Mark Anthony Pusing
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Part 1: Financial Planning, Performance, and Control

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Mark Anthony Pusing
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  • CMA- GLEIM MCQ - Part 1 (1st Batch)

    Question 1 of 100

    1

    [1] Gleim #: 1.1.1 -- Source: CMA 691 3-2
    Each organization plans and budgets its operations for slightly different reasons. Which one of
    the following is not a significant reason for planning?

    Select one of the following:

    • Providing a basis for controlling operations.

    • Forcing managers to consider expected future trends and conditions.

    • Ensuring profitable operations.

    • Checking progress toward the objectives of the organization.

    Explanation

    Question 2 of 100

    1

    [2] Gleim #: 1.1.2 -- Source: CMA 697 3-11
    When developing a budget, an external factor to consider in the planning process is

    Select one of the following:

    • A change to a decentralized management system.

    • The implementation of a new bonus program.

    • New product development.

    • The merger of two competitors.

    Explanation

    Question 3 of 100

    1

    [3] Gleim #: 1.1.3 -- Source: CMA 692 3-11
    Which one of the following is usually not cited as being an advantage of a formal budgetary
    process?

    Select one of the following:

    • Forces management to evaluate the reasonableness of assumptions used and goals
      identified in the budgetary process.

    • Ensures improved cost control within the organization and prevents inefficiencies.

    • Provides a formal benchmark to be used for feedback and performance evaluation.

    • Serves as a coordination and communication device between management and
      subordinates.

    Explanation

    Question 4 of 100

    1

    [4] Gleim #: 1.1.4 -- Source: CIA 1194 III-54
    The major objectives of any budget system are to

    Select one of the following:

    • Define responsibility centers, provide a framework for performance evaluation, and
      promote communication and coordination among organization segments.

    • Define responsibility centers, facilitate the fixing of blame for missed budget predictions,
      and ensure goal congruence between superiors and subordinates.

    • Foster the planning of operations, provide a framework for performance evaluation, and
      promote communication and coordination among organization segments.

    • Foster the planning of operations, facilitate the fixing of blame for missed budget
      predictions, and ensure goal congruence between superiors and subordinates.

    Explanation

    Question 5 of 100

    1

    [5] Gleim #: 1.1.5 -- Source: CMA 1291 3-21
    A planning calendar in budgeting is the

    Select one of the following:

    • Calendar period covered by the budget.

    • Schedule of activities for the development and adoption of the budget.

    • Calendar period covered by the annual budget and the long-range plan.

    • Sales forecast by months in the annual budget period.

    Explanation

    Question 6 of 100

    1

    [6] Gleim #: 1.1.6 -- Source: CMA 1292 3-8
    A budget manual, which enhances the operation of a budget system, is most likely to include

    Select one of the following:

    • A chart of accounts.

    • Distribution instructions for budget schedules.

    • Employee hiring policies.

    • Documentation of the accounting system software.

    Explanation

    Question 7 of 100

    1

    [7] Gleim #: 1.1.7 -- Source: CIA 590 IV-14
    One of the primary advantages of budgeting is that it

    Select one of the following:

    • Does not take the place of management and administration.

    • Bases the profit plan on estimates.

    • Is continually adapted to fit changing circumstances.

    • Requires departmental managers to make plans in conjunction with the plans of other
      interdependent departments.

    Explanation

    Question 8 of 100

    1

    [8] Gleim #: 1.1.8 -- Source: CMA 692 3-7
    The budget that describes the long-term position, goals, and objectives of an entity within its
    environment is the

    Select one of the following:

    • Capital budget.

    • Operating budget.

    • Cash management budget.

    • Strategic budget.

    Explanation

    Question 9 of 100

    1

    [9] Gleim #: 1.1.9 -- Source: CMA 697 3-20
    Which one of the following best describes the role of top management in the budgeting
    process? Top management

    Select one of the following:

    • Should be involved only in the approval process.

    • Lacks the detailed knowledge of the daily operations and should limit their involvement.

    • Needs to be involved, including using the budget process to communicate goals.

    • Needs to separate the budgeting process and the business planning process into two
      separate processes.

    Explanation

    Question 10 of 100

    1

    [10] Gleim #: 1.1.10 -- Source: Publisher
    An advantage of participative budgeting is that it

    Select one of the following:

    • Minimizes the cost of developing budgets.

    • Reduces the effect on the budgetary process of employee biases

    • Yields information known to management but not to employees.

    • Encourages acceptance of the budget by employees.

    Explanation

    Question 11 of 100

    1

    [11] Gleim #: 1.1.11 -- Source: CMA 683 4-2
    The primary role of the budget director and the budgeting department is to

    Select one of the following:

    • Settle disputes among operating executives during the development of the annual operating
      plan.

    • Develop the annual profit plan by selecting the alternatives to be adopted from the
      suggestions submitted by the various operating segments

    • Justify the budget to the executive committee of the board of directors.

    • Compile the budget and manage the budget process.

    Explanation

    Question 12 of 100

    1

    [12] Gleim #: 1.1.12 -- Source: CMA 693 3-22
    Which one of the following is not considered to be a benefit of participative budgeting?

    Select one of the following:

    • Individuals at all organizational levels are recognized as being part of the team; this results
      in greater support of the organization.

    • The budget estimates are prepared by those in direct contact with various activities.

    • Managers are more motivated to reach the budget objectives since they participated in
      setting them.

    • When managers set the final targets for the budget, senior management need not be
      concerned with the overall profitability of current operations.

