IMANET Certified Management Accountant CMA Exam Practice Test

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Total 1336 questions
Question 1

The following information applies to Oxford Company:

A cash payment equal to 50% of purchases is made at the time of purchase1 and 25% is paid in each of the next 2 months. Purchases for the previous November and December were $140,000 per month. Payroll for a month is 10% of that month's sales, and other operating expenses are 15% of the following month's sales (July sales were $210,000). Interest payments were $25,000 paid quarterly in January and April. Oxford's cash disbursements for the month of April were



Answer : D

The cash disbursements for the month of April include 50% of April purchases1 25% of March purchases, 25% of February purchases, April payroll (10% of April sales), other operating expenses (15% of May sales), and an interest payment of $25000.


Question 2

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



Answer : B

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 3

How much does each additional sales dollar contribute toward profit for a firm with $4 million break-even level of revenues and $1 .2 million in fixed costs including depreciation?



Answer : A

Solving for CM% results in CM% = 30%. Thus, 30% of every dollar, or $0.30, contributes towards profits.


Question 4

Troy Toys is a retailer operating in several cities. The individual store managers deposit daily collections at a local bank in a non-interest bearing checking account. Twice per week1 the local bank issues a depository transfer check (DTC)to the central bank at headquarters. The controller of the company is considering using a wire transfer instead. The additional cost of each transfer would be $25; collections would be accelerated by 2 days; and the annual interest rate paid by the central bank is 7.2%(0.02% per day). At what amount of dollars transferred would it be economically feasible to use a wire transfer instead of the DTC? Assume a 360-day year.



Answer : D

Given a $25 fee and an interest rate of 0.02% per day for2 days, the breakeven amount is $62,500 [$25 transfer fee + (2 x .02% interest rate)]. Thus, the interest earned on a transfer of any amount greater than $62,500 would exceed the $25 fee.


Question 5

Sunk costs



Answer : B

Sunk costs are those that cannot be avoided because the expenditure has already occurred or an irrevocable decision to incur the cost has been made. Sunk costs are irrelevant to management decision making because they cannot vary with the decision choice selected.


Question 6

Whitehall Corporation produces chemicals used in the cleaning industry During the previous month, Whitehall incurred $300,000 of joint costs in producing 60,000 units of AM-12 and 40000 units of BM-36. Whitehall uses the units-of-production method to allocate joint costs. Currently, AM-i 2 is sold at split-off for $3.50 per unit. Flank Corporation has approached Whitehall to purchase all of the production of AM-12 after further processing. The further processing will cost Whitehall $90000.Assume that Whitehall Corporation agreed to sell AM-12 to Flank Corporation for $5.50 per unit after further processing. During the first month of production, Whitehall sold 50,000 units with 10,000 units remaining in inventory at the end of the month. With respect to AM-12, which one of the following statements is true?



Answer : B

Joint costs are allocated based on units of production. Accordingly, the unit joint cost allocated to AM-12 is $3.00 [$300,000 + (60,000 units of AM-12 + 40,000 units of BM- 36)]. The unit cost of AM-12 is therefore $4.50 [$3.00 joint cost + ($90,000 additional cost + 60,000 units)]. Total inventory value is $45,000 (10,000 units x $4.50), and total operating profit is $50,000 [50,000 units sold x ($5.50 unit price --- $4.50 unit cost)]


Question 7

Vasil, Inc. conducted a strategy self-assessment of factors contributing to market attractiveness and business strengths as follows:

The factor ratings range from 1 (the lowest) to 5 (the highest). Which one of the following strategies would be the most beneficial for Vasil?



Answer : A

Vasil can quantify the results of its strategic self-assessment by weighting and summing each rating.


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Total 1336 questions