CMA-Strategic-Financial-Management Free Practice Test

- (Topic 1)
A company manufactures two products Product X and Product Y, during a joint process Product Y canoe processed further to create Product Z Relevant data are shown below.

1. A. Product Y should be processed further because me selling once of Product Z Is higher than Product Y
2. B. Product Y should he processed further because an additional S5.000 profit can be achieved by processing further
3. C. Product y should not be processed further because an additional S35 000 loss can be achieved by processing further
4. D. Product Y should be processed further because an additional $45,000 prof* can be achieved by processing further

Correct Answer: B

CORRECT TEXT - (Topic 2)
Identify and explain two ways for AMI to hedge its exchange rate risk. 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:
Either enter into a forward contact for the used Or enter into a money market hedge to get the receivable at the current spot rate and take the loan in used to be paid by the customer when they are due for their payments.

Does this meet the goal?

1. A. Yes
2. B. No

Correct Answer: A

- (Topic 1)
Given the financial information shown below, what amounts would be shown for sales revenue and for gross prom, respectively in a common size income statement?

1. A. 100% and 20%
2. B. 100% and 45%
3. C. 222% and 225$
4. D. 100% and 55%

Correct Answer: B

CORRECT TEXT - (Topic 2)
Calculate Guda??s marginal cost of capital- Show your calculations.
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:
it the company will adjust the selling price mat is if it reduces the profit margin mil decrease as more of its costs are fixed rather man variable in nature hence in has greater sensitivity
to increase in sales price

Does this meet the goal?

1. A. Yes
2. B. No

Correct Answer: A

- (Topic 1)
Company A is concerned with its debt status and interested in analyzing how each one of the following activities might affect its to equity ratio. Assuming each activity is independent, which one of following activities is

1. A. Purchase back some of its common stock during the year.
2. B. Acquiring a subsidiary and consolidating for year-end financial statements.
3. C. Changing its inventory method from LIFO to weighted average.
4. D. Creating a separate entity to purchase a needed machine and leasing it from this entity.

Correct Answer: B