    Explanation

    Question 13 of 100

    1

    [13] Gleim #: 1.1.13 -- Source: CMA 1292 3-23
    The budgeting technique that is most likely to motivate managers is

    Select one of the following:

    • Top-down budgeting.

    • Zero-based budgeting.

    • Program budgeting and review technique.

    • Bottom-up budgeting.

    Explanation

    Question 14 of 100

    1

    [14] Gleim #: 1.1.14 -- Source: CMA 1292 3-13
    When comparing performance report information for top management with that for lower-level
    management,

    Select one of the following:

    • Top management reports are more detailed.

    • Lower-level management reports are typically for longer time periods.

    • Top management reports show control over fewer costs.

    • Lower-level management reports are likely to contain more quantitative data and less
      financial data.

    Explanation

    Question 15 of 100

    1

    [15] Gleim #: 1.1.15 -- Source: CMA 0205
    In the budgeting and planning process for a firm, which one of the following should be
    completed first?

    Select one of the following:

    • Sales budget.

    • Financial budget.

    • Cost management plan.

    • Strategic plan.

    Explanation

    Question 16 of 100

    1

    [16] Gleim #: 1.1.16 -- Source: CMA 0205
    Which one of the following is most important to a successful budgeting effort?

    Select one of the following:

    • Experienced analysts.

    • Integrated budget software.

    • Reliable forecasts and trend analyses.

    • Top management support.

    Explanation

    Question 17 of 100

    1

    [17] Gleim #: 1.1.17 -- Source: Publisher
    An improperly executed budget process might have the effect(s) of

    Select one of the following:

    • Disregard of overall company goals.

    • Inflated budget requests.

    • Meeting short-term but not long-term goals.

    • All of the answers are correct.

    Explanation

    Question 18 of 100

    1

    [18] Gleim #: 1.1.18 -- Source: Publisher
    The major disadvantage of a budget produced by means of a top-down process is

    Select one of the following:

    • Impairment of goal congruence.

    • Lack of involvement by upper-level management.

    • Inconsistency with strategic plans.

    • Absence of a significant motivational effect.

    Explanation

    Question 19 of 100

    1

    [19] Gleim #: 1.1.19 -- Source: Publisher
    A budget helps a company control costs by setting cost guidelines. However, a budget also
    performs the function(s) of

    Select one of the following:

    • Planning.

    • Motivating.

    • Communicating.

    • All of the answers are correct.

    Explanation

    Question 20 of 100

    1

    [20] Gleim #: 1.1.20 -- Source: Publisher
    Ineffective budget control systems are characterized by

    Select one of the following:

    • Use of budgets as a planning but not a control tool.

    • Use of budgets for harassment of individuals rather than motivation.

    • Lack of timely feedback in the use of the budget.

    • All of the answers are correct.

    Explanation

    Question 21 of 100

    1

    [21] Gleim #: 1.1.21 -- Source: Publisher
    Which of the following statements regarding budgets is false?

    Select one of the following:

    • Budgets present organizational plans in a formal, logical, and integrated manner.

    • Budgets are used only as a planning function.

    • Budgets may be developed for cash flows or labor usage.

    • A budget is a plan that contains a quantitative statement of expected results.

    Explanation

    Question 22 of 100

    1

    [22] Gleim #: 1.1.22 -- Source: CMA 0408 2-001
    All of the following are advantages of the use of budgets in a management control system
    except that budgets

    Select one of the following:

    • Force management planning.

    • Provide performance criteria.

    • Promote communication and coordination within the organization.

    • Limit unauthorized expenditures.

    Explanation

    Question 23 of 100

    1

    [23] Gleim #: 1.1.23 -- Source: CMA 0408 2-003
    All of the following are criticisms of the traditional budgeting process except that it

    Select one of the following:

    • Makes across-the-board cuts when early budget iterations show that planned expenses are
      too high.

    • Incorporates non-financial measures as well as financial measures into its output.

    • Overemphasizes a fixed time horizon, such as one year.

    • Is not used until the end of the budget period to evaluate performance.

    Explanation

    Question 24 of 100

    1

    [24] Gleim #: 1.1.24 -- Source: CMA 0408 2-005
    The following sequence of steps is employed by a company to develop its annual profit plan:
    Planning guidelines are disseminated downward by top management after receiving input
    from all levels of management.
    A sales budget is prepared by individual sales units reflecting the sales targets of the
    various segments. This provides the basis for departmental production budgets and other
    related components by the various operating units. Communication is primarily lateral with
    some upward communication possible.
    A profit plan is submitted to top management for coordination and review. Top
    management’s recommendations and revisions are acted upon by middle management. A
    revised profit plan is resubmitted for further review to top management.
    Top management grants final approval and distributes the formal plan downward to the
    various operating units.
    This outline of steps best describes which one of the following approaches to budget
    development?

    Select one of the following:

    • Imposed budgeting by top management.

    • Bottom-up approach.

    • Top-down approach.

    • Total justification of all activities by operating units

    Explanation

    Question 25 of 100

    1

    [25] Gleim #: 1.1.25 -- Source: CMA 0408 2-006
    All of the following are advantages of top-down budgeting as opposed to participatory
    budgeting, except that it

    Select one of the following:

    • Increases coordination of divisional objectives

    • Reduces the time required for budgeting.

    • May limit the acceptance of proposed goals and objectives.

    • Facilitates implementation of strategic plans.

    Explanation

    Question 26 of 100

    1

    [26] Gleim #: 1.1.26 -- Source: CMA 0408 2-007
    In developing the budget for the next year, which one of the following approaches would
    produce the greatest amount of positive motivation and goal congruence?

