CMA-Strategic-Financial-Management Free Practice Test

- (Topic 1)
SSA inc. issues 4% bonds with a lace value of $500,000 when the market rate of interest is 3% for similar bonds. The bonds mature in 10 years, and pay interest every six months. Which one of the following is closest to the amount of cash SSA will receive upon issued.

1. A. $459,000
2. B. $500,000
3. C. $505,000
4. D. $543,000

Correct Answer: D

- (Topic 1)
A company produces 10,000 units of Product A monthly at the costs shown below.

The company estimates that 30% of the fixed overhead costs allocated to Product A are avoidable if the company chooses to outsource the production If the company purchases Product A from an outside supplier for $18 per unit what would be the net effect on its operating income?

1. A. $23,000
2. B. $5,00C
3. C. ($5,000)
4. D. ($17,000)

Correct Answer: C

- (Topic 1)
A retail company sells numerous products m its one department store. The income statements tot two of these products are shown below

After reviewing the income statements, the president is considering drooping one or both products. Which produces), if any should the company discontinue?

1. A. Both Product A and Product B
2. B. Product A only
3. C. Product B only
4. D. Neither Product A nor Product B

Correct Answer: B

CORRECT TEXT - (Topic 2)
Calculate AMI??s degree of operating leverage. Show your calculations. Essay
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units. The operating results are shown below.

Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.
Solution:
$1m/$0.5, 2 times
contribution/operating income
They can simply revalue their assets and hence ask for a higher price for their company or they re structure their financing structure by either issuing fleets or reducing me equity by paying a special one off dividend.

Does this meet the goal?

1. A. Yes
2. B. No

Correct Answer: A

- (Topic 1)
An organization s sol of values and code or ethics is an important consideration in human resource decisions for each of the following reasons except

1. A. employees not motivated to adhere to a set of values may impact relationships wan other entities doing Business e organization.
2. B. failure to address the alignment or individual values and ethics with organizational expectations may have a negative impact on performance.
3. C. lack of a communicated set of values may create confusion and conflict among employees
4. D. an organization may not have a legal right to discharge a dishonest employee if such a code is not communicated

Correct Answer: D