IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 871:

  Which of the following factors is not typical of an industry that faces intense competitive rivalry?

  A. Price-cutting
  B. Large advertising budgets.
  C. Frequent introduction of new products.
  D. Inelastic demand.
  D. Inelastic demand.

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  Explanation

  Rivalry among existing firms will be intense when an industry has many strong competitors. Inelastic demand exists when quantity purchased is not greatly affected by price changes. Thus, price cutting does not increase sales for the industry and is therefore a typical of an intensely competitive industry.

• Question 872:

  If an investment project has a profitability index of 1.15,the

  A. Project's internal rate of return is 15%.
  B. Project's cost of capital is greater than its internal rate of return.
  C. Project's internal rate of return exceeds its net present value.
  D. Net present value of the project is positive.
  D. Net present value of the project is positive.

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  Explanation

  The profitability index is the ratio of the present value of future net cash inflows to the initial net cash investment. It is a variation of the NPV method that facilitates comparison of different-sized investments. A profitability index greater than 1.0 indicates a profitable investment or one that has a positive net present value.

• Question 873:

  Under throughput costing, the only cost considered to be truly variable in the short run is

  A. Direct materials.
  B. Direct Labor
  C. Manufacturing overhead.
  D. all manufacturing costs are considered variable.
  A. Direct materials.

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  Explanation

  Is Correct. Throughput costing, also called super variable costing, recognizes one direct materials costs as being truly variable and thus relevant the calculation of throughput margin.

• Question 874:

  A company is concerned that spare parts inventories are too large. It has attempted to keep critical parts for its fleet in stock so that equipment will have minimal downtime. Management wants to know what the optimal spare parts inventory should be if downtime is estimated to cost $150 per day. Carrying cost and order cost have not been measured. You have been asked to make a formal recommendation on spare parts stocking levels. Which of the following techniques is most appropriate to use?

  A. Operations research.
  B. Value analysis.
  C. Attribute listing.
  D. Brainstorming.
  A. Operations research.

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  Explanation

  Operations research attempts to find optimal solutions using classical concepts such as statistics, simulation, logical thinking, and other scientific and mathematical techniques to develop and test hypotheses. This application closely fits the problem and charge given.

• Question 875:

  The Alpha Division of a company, which is operating at capacity, produces and sells 1.000 units of a certain electronic component in a perfectly competitive market. Revenue and cost data are as follows: Sales $50,000 Variable costs 34,000 Fixed costs 12,000 The minimum transfer price that should be charged to the Beta Division of the same company for each component is

  A. $12
  B. $34
  C. $46
  D. $50
  D. $50

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  Explanation

  In a perfectly competitive market, market price is ordinarily the appropriate transfer price. Because the market price is objective, using it avoids waste and maximizes efficiency. In a perfectly competitive market, the market price equals the minimum transfer price, which is the sum of outlay cost and opportunity cost. Outlay cost is the variable cost per unit, or $34 ($34000 + 1,000). Opportunity cost is the contribution margin forgone, or $16 ($50 - $34). Thus, the minimum transfer price is $50 ($34 + $16).

• Question 876:

  Kim is thinking of organizing a fund raiser charity. She has planned to rent a banquet hall and provide to support a local the guests with food, entertainment, and various party favors. She has decided to charge $500 a person. After researching around town, Kim has discovered the following costs:

  

  If Kim's goal is to raise $10,000 for her charily, how many people must attend the banquet?

  A. 404
  B. 425
  C. 428
  D. 446
  D. 446

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  Explanation

• Question 877:

  Cat fur Company has fixed costs of $300,000. It produces two products, X and Y Product has a van able 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. What is Cat furs breakeven point in dollars?

  A. $300,000
  B. $750,000
  C. $857,142
  D. $942,857
  D. $942,857

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  Explanation

  A helpful approach in a multiproduct situation is to make calculations based on the composite unit, i.e.. 2 units of Product X and 3 units of Product Y (a 66% ratio). The selling price of this composite unit is $110 [(2 $10) + (3 x $30)]. The UCM of the composite unit is $35 fJ2 x ($10-- $6)] + [3 x ($30-- $2 1)11. Consequently, the breakeven point in composite units is 8,571.43 ($300,000 FC. $35 UCM), and the breakeven point in sales dollars is $942,857 (8.571 43 x $110)

• Question 878:

  A company's product has an expected 4-year life cycle from research, development, and design through its withdrawal from the market. Budgeted costs are Upstream costs (RandD. design) $2,000,000 Manufacturing costs 3. 000.000 Downstream costs (marketing, distribution, customer service) 1,200.000 After-purchase costs 1.000.000 The company plans to produce 200.000 units and price the product at 125% of the whole- life unit cost. Thus, the budgeted unit selling price is

  A. $15
  B. $31
  C. $36
  D. $45
  D. $45

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  Explanation

• Question 879:

  Which of the following is not a category of relevant cash flows'?

  A. Annual net cash flows
  B. Project termination cash flows.
  C. Incremental cash flows.
  D. Net initial investment.
  C. Incremental cash flows.

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  Explanation

  Relevant cash flows are a much more reliable guide when judging capital projects, since only they provide a true measure of a project's potential to affect shareholder value. The relevant cash flows can be divided into three categories. (1) net initial investment, (2) annual net cash flows, and (3) project termination cash flows. An incremental cash flow is the difference in cash received or disbursed resulting from selecting one option instead of another. It is not a category of relevant cash Bows.

• Question 880:

  Marketing is involved in all phases of the business-process approach to approach to value creation and delivery. In the tactical marketing phase, the firm

  A. Defines market segments
  B. Selects target markets
  C. Dvelops the offering
  D. Uses an integrated marketing process to communicate value
  D. Uses an integrated marketing process to communicate value

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  Explanation

  The firm delivers and communicates value in the tactical marketing stage. Communication of value is done through an integrated marketing communication process. Instead of an emphasis on one method (e.g., advertising or the sales force), modem marketers combine promotional methods so that a consistent and favorable image will be communicated to customers whenever they have contact with the brand.