    Select one of the following:

    • Permit the divisional manager to develop the goal for the division that in the manager’s
      view will generate the greatest amount of profits.

    • Have senior management develop the overall goals and permit the divisional manager to
      determine how these goals will be met.

    • Have the divisional and senior management jointly develop goals and objectives while
      constructing the corporation’s overall plan of operation.

    • Have the divisional and senior management jointly develop goals and the divisional
      manager develop the implementation plan.

    Explanation

    Question 27 of 100

    1

    [27] Gleim #: 1.1.27 -- Source: CMA 0408 2-008
    Which one of the following is not an advantage of a participatory budgeting process?

    Select one of the following:

    • Coordination between departments.

    • Communication between departments.

    • Cost congruence.

    • Control of uncertainties.

    Explanation

    Question 28 of 100

    1

    [28] Gleim #: 1.1.28 -- Source: CMA 0408 2-010
    Which one of the following statements concerning approaches for the budget development
    process is correct?

    Select one of the following:

    • The top-down approach to budgeting will not ensure adherence to strategic organizational
      goals.

    • To prevent ambiguity, once departmental budgeted goals have been developed, they should
      remain fixed even if the sales forecast upon which they are based proves to be wrong in the
      middle of the fiscal year.

    • With the information technology available, the role of budgets as an organizational
      communication device has declined.

    • Since department managers have the most detailed knowledge about organizational
      operations, they should use this information as the building blocks of the operating budget.

    Explanation

    Question 29 of 100

    1

    [29] Gleim #: 1.1.29 -- Source: CMA 0408 2-011
    Rock Industries has four divisions. In the quest to develop a more achievable budget for the
    coming year, the chief executive officer has elected to develop the company’s budget by using
    a decentralized bottom-up budget approach. Chip Jones is production manager in one of the
    divisions. Jones’ involvement in the budget process this year will probably

    Select one of the following:

    • Be negligible.

    • Require development of a production budget that is forwarded to the Budget Department.

    • Require development of a production budget after receiving the division’s projected sales
      forecast.

    • Require development of a production budget based on the prior year’s manufacturing
      activity.

    Explanation

    Question 30 of 100

    1

    [30] Gleim #: 1.1.30 -- Source: CMA 0408 2-012
    Marietta Thomas, Amador Corporation’s vice president of planning, has seen and heard it all.
    She has told the corporate controller that she is “....very upset with the degree of slack that
    veteran managers use when preparing their budgets.” Thomas has considered implementing
    some of the following activities during the budgeting process.
    1. Develop the budgets by top management and issue them to lower-level operating units.
    2. Study the actual revenues and expenses of previous periods in detail.
    Have the budgets developed by operating units and accept them as submitted by a
    company-wide budget committee.
    3.
    4. Share the budgets with all employees as a means to reach company goals and objectives.
    Use an iterative budgeting process that has several “rounds” of changes initiated by
    operating units and/or senior managers.
    5.
    Which one of these activities should Amador implement in order to best remedy Thomas’
    concerns, help eliminate the problems experienced by Amador, and motivate personnel?

    Select one of the following:

    • 1 only.

    • 2 and 3.

    • 2 and 4.

    • 2, 4, and 5.

    Explanation

    Question 31 of 100

    1

    [31] Gleim #: 1.1.31 -- Source: CMA 0408 2-013
    Budgeting problems where departmental managers are repeatedly achieving easy goals or
    failing to achieve demanding goals can be best minimized by establishing

    Select one of the following:

    • Preventive controls.

    • A policy that allows managers to build slack into the budget.

    • Participative budgeting where managers pursue objectives consistent with those set by top
      management.

    • Better communication whereby managers discuss budget matters daily with their superiors.

    Explanation

    Question 32 of 100

    1

    [32] Gleim #: 1.1.32 -- Source: CMA 0408 2-015
    Which one of the following items would most likely cause the planning and budgeting system
    to fail? The lack of

    Select one of the following:

    • Historical financial data.

    • Input from several levels of management.

    • Top management support.

    • Adherence to rigid budgets during the year.

    Explanation

    Question 33 of 100

    1

    [33] Gleim #: 1.1.33 -- Source: CMA 0408 2-016
    All of the following are disadvantages of top-down budgeting as opposed to participatory
    budgeting, except that it

    Select one of the following:

    • May result in a budget that is not possible to achieve.

    • May limit the acceptance of proposed goals and objectives.

    • Reduces the communication between employees and management.

    • Reduces the time required for budgeting.

    Explanation

    Question 34 of 100

    1

    [34] Gleim #: 1.1.34 -- Source: CMA 0408 2-017
    Suboptimal decision making is not likely to occur when

    Select one of the following:

    • There is little congruence among the overall organization goals, the subunit goals, and the
      individual goals of decision makers.

    • Goals and standards of performance are set by the top management.

    • Guidance is given to subunit managers about how standards and goals affect them.

    • The subunits in the organization compete with each other for the same input factors or for
      the same customers.

    Explanation

    Question 35 of 100

    1

    [35] Gleim #: 1.1.35 -- Source: CMA 0408 2-018
    All of the following statements concerning standard costs are correct except that

    Select one of the following:

    • Time and motion studies are often used to determine standard costs.

    • Standard costs are usually set for one year.

    • Standard costs can be used in costing inventory accounts.

    • Standard costs are usually stated in total, while budgeted costs are usually stated on a perunit
      basis.

    Explanation

    Question 36 of 100

    1

    [36] Gleim #: 1.1.36 -- Source: CMA 0408 2-019
    One approach for developing standard costs incorporates communication, bargaining, and
    interaction among product line managers; the immediate supervisors for whom the standards
    are being developed; and the accountants and engineers before the standards are accepted by
    top management. This approach would best be characterized as a(n)

    Select one of the following:

    • Imposed approach.

