IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 821:

  A company serves as a distributor of products by ordering finished products once a quarter and using that inventory to accommodate the demand over the quarter. If it plans to ease its credit policy for customers, the amount of products ordered for its inventory every quarter will be

  A. Increased to accommodate higher sales levels.
  B. Reduced to offset the increased cost of carrying accounts receivable.
  C. Unaffected if safety stock is part of the current quarterly order.
  D. Unaffected if the JIT inventory control system is used.
  A. Increased to accommodate higher sales levels.

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  Explanation

  Relaxing the credit policy for customers will lead to increased sales because more people will be eligible for more credit. As sales increase, purchase orders wi II increase to accommodate the higher sales levels.

• Question 822:

  Which of the following statements regarding benchmarking is false?

  A. Benchmarking involves continuously evaluating the practices of best-in-class organization and adapting company processes to incorporate the best of these practices.
  B. Benchmarking, in process, usually involves a company forming benchmarking teams.
  C. Benchmarking is an ongoing process that entails quantitative and qualitative measurement of the difference between the company's performance of an activity and the performance by the best in the world or the best in the industry.
  D. The benchmarking organization against which a firm is comparing itself must be a direct competitor.
  D. The benchmarking organization against which a firm is comparing itself must be a direct competitor.

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  Explanation

  Benchmarking is an ongoing process that entails quantitative and qualitative measurement of the difference between the company's performance of an activity and the performance by a best-in-class organization. The benchmarking organization against which a firm is comparing itself need not be a direct competitor. The important consideration is that the benchmarking organization be an outstanding performer in its industry.

• Question 823:

  Which core business process seeks to increase the value of the customer base by such methods as customer service?

  A. Customer acquisition.
  B. Customer relationship management.
  C. Fulfillment management.
  D. Market sensing.
  B. Customer relationship management.

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  Explanation

  Customer relationship management seeks to increase the value of the customer base by developing long-term relationships with individual customers by such methods as customer service, customized (if not personalized) offerings, and choice of marketing messages and media.

• Question 824:

  Stewart Industries has been producing two bearings, components B12 and B18, for use in production.

  

  Stewart's annual requirement for these components is 8,000 units of B12 and 11000 units of B18. Recently, Stewart's management decided to devote additional machine time to other product lines resulting in only 41,000 machine hours per year that can be dedicated to the production of the bearings. An outside company has offered to sell Stewart the annual supply of the bearings at prices of $11.25 for B12 and $13. 50 for B18. Stewart wants to schedule the otherwise idle 411000 machine hours to produce bearings so that the company can minimize its costs (maximize its net benefits). Note 1: Variable manufacturing overhead is applied on the basis of direct labor hours. Note 2: Fixed manufacturing overhead is applied on the basis of machine hours. The net benefit (loss) per machine hour that would result if Stewart accept the supplier's offer of $13. 50 per unit for Component B18 is

  A. $.50
  B. $(1.00)
  C. $(1.75)
  D. Some amount other than those given.
  B. $(1.00)

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  Explanation

• Question 825:

  Which one of the following is not a determinant in valuing a can option?

  A. Exercise pence
  B. Expiration date.
  C. Forward contract price.
  D. Interest rate.
  C. Forward contract price.

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  Explanation

  The exercise price, the expiration date, and the interest rate are all determinants in veiling a call option.

• Question 826:

  Unit fixed costs

  A. Are constant per unit regardless of units produced or sold.
  B. Are determined by dividing total fixed costs by a denominator such as production or sales volume.
  C. Vary directly with the activity level when stated on a per-unit basis.
  D. Include both fixed and variable elements.
  B. Are determined by dividing total fixed costs by a denominator such as production or sales volume.

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  Explanation

  A unit fixed cost is equal to total fixed costs divided by an appropriate denominator or activity level. The resulting average or unit fixed cost must be used with extreme caution in decision making.

• Question 827:

  An emerging industry is new formed and is small in size initially. It results from innovation, changes is cost structures, new customer needs, or another factor that creates an attractive opportunity for selling a product or service. Which of the following is a structural characteristic of an emerging industry?

  A. A long time horizon for product development.
  B. Low initial costs and a shallow learning curve.
  C. Mobility barriers include economies of scale and brand identification.
  D. The presence of embryonic companies and spin-offs.
  D. The presence of embryonic companies and spin-offs.

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  Explanation

  Embryonic companies (firms newly formed and not new units of established entities) area numerous in the emerging phase of industry evolution. Entry is not discouraged by the presence of economies of scale or strategic certainty. Spin-offs from existing firms also are common. Given the strategic uncertainties and the lure of equity interests, employees of these firms may have the inventive, and be well-placed, to create new firms. Their motive is to exploit ideas that may not received a favorable reception by their former employers.

• Question 828:

  Assuming the after-tax cost of common stock is 15%, the after-tax weighted marginal cost of capital for Rogers' first financing alternative consisting of bonds, preferred stock, and common stock would be

  A. 7. 285%
  B. 8725%
  C. 10.375%
  D. 11.700%
  C. 10.375%

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  Explanation

• Question 829:

  A lock-box system

  A. Reduces the need for compensating balances.
  B. Provides security for late night deposits.
  C. Reduces the risk of having checks lost in the mail.
  D. Accelerates the inflow of funds.
  D. Accelerates the inflow of funds.

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  Explanation

  A lock-box system accelerates the inflow of funds. A company maintains mail boxes, often in numerous locations around the country, to which customers send payments. A bank checks these mailboxes several times a day, and funds received are immediately deposited to the company's account without first being processed by the company's accounting system, thereby hastening availability? the funds.

• Question 830:

  When the Economic Order Quantity' (EOQ) model is used for firm that manufactures its inventor, ordering costs consist primarily of

  A. Insurance and taxes.
  B. Obsolescence and deterioration
  C. Storage and handling.
  D. Production set-up.
  D. Production set-up.

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  Explanation

  A manufacturer can use the EOQ model by substituting production set-up costs for ordering costs. Set-up costs are the manufacturer's equivalent of ordering costs. The result is sometimes referred to as the economic batch quantity.