resell the product, home-country agents who negotiate transactions with foreign buyers for a commission, cooperatives that represent groups of sellers, and export-management firms that receive fees for administering the firm's export efforts. Indirect export requires lower investment than direct export and is less risky because of the intermediate's expertise

• Question 693:

  BEandH Manufacturing is considering dropping a product line. It currently produces a multi-purpose woodworking clamp in a simple manufacturing process that uses special equipment. Variable costs amount to $6. 00 per unit. Fixed overhead costs, exclusive of depreciation, have been allocated to this product at a rate of $3. 50 a unit and will continue whether or not production ceases. Depreciation on the special equipment amounts to $20,000 a year. If production of the clamp is stopped, the special equipment can be sold for $18,000; if production continues, however, the equipment will be useless for further production at the end of 1 year and will have no salvage value. The clamp has a selling price of $10 a unit. Ignoring tax effects, the minimum number of units that would have to be sold in the current year to break even on a cash flow basis is

  A. 4,500 units.
  B. 5,000 units.
  C. 20.000 units.
  D. 36,000 units.
  A. 4,500 units.

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  Explanation

• Question 694:

  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. Assume that Cat fur Company achieved its planned breakeven level of sales in dollars, but the mix of products sold was one-to- one. All actual costs and unit selling prices equaled budgeted amounts. What is the impact on profitability?

  A. The company is operating at the breakeven point.
  B. The company earned a profit.
  C. The company sustained a loss.
  D. Cannot be deterrence from the informant given.
  B. The company earned a profit.

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  Explanation

  The expected sales mix is 40% for Product X and 60% for Product V. Given that Product X has a 40% contribution margin ratio and Product V has a 30% contribution margin ratio, selling more of Product X and less of Product V increases the average contribution margin ratio. The effect is to lower the breakeven point Thus, if the new composite unit includes 2 units of Product X and 2 units of Product V. the composite unit selling price is $80 [(2 x $10) + (2 x $30)]. and the composite UCM is $26 {J2 x ($10 --$6)] + (2 x ($30-- $21)D, The new breakeven point in composite units is therefore 11.53846 ($300,000 FC ?$26 UCM). and the new breakeven point in sales dollars is $923,077 (11.538.46 x $80) Given that sales reached the budgeted breakeven point of $942,857, Cat fur must have made a profit of $19,780 ($942,857 -- $923,077).

• Question 695:

  In marketing toothbrushes as its single product, Hollow Company uses one marketing mix, believing all toothbrush users have similar needs. Such an approach to target marketing is called

  A. Mass marketing
  B. Niche marketing.
  C. Micromarketing.
  D. Concentrated marketing.
  A. Mass marketing

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  Explanation

  When the needs of all customers are considered to be the same, the product and the customers do not need to be differentiated, and the appropriate strategy is mass marketing.

• Question 696:

  Mason Enterprises has prepared the following budget for the month of July:

  

  Assuming thattotal fixed costs will be $150,000 and the mix remains constant, the breakeven point (rounded to the next higher whole unit) will be

  A. 20,455 units.
  B. 21,429units.
  C. 21,8l9units.
  D. 6,818 units.
  C. 21,8l9units.

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  Explanation

• Question 697:

  Which of the following is not a phase in a value-chain analysis?

  A. Identify activities that are candidates for cost reduction.
  B. Identify ways to generate additional customer value.
  C. Identify means for improving product cost efficiency.
  D. Identify the firm's competitive advantage.
  C. Identify means for improving product cost efficiency.

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  Explanation

  The second step in a value-chain analysis is to determine how each value-creating activity can produce a competitive advantage for the firm. This step has multiple substeps:

  (1) Identify the firm's competitive advantage (e.g., cost reduction, product differentiation) so that the firm's position in the industry's value chain can be clarified. (2) Identify the ways in which the firm's value-creating activities can generate additional customer value. (3) Identify activities that are candidates for cost reduction or, in the case of non-core competencies, outsourcing. (4) Identify value-adding ways in which the firm's remaining activities can be linked.

• Question 698:

  The payback reciprocal can be used to approximate a project's

  A. Profitability' index.
  B. Net present value.
  C. Accounting rate of return if the cash flow pattern is relatively stable.
  D. Internal rate of return if the cash flow pattern is relatively stable.
  D. Internal rate of return if the cash flow pattern is relatively stable.

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  Explanation

• Question 699:

  Assume that the after-tax cost of debt is 7% and the cost of equity is 12%. Determine the weighted-average cost of capital to DQZ.

  A. 10.50%
  B. 850%
  C. 950%
  D. 6. 30%
  A. 10.50%

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  Explanation

  The 7% debt cost and the 12% equity cost should be weighted by the proportions of the total investment represented by each source of capital. The total project costs $50 million, of which debt is $15 million, or 30% of the total. Equity capital is the other 70%,. Consequently, the weighted-average cost of capital is 10.5% [(7%)(30%) + (12%)(70%)].

• Question 700:

  Which of the following terms is not connected with the employment of just-in- time(JIT)manufacturing?

  A. Cells
  B. Kanban
  C. Lean production
  D. Safety stock
  D. Safety stock

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  Explanation

  Safety stock involves always keeping enough raw materials on hand to overcome the effects of an interruption in supply.in a JIT system,manufacturers arecompletely depended on the reliability of their suppliers in delivering raw materials as they are needed.keeping safety stock undercuts the entire philosophy of JIT.