    • Centralized top-down approach.

    • Engineering approach.

    • Team development approach.

    Explanation

    Question 37 of 100

    1

    [37] Gleim #: 1.1.37 -- Source: CMA 0408 2-020
    When compared with ideal standards, practical standards

    Select one of the following:

    • Produce lower per-unit product costs.

    • Result in a less desirable basis for the development of budgets.

    • Incorporate very generous allowance for spoilage and worker inefficiencies.

    • Serve as a better motivating target for manufacturing personnel.

    Explanation

    Question 38 of 100

    1

    [38] Gleim #: 1.1.38 -- Source: CMA 0408 2-021
    Diana Stinson, Cherry Valley, Inc.’s factory manager, had lost her patience. Six months ago,
    she appointed a team from the production and service departments to finalize the allocation of
    costs and setting of standard costs. They were still feuding, so she hired Brennan and Rose, a
    large consulting firm, to resolve the matter.
    All of the following are potential consequences of having the standards set by Brennan and
    Rose except that

    Select one of the following:

    • Brennan and Rose may not fully understand Cherry Valley’s manufacturing process,
      resulting in suboptimal performance.

    • Employees could react negatively since they did not participate in setting the standards

    • There could be dissatisfaction if the standards contain costs that are not controllable by the
      unit held responsible.

    • The standards may appear to lack management support

    Explanation

    Question 39 of 100

    1

    [39] Gleim #: 1.1.39 -- Source: CMA 0408 2-022
    Jura Corporation is developing standards for the next year. Currently XZ-26, one of the
    material components, is being purchased for $36.45 per unit. It is expected that the
    component’s cost will increase by approximately 10% next year and the price could range from
    $38.75 to $44.18 per unit, depending on the quantity purchased. The appropriate standard for
    XZ-26 for next year should be set at the

    Select one of the following:

    • Current actual cost plus the forecasted 10% price increase.

    • Lowest purchase price in the anticipated range to keep pressure on purchasing to always
      buy in the lowest price range.

    • Highest price in the anticipated range to ensure that there are only favorable purchase price
      variances.

    • Price agreed upon by the purchasing manager and the appropriate level of company
      management.

    Explanation

    Question 40 of 100

    1

    [40] Gleim #: 1.1.40 -- Source: CMA 0408 2-023
    Which one of the following will allow a better use of standard costs and variance analysis to
    help improve managerial decision-making?

    Select one of the following:

    • Company A does not differentiate between variable and fixed overhead in calculating its
      overhead variances.

    • Company B uses the prior year’s average actual cost as the current year’s standard.

    • Company C investigates only negative variances.

    • Company D constantly revises standards to reflect learning curves.

    Explanation

    Question 41 of 100

    1

    [41] Gleim #: 1.1.41 -- Source: CMA 0408 2-024
    After performing a thorough study of Michigan Company’s operations, an independent
    consultant determined that the firm’s labor standards were probably too tight. Which one of the
    following facts would be inconsistent with the consultant’s conclusion?

    Select one of the following:

    • A review of performance reports revealed the presence of many unfavorable efficiency
      variances.

    • Michigan’s budgeting process was well-defined and based on a bottom-up philosophy.

    • Management noted that minimal incentive bonuses have been paid in recent periods.

    • Production supervisors found several significant fluctuations in manufacturing volume,
      with short-term increases on output being followed by rapid, sustained declines.

    Explanation

    Question 42 of 100

    1

    [42] Gleim #: 1.2.42 -- Source: CMA 1291 4-27
    Automite Company is an automobile replacement parts dealer in a large metropolitan
    community. Automite is preparing its sales forecast for the coming year. Data regarding both
    Automite’s and industry sales of replacement parts as well as both the used and new automobile
    sales in the community for the last 10 years have been accumulated. If Automite wants to
    determine whether its sales of replacement parts are dependent upon the industry sales of
    replacement parts or upon the sales of used and new automobiles, the company should employ

    Select one of the following:

    • Simulation techniques.

    • Correlation and regression analysis.

    • Statistical sampling.

    • Time series analysis.

    Explanation

    Question 43 of 100

    1

    [43] Gleim #: 1.2.43 -- Source: CMA 1285 5-27
    The correlation coefficient that indicates the weakest linear association between two variables
    is

    Select one of the following:

    • –0.73

    • –0.11

    • 0.12

    • 0.35

    Explanation

    Question 44 of 100

    1

    [44] Gleim #: 1.2.44 -- Source: CMA 1289 5-14
    Correlation is a term frequently used in conjunction with regression analysis and is measured
    by the value of the coefficient of correlation, r. The best explanation of the value r is that it

    Select one of the following:

    • Is always positive.

    • Interprets variances in terms of the independent variable.

    • Ranges in size from negative infinity to positive infinity.

    • Is a measure of the relative relationship between two variables.

    Explanation

    Question 45 of 100

    1

    [45] Gleim #: 1.2.45 -- Source: CMA 697 4-26
    A regression equation

    Select one of the following:

    • Estimates the dependent variables.

    • Encompasses factors outside the relevant range.

    • Is based on objective and constraint functions.

    • Estimates the independent variable.

    Explanation

    Question 46 of 100

    1

    [46] Gleim #: 1.2.46 -- Source: CIA 593 III-64
    What coefficient of correlation results from the following data?
    X Y
    1 10
    2 8
    3 6
    4 4
    5 2

    Select one of the following:

    • A. 0

    • B. –1

    • C. +1

    • D. Cannot be determined from the data given.

