Free Certified Management Accountant (CMA) Exam CMA Exam Practice Test

The maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative is called

• Opportunity cost.
• Sunk cost.
• Incremental cash flow.
• Net initial investment.

Which strategy for a global marketing organization balances local responsiveness and global integration?

• Global
• Multinational
• Glocal
• Transnational

The length of time required to recover the initial cash outlay of a capital project is determined by using the

• Discounted cash flow method.
• Payback method.
• Weighted net present value method.
• Net present value method.

Which one of the following statements concerning cash flow determination for capital budgeting purposes is not correct?

• Tax depreciation must be considered because it affects cash payments for taxes.
• Book depreciation is relevant because it affects net income.
• Sunk costs are not incremental flows and should not be included.
• Networking capital changes should be included in cash flow forecasts.

Without prejudice to your answers from any other questions, assume that the after-tax cost of debt financing is 10%. the cost of retained earnings is 14%. and the cost of new common stock is 16%. What is the marginal cost of capital to - FLF Corporation for any projected capital expansion in excess of $7 million?

• 10%
• 12.74%
• 136%
• 16%

Bombastic Bathrooms manufacturers a certain style of plumbing fixture in four materials. Price and cost data for each are given below:The constraint in Bombastic manufacturing process is the

• Boring department.
• Machining department.
• Finishing department.
• Inspection & packing activity.

Assume that the Plastics Division has excess capacity and it has negotiated a transfer price of $5.60 per plastic component with the Entertainment Division. This price will

• Cause the Plastics Division to reduce the number of commercial plastic components it manufactures.
• Motivate both divisions as estimated profits are shared.
• Encourage the Entertainment Division to seek an outside source for plastic components
• Demotivate the Plastics Division causing mediocre performance

Which strategy in a global industry is most Ikea to be facilitated by a transnational coalition?

• A protected niche strategy.
• A nab onal focus strategy.
• A national segment strategy.
• Broad line global competition.

An annual payment in perpetuity of $1,000 per year beginning immediate is said to offer a 12% interest rate. What is its present value?

• $8,33333
• $9,33333
• $10,000
• $12,000

A firm's statement of broad objectives or mission statement should accomplish all of the following except

• Outlining strategies for technological development, market expansion, and product differentiation.
• Defining the purpose of the company.
• Providing an overall guide to those in high-level, decision-making positions.
• Stating the moral and ethical principles that guide the actions of the firm.