IMANET-CMA Online Practice Questions and Answers

Just-in-time production is also called

A. Kaizen.

B. Lean manufacturing

C. Activity-based management

D. Backflush costing

Which basic force(s) drive(s) industry competition and the ultimate profit potential of the industry?

I. Threat of new entrants.

II. Bargaining power of suppliers.

III. Favorable access to raw materials and labor.

IV.

Product differentiation.

A.

I only

B.

I and II only

C.

III and IV only

D.

I, II, III and IV

The firm should emphasize customer retention

A. By creating low switching costs.

B. By maximizing customer churn.

C. Although new customers are less costly than old customers.

D. Because the customer base is an intangible asset.

Sales promotion

A. Provides incentives to buy, and advertising provides reasons.

B. Is directed toward consumers, not the trade.

C. Objectives with respect to retailers include motivating them to do more prospecting.

D. Costs have decreased as a percentage of marketing budgets because consumers are less price conscious.

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. Under such philosophy, the price charged on a consistent basis for a specific product would probably be lowest during which life cycle stage?

A. introduction stage

B. Growth stage

C. Mutually stage

D. Decline stage

Catherine and Co. has extra cash at the end of the year and is angling the beltways invest the funds. The company should invest in a project only if the

A. Expected return on the project exceeds the return on investments of comparable risk.

B. Return on investments of comparable risk exceeds the expected return on the project.

C. Expected return on the project is equal to the return on investments of comparable risk.

D. Return on investments of comparable risk equals the expected return on the project.

An interest swap covers a 3-year period with annual payments on a $1 million notional principal amount. Party X agrees to pay a fixed rate of 8.5% to Party Z, who will in return pay to X a floating rate equal to the London Interbank Offered Rate (LIBOR) in effect. LIBOR is the rate offered by major London banks on large dollar deposites. The contract is initiated on January 1, Year 1. The first payment is due on December 21, Year

1. The following are the floating rates on LIBOR over the 3-year period:

Time LIBOR 1/1/Year 1 8.00% 1/1/Year 2 9.00% 1/1/Year 3 9.50% 1/1/Year 4 8.50%

What is the net payment made to the party that recognized a net gain on the contract?

A. $0

B. $10,000 to X

C. $ 15,000 to X

D. $15, 000 to Z

A technique used by stock promoters to combine several small businesses in the same industry into a company large enough to initiate an initial pubic offering (IPO) is a

A. Sale-leaseback.

B. Roll-up.

C. DRIP.

D. ESOP

Which one of the following is least likely to be an objective of a cost accounting system?

A. Product costing.

B. Department efficiency.

C. Inventory valuation.

D. Sales commission determination.

The segmented income statement for a retail company with three product lines is presented below: The company buys the goods in the three product lines directly from manufacturers' representatives. Each product line is directed by a manager whose salary is included in the administrative expenses. Administrative expenses are allocated to the three product lines equally because the administration is spread evenly among the three product lines. Salaries represent payments to the workers in each product line and therefore are traceable costs of each product line. Advertising promotes the entire company rather than the individual product lines. As a result, the advertising is allocated to the three product lines in proportion to the sales revenue. Commissions are paid to the salespersons in each product line based on 2% of gross sales. Rent represents the cost of the retail store and warehouse under a lease agreement with 5 years remaining. The product lines share the retail and warehouse space, and the rent is allocated to the three product lines based on the square footage occupied by each of the product lines. The company buys the goods in the three product lines directly from manufacturers' representatives. Each product line is directed by a manager whose salary is included in the administrative expenses. Administrative expenses are allocated to the three product lines equally because the administration is spread evenly among the three product lines. Salaries represent payments to the workers in each product line and therefore are traceable costs of each product line. Advertising promotes the entire company rather than the individual product lines. As a result1 the advertising is allocated to the three product lines in proportion to the sales revenue. Commissions are paid to the salespersons in each product line based on 2% of gross sales. Rent represents the cost of the retail store and warehouse under a lease agreement with 5 years remaining. The product lines share the retail and warehouse space, and the rent is allocated to the three product lines based on the square footage occupied by each of the product lines. The segmented income statement for this retail company does not facilitate performance evaluation because it does not distinguish between controllable and uncontrollable costs. The only costs and expenses controllable at the product-line level for this retail company are

A. Commissions, cost of sales, and rent.

B. Advertising, cost of sales, and salaries.

C. Commissions, cost of sales, and salaries.

D. Administration, advertising, and rent.

Bakker Industries seals three products (Products 611, 613, and 615) that it manufactures in a factory consisting of one department Both labor and machine time are applied to the products. Bakker's management is planning its production schedule for the next several months There are labor shortages in the community. Some of the machines will be out of service for extensive overhauling Available machine and labor time for each of me next 6 months is listed below If Bakker's strategy is to maximize dollar profits, how many units of product 615 will be produced?

A. 400 units

B. 500 units.

C. 800 units

D. 1.000 units.

Barker, Inc. has no capital rationing constraint and is analyzing many independent investment alternatives. Barker should accept all investment proposals

A. If debt financing is available for them.

B. That have positive cash flows.

C. That provide returns greater than the before-tax cost of debt.

D. That have a positive net present value.

In equipment-replacement decisions1 which one of the following does not affect the decision-making process?

A. Current disposal price of the old equipment.

B. Operating costs of the old equipment.

C. Original fair market value of the old equipment.

D. Cost of the new equipment.

A company's approach to an insourcing vs. outsourcing decision

A. Depends on whether the company is operating at or below normal volume.

B. Involves an analysis of avoidable costs.

C. Should use absorption (full) costing.

D. Should use activity-based costing.

The ABC Company manufactures components for use in producing one of its finished products. When 12,000 units are produced, the full cost per unit is $35, separated as follows: Direct materials $ 5 Direct labor 15 Variable overhead 10 Fixed overhead 5 The XYZ Company has offered to sell 12,000 components to ABC for $37 each. If ABC accepts the offer, some of the facilities currently being used to manufacture the components can be rented as warehouse space for $40,000. However, $3 of the fixed overhead currently applied to each component would have to be covered by ABC's other products. What is the differential cost to the ABC Company of purchasing the components from the XYZ Company?

A. $8000

B. $20,000

C. $24,000

D. $44,000