    Explanation

    Question 47 of 100

    1

    [47] Gleim #: 1.2.47 -- Source: CMA 1290 4-27
    In the standard regression equation y = a + bx, the letter b is best described as a(n)

    Select one of the following:

    • Independent variable

    • Dependent variable.

    • Constant coefficient

    • Variable coefficient.

    Explanation

    Question 48 of 100

    1

    [48] Gleim #: 1.2.48 -- Source: CMA 1290 4-28
    The letter x in the standard regression equation is best described as a(n)

    Select one of the following:

    • Independent variable

    • Dependent variable

    • Constant coefficient.

    • Coefficient of determination

    Explanation

    Question 49 of 100

    1

    [49] Gleim #: 1.2.49 -- Source: CIA 1194 II-46
    In regression analysis, which of the following correlation coefficients represents the strongest
    relationship between the independent and dependent variables?

    Select one of the following:

    • 1.03

    • –.02

    • –.89

    • .75

    Explanation

    Question 50 of 100

    1

    [50] Gleim #: 1.2.50 -- Source: CIA 595 II-46
    The internal auditor of a bank has developed a multiple regression model which has been used
    for a number of years to estimate the amount of interest income from commercial loans. During
    the current year, the auditor applies the model and discovers that the r 2 value has decreased
    dramatically, but the model otherwise seems to be working okay. Which of the following
    conclusions are justified by the change?

    Select one of the following:

    • Changing to a cross-sectional regression analysis should cause r 2 to increase.

    • Regression analysis is no longer an appropriate technique to estimate interest income.

    • Some new factors, not included in the model, are causing interest income to change.

    • A linear regression analysis would increase the model’s reliability.

    Explanation

    Question 51 of 100

    1

    [51] Gleim #: 1.2.51 -- Source: Publisher
    The least exact method for separating fixed and variable costs is

    Select one of the following:

    • The least squares method

    • Computer simulation

    • The high-low method

    • Matrix algebra.

    Explanation

    Question 52 of 100

    1

    Jackson Co. has the following information for the first quarter of its year:
    Machine Cleaning
    Hours Expense
    January 2,100 $ 900
    February 2,600 1,200
    March 1,600 800
    April 2,000 1,000

    [52] Gleim #: 1.2.52 -- Source: Publisher
    (Refers to Fact Pattern #1)
    Using the high-low method, what is Jackson’s variable cost of cleaning per machine hour?

    Select one of the following:

    • $.40

    • $.48

    • $2.00

    • $2.50

    Explanation

    Question 53 of 100

    1

    [53] Gleim #: 1.2.53 -- Source: Publisher
    (Refers to Fact Pattern #1)
    Using the high-low method, what is Jackson’s fixed cost?

    Select one of the following:

    • $160

    • $320

    • $640

    • $1,040

    Explanation

    Question 54 of 100

    1

    [54] Gleim #: 1.2.54 -- Source: Publisher
    (Refers to Fact Pattern #1)
    Jackson’s management expects machine hours for the month of May to be 1,400 hours. What is
    their expected total cost for the month of May using the high-low method?

    Select one of the following:

    • $560

    • $650

    • $720

    • $760

    Explanation

    Question 55 of 100

    1

    [Fact Pattern #2]
    In preparing the annual profit plan for the
    coming year, Wilkens Company wants to
    determine the cost behavior pattern of the
    maintenance costs. Wilkens has decided to use
    linear regression by employing the equation y
    = a + bx for maintenance costs. The prior
    year’s data regarding maintenance hours and
    costs and the results of the regression analysis
    are as follows.
    Average cost per hour $ 9.00
    a 684.65
    b 7.2884
    Standard error of a 49.515
    Standard error of b .12126
    Standard error of the estimate 34.469
    r 2 .99724
    Hours of Maintenance
    Activity Costs
    January 480 $ 4,200
    February 320 3,000
    March 400 3,600
    April 300 2,820
    May 500 4,350
    June 310 2,960
    July 320 3,030
    August 520 4,470
    September 490 4,260
    October 470 4,050
    November 350 3,300
    December 340 3,160
    Sum 4,800 $43,200
    Average 400 $ 3,600

    [55] Gleim #: 1.2.55 -- Source: CMA 1290 4-29
    (Refers to Fact Pattern #2)
    Based upon the data derived from the regression analysis, 420 maintenance hours in a month
    would mean that Wilkens Co.’s maintenance costs (rounded to the nearest dollar) would be
    budgeted at:

    Select one of the following:

    • $3,780

    • $3,600

    • $3,790

    • $3,746

    Explanation

    Question 56 of 100

    1

    [56] Gleim #: 1.2.56 -- Source: CMA 1290 4-30
    (Refers to Fact Pattern #2)
    The percentage of Wilkens Co.’s total variance that can be explained by the regression equation
    is

    Select one of the following:

    • 99.724%

    • 69.613%

    • 80.982%

    • 99.862%

    Explanation

    Question 57 of 100

    1

    [57] Gleim #: 1.2.57 -- Source: Publisher
    (Refers to Fact Pattern #2)
    If Wilkens Company uses the high/low method of analysis, the equation for the relationship
    between hours of activity and maintenance cost would be

    Select one of the following:

