CMA ima questions part 1

Topics: Cost accounting, Variable cost, Management accounting Pages: 31 (6251 words) Published: November 21, 2014
CMA Part 1 – Financial Planning, Performance, & Control
Examination Practice Questions

© Copyright 2013 Institute of Certified Management Accountants

CMA Part 1 – Financial Planning, Performance and Control
Examination Practice Questions

1. A company is preparing the sales budget for two potential products. Both products require the use of the same manufacturing equipment, which is only available for 60 hours each month. The contribution margin of product A is $95 per unit and the contribution margin of product B is $55 per unit. Product A requires 4 hours of machine time per unit and product B requires 2.5 hours per unit. In order to efficiently allocate the equipment resources, the company should manufacture

a.
b.
c.
d.

product A, because the contribution margin is more per unit than product B. product B, because they can produce more units of that product than product A. product A, because it will make better use of the equipment than product B. product B, because they can produce many units and still save hours for product A.

2. Granger Company is reviewing its standard machine hours per unit to use in its budget for the upcoming year. The machine manufacturer’s specifications indicated a unit could be made in 0.75 hours, and a benchmarking study showed a competitor produced at a speed of 0.78 machine hours per unit. Granger’s actual results from last year averaged 0.83 machine hours per unit even though a standard of 0.80 machine hours per unit had been established using engineering studies. The standard Granger should use in its upcoming budget is

a.
b.
c.
d.

0.75 machine hours per unit.
0.78 machine hours per unit.
0.80 machine hours per unit.
0.83 machine hours per unit.

© Copyright 2013 Institute of Certified Management Accountants

3. While gathering information to use in preparing the annual budget, a company identifies cost drivers associated with manufacturing costs. Which one of the following is a quantitative analysis method the company can use to measure the average change in the manufacturing costs associated with a change in a cost driver? a.

b.
c.
d.

Time series analysis.
Exponential smoothing.
Regression analysis.
Learning curve analysis.

4. A company uses simple regression to predict one of its semi-variable costs. The computed equation of Y = -25,000 + 2.5X appears to have a good visual fit. The cause of the negative term in this equation could be that

a. the zero level of output is outside of the relevant range. b. too many outliers were included in the data.
c. an inappropriate cost driver was used as the independent variable. d. the cost does not exhibit semi-variable behavior.

5. Which one of the following statements best demonstrates the concept of the learning curve?
a. A learning curve is a linear cost behavior influenced by learning. b. A learning curve is a judgmental method of estimating costs when learning is present. c. A learning curve is a percentage by which average time per unit produced decreases as output doubles.

d. A learning curve is a percentage by which average time falls as output increases by 1.

6. Langley Corporation is developing a new product that will be manufactured in pairs. The company recently produced the first two units of this product using 200 hours of direct labor time. If Langley has a 90% learning curve and uses the cumulative average-time learning model, the total direct labor time to manufacture the first four units of this new product is

a.
b.
c.
d.

400 hours.
380 hours.
360 hours.
324 hours.
© Copyright 2013 Institute of Certified Management Accountants

7. Sunrise Corporation’s actual sales for May were $22,000,000, a result $600,000 greater than projected. Actual sales for June totaled $22,500,000. Using exponential smoothing with a smoothing factor (alpha) of 0.7, Sunrise’s projected sales for July would be a.

b.
c.
d.

$22,476,000.
$22,296,000.
$21,856,000.
$21,820,000....
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