    • y = 400 + 9.0x

    • y = 570 + 7.5x

    • y = 3,600 + 400x

    • y = 570 + 9.0x

    Explanation

    Question 58 of 100

    1

    Alpha Company produces several different products and is making plans for the introduction of a
    new product which it will sell for $6 a unit. The following estimates have been made for
    manufacturing costs on 100,000 units to be produced the first year:
    Direct materials $500,000
    Direct labor $40,000 (the labor rate is $4/hour)
    Overhead costs have not been established for the new product, but monthly data on total production
    and overhead cost for the past 24 months have been analyzed using simple linear regression. The
    following results were derived from the simple regression and provide the basis for overhead cost
    estimates for the new product.
    Dependent variable (y) -- Factory overhead costs
    Independent variable (x) -- Direct labor hours
    Computed values:
    y-intercept $40,000
    Coefficient of independent variable $2.10
    Coefficient of correlation 0.953
    Standard error of estimate $2,840
    Standard error of regression coefficient 0.42
    Mean value of independent variable $18,000
    Coefficient of determination 0.908
    [58] Gleim #: 1.2.58 -- Source: Publisher
    (Refers to Fact Pattern #3)
    What percentage of the variation in Alpha’s overhead costs is explained by the independent
    variable?

    Select one of the following:

    • 90.8%

    • 42%

    • 48.8%

    • 95.3%

    Explanation

    Question 59 of 100

    1

    Gleim #: 1.2.59 -- Source: Publisher
    (Refers to Fact Pattern #3)
    Alpha’s total overhead cost for an estimated activity level of 20,000 direct labor hours would be

    Select one of the following:

    • $42,000

    • $82,000

    • $122,000

    • $222,000

    Explanation

    Question 60 of 100

    1

    [60] Gleim #: 1.2.60 -- Source: CIA 1194 III-59
    The manager of the assembly department of a company would like to estimate the fixed and
    variable components of the department’s cost. To do so, the manager has collected information
    on total cost and output for the past 24 months. To estimate the fixed and variable components
    of total cost, the manager should use

    Select one of the following:

    • Regression analysis

    • Game theory

    • Sensitivity analysis

    • Queuing theory

    Explanation

    Question 61 of 100

    1

    Gleim #: 1.2.61 -- Source: CIA 1195 II-30
    A division uses a regression in which monthly advertising expenditures are used to predict
    monthly product sales (both in millions of dollars). The results show a regression coefficient for
    the independent variable equal to 0.8. This coefficient value indicates that

    Select one of the following:

    • The average monthly advertising expenditure in the sample is $800,000.

    • When monthly advertising is at its average level, product sales will be $800,000.

    • On average, for every additional dollar in advertising you get $0.80 in additional sales.

    • Advertising is not a good predictor of sales because the coefficient is so small.

    Explanation

    Question 62 of 100

    1

    [62] Gleim #: 1.2.62 -- Source: CMA 1289 4-11
    All of the following are assumptions underlying the validity of linear regression output except

    Select one of the following:

    • The errors are normally distributed.

    • The mean of the errors is zero

    • Certainty.

    • The standard deviation of the errors is constant

    Explanation

    Question 63 of 100

    1

    Gleim #: 1.2.63 -- Source: CMA 1292 3-3
    In determining cost behavior in business, the cost function is often expressed as y = a + bx.
    Which one of the following cost estimation methods should not be used in estimating fixed and
    variable costs for the equation?

    Select one of the following:

    • Graphic method.

    • Simple regression.

    • High and low point method.

    • Multiple regression

    Explanation

    Question 64 of 100

    1

    [64] Gleim #: 1.2.64 -- Source: CMA 0408 1-136
    For cost estimation, simple regression differs from multiple regression in that simple regression
    uses only

    Select one of the following:

    • One dependent variable, while multiple regression uses all available data to estimate the
      cost function

    • Dependent variables, while multiple regression can use both dependent and independent
      variables

    • One independent variable, while multiple regression uses more than one independent
      variable

    • One dependent variable, while multiple regression uses more than one dependent variable

    Explanation

    Question 65 of 100

    1

    [65] Gleim #: 1.2.65 -- Source: CMA 0408 1-137
    A company has accumulated data for the last 24 months in order to determine if there is an
    independent variable that could be used to estimate shipping costs. Three possible independent
    variables being considered are packages shipped, miles shipped, and pounds shipped. The
    quantitative technique that should be used to determine whether any of these independent
    variables might provide a good estimate for shipping costs is

    Select one of the following:

    • Flexible budgeting

    • Linear programming.

    • Linear regression

    • Variable costing

    Explanation

    Question 66 of 100

    1

    [66] Gleim #: 1.2.66 -- Source: CMA 0408 1-138
    Slawford Manufacturing developed the following multiple regression equation, utilizing many
    years of data, and uses it to model, or estimate, the cost of its product.
    Cost = FC + (a × L) + (b × M)
    Where: FC = fixed costs
    L = labor rate per hour
    M = material cost per pound
    Which one of the following changes would have the greatest impact on invalidating the results
    of this model?

    Select one of the following:

    • A significant reduction in factory overheads, which are a component of fixed costs.

    • Renegotiation of the union contract calling for much higher wage rates

    • A large drop in material costs, as a result of purchasing the material from a foreign source.

    • A significant change in labor productivity

    Explanation

    Question 67 of 100

    1

    [67] Gleim #: 1.2.67 -- Source: CMA 0408 1-139
    In order to analyze sales as a function of advertising expenses, the sales manager of Smith
    Company developed a simple regression model. The model included the following equation,
    which was based on 32 monthly observations of sales and advertising expenses with a related
    coefficient of determination of .90.
    Sales = $10,000 + (2.5 × Advertising expenses)
    If Smith Company’s advertising expenses in one month amounted to $1,000, the related point
    estimate of sales would be

    Select one of the following:

    • $2,500

    • $11,250

    • $12,250

    • $12,500

    Explanation

    Question 68 of 100

    1

    [68] Gleim #: 1.2.68 -- Source: CMA 0408 1-140
    The results of regressing Y against X are as follows:
    Coefficient
    Intercept 5.23
    Slope 1.54
    When the value of X is 10, the estimated value of Y is

    Select one of the following:

    • 6.78

    • 8.05

    • 20.63

    • 53.84

    Explanation

    Question 69 of 100

    1

    [69] Gleim #: 1.3.69 -- Source: CMA 697 4-25
    Corrigon Industries is preparing a bid for a special project requiring the production of 35,000
    units. The engineering personnel have advised that the units can be produced in groups with the
    first group consisting of 1,000 units. A review of prior experience indicates that the direct labor
    time needed per unit will be progressively smaller by a constant percentage rate as experience
    is gained in the production process. The quantitative method that would best estimate
    Corrigon’s total cost for the project is

    Select one of the following:

    • Linear programming.

    • Dynamic programming.

    • Learning curve analysis.

    • Time series analysis.

    Explanation

    Question 70 of 100

    1

    [70] Gleim #: 1.3.70 -- Source: CMA 1293 4-24
    The average labor cost per unit for the first batch produced by a new process is $120. The
    cumulative average labor cost after the second batch is $72 per product. Using a batch size of
    100 and assuming the learning curve continues, the total labor cost of four batches will be

    Select one of the following:

    • $4,320

    • $10,368

    • $2,592

    • $17,280

    Explanation

    Question 71 of 100

    1

    [Fact Pattern #4]
    Moss Point Manufacturing recently
    completed and sold an order of 50 units that
    had costs as shown in the next column.
    The company has now been requested to
    prepare a bid for 150 units of the same
    product.
    Direct materials $ 1,500
    Direct labor (1,000 hours × $8.50) 8,500
    Variable overhead (1,000 hours ×
    $4.00)*
    4,000
    Fixed overhead** 1,400
    $15,400
    *Applied on the basis of direct labor hours.
    **Applied at the rate of 10% of variable cost.

    [71] Gleim #: 1.3.71 -- Source: CMA 1288 5-19
    (Refers to Fact Pattern #4)
    If an 80% learning curve is applicable, Moss Point’s total cost on this order would be estimated
    at

    Select one of the following:

    • $26,400

    • $32,000

    • $38,000

    • $41,800

    Explanation

    Question 72 of 100

    1

    [72] Gleim #: 1.3.72 -- Source: CMA 1288 5-20
    (Refers to Fact Pattern #4)
    If Moss Point had experienced a 70% learning curve, the bid for the 150 units would

    Select one of the following:

    • Show a 30% reduction in the total direct labor hours required with no learning curve.

    • Include increased fixed overhead costs.

    • Be 10% lower than the total bid at an 80% learning curve.

    • Include 6.40 direct labor hours per unit at $8.50 per hour.

    Explanation

    Question 73 of 100

    1

    [73] Gleim #: 1.3.73 -- Source: Publisher
    A particular manufacturing job is subject to an estimated 90% learning curve. The first unit
    required 50 labor hours to complete. What is the cumulative average time per unit after four
    units are completed?

    Select one of the following:

    • 50.0 hours.

    • 45.0 hours.

    • 40.5 hours

    • 40.0 hours

    Explanation

    Question 74 of 100

    1

    [74] Gleim #: 1.3.74 -- Source: Publisher
    A particular manufacturing job is subject to an estimated 80% learning curve. The first unit
    required 50 labor hours to complete. What is the cumulative average time per unit after eight
    units are completed?

    Select one of the following:

    • 20.0 hours.

    • 25.6 hours.

    • 32.0 hours.

    • 40.0 hours

    Explanation

    Question 75 of 100

    1

    [75] Gleim #: 1.3.75 -- Source: Publisher
    A particular manufacturing job is subject to an estimated 80% learning curve. The first unit
    required 50 labor hours to complete. If the learning curve is based on a cumulative average time
    per unit assumption, what is the time required to complete the second unit?

    Select one of the following:

    • 30.0 hours.

    • 40.0 hours

    • 45.0 hours

    • 50.0 hours

    Explanation

    Question 76 of 100

    1

    [76] Gleim #: 1.3.76 -- Source: CIA 1187 III-41
    A learning curve of 80% assumes that direct labor costs are reduced by 20% for each doubling
    of output. What is the incremental cost of the sixteenth unit produced as an approximate
    percentage of the first unit produced?

    Select one of the following:

    • 41%

    • 31%

    • 51%

    • 64%

    Explanation

    Question 77 of 100

    1

    [77] Gleim #: 1.3.77 -- Source: Publisher
    Red Baron, Inc. is a new competitor in the production of airplane propellers. Red Baron has to
    train its employees in the process of making propellers. To increase the speed of learning, Red
    Baron will give a bonus to the employee with the lowest cumulative average time per unit after
    eight units are completed. Lucy took 50 hours to complete the first unit, and she is subject to an
    80% learning curve. Sally took 60 hours to complete the first unit, and she is subject to a 70%
    learning curve. Marcy took 40 hours to complete the first unit, and she is subject to a 90%
    learning curve. Patty took 55 hours to complete the first unit, and she is subject to a 75%
    learning curve. Which employee will receive the bonus?

    Select one of the following:

    • Lucy

    • Sally

    • Marcy

    • Patty

    Explanation

    Question 78 of 100

    1

    [78] Gleim #: 1.3.78 -- Source: CMA 692 4-5
    Lake Corporation manufactures specialty components for the electronics industry in a highly
    labor intensive environment. Arc Electronics has asked Lake to bid on a component that Lake
    made for Arc last month. The previous order was for 80 units and required 120 hours of direct
    labor to manufacture. Arc would now like 240 additional components. Lake experiences an
    80% learning curve on all of its jobs. The number of direct labor hours needed for Lake to
    complete the 240 additional components is

    Select one of the following:

    • 360.0

    • 187.2

    • 307.2

    • 256.0

    Explanation

    Question 79 of 100

    1

    [79] Gleim #: 1.3.79 -- Source: CMA 696 4-7
    It is estimated that a particular manufacturing job is subject to an 80% learning curve. The first
    unit required 50 labor hours to complete. What is the cumulative average time per unit after
    completing four units?

    Select one of the following:

    • 50.0 hours

    • 40.0 hours

    • 32.0 hours

    • 30.0 hours

    Explanation

    Question 80 of 100

    1

    [80] Gleim #: 1.3.80 -- Source: CMA 1291 4-22
    A company plans to bid on a special project that calls for a total of 24,000 units. The units will
    be produced in lots, with the first lot consisting of 750 units. Based on prior experience, the
    direct labor time needed per unit of product will be progressively smaller by a constant
    percentage rate as experience is gained in the manufacturing process. The quantitative method
    that would best estimate the company’s total cost for the project is

    Select one of the following:

    • Learning curve techniques

    • Differential calculus

    • Discounted cash flow techniques.

    • Linear programming

    Explanation

    Question 81 of 100

    1

    [81] Gleim #: 1.3.81 -- Source: CMA 1294 4-28
    Seacraft, Inc. received a request for a competitive bid for the sale of one of its unique boating
    products with a desired modification. Seacraft is now in the process of manufacturing this
    product but with a slightly different modification for another customer. These unique products
    are labor intensive and both will have long production runs. Which one of the following
    methods should Seacraft use to estimate the cost of the new competitive bid?

    Select one of the following:

    • Expected value analysis.

    • Learning curve analysis.

    • Regression analysis

    • Continuous probability simulation.

    Explanation

    Question 82 of 100

    1

    [82] Gleim #: 1.3.82 -- Source: CMA 1289 4-7
    The technique used to predict the change in direct labor hours as a new process stabilizes is

    Select one of the following:

    • Simple regression

    • Multiple regression

    • Time series analysis

    • Learning curve analysis

    Explanation

    Question 83 of 100

    1

    [Fact Pattern #5]
    LCB, Inc. is preparing a bid to the Department of the Navy to produce engines for rescue boats. The
    company has manufactured these engines for the Navy for the past 3 years on an exclusive contract
    and has experienced the following costs:
    Cumulative Total Cumulative Costs
    Units Produced Materials Labor
    10 $ 60,000 $120,000
    20 120,000 192,000
    40 240,000 307,200
    At LCB, variable overhead is applied on the basis of $1.00 per direct labor dollar. Based on
    historical costs, LCB knows that the production of 40 engines will incur $100,000 of fixed overhead
    costs. The bid request is for an additional 40 units; all companies submitting bids are allowed to
    charge a maximum of 25% above full cost for each order.
    [83] Gleim #: 1.3.83 -- Source: CMA 688 5-9
    (Refers to Fact Pattern #5)
    In order to ensure that the company would not lose money on the project, LCB’s minimum bid
    for the 40 units would be

    Select one of the following:

    • $760,800

    • $608,640

    • $885,800

    • $708,640

    Explanation

    Question 84 of 100

    1

    Gleim #: 1.3.84 -- Source: CMA 688 5-7
    (Refers to Fact Pattern #5)
    LCB’s rate of learning on the 3-year engine contract is

    Select one of the following:

    • 75.5%

    • 79.0%

    • 80.0%

    • 62.6%

    Explanation

    Question 85 of 100

    1

    [85] Gleim #: 1.3.85 -- Source: CMA 688 5-8
    (Refers to Fact Pattern #5)
    The maximum bid price that LCB, Inc. could submit to the Department of the Navy for the 40
    units is

    Select one of the following:

    • $760,800

    • $608,640

    • $885,800

    • $708,640

    Explanation

    Question 86 of 100

    1

    Donehart Corporation produces agricultural vehicles. Most of the component parts for these vehicles
    are subcontracted to reliable vendors. The final assembly of all vehicles is accomplished at
    Donehart’s plant. Donehart’s Engineering Department has developed a new fuel injection system
    that can be produced in-house because of the availability of production capacity. The first production
    run of the new fuel injection system has already been completed in-house. This 80-unit production
    run took 60 direct labor hours per unit to produce based on the cumulative average labor hours per
    fuel injection unit. Donehart has experienced an 80% learning curve with similar products, and this
    experience indicates that learning tends to cease by the time 640 systems are produced. Donehart’s
    direct labor cost (including employee benefits) is $18 per direct labor hour. Donehart’s management
    must decide whether to continue producing the fuel injection system or to subcontract the work.
    Donehart’s purchasing agent has received a proposal from Midland, Inc., a company specializing in
    fuel injection systems. From past contracts, Midland has proven to be efficient and reliable. The
    terms of Midland’s proposal are outlined below.
    - Donehart must supply all materials required for the fuel injection system units.
    - The first 80 units produced by Midland will require direct labor input at the rate of 56 hours per
    unit. Current direct labor cost is $20 per hour.
    - The direct labor cost charged to Donehart will be the hourly rate in effect at the time the work is
    performed. Midland is currently negotiating its labor contract, which includes a 4% increase in
    direct labor cost and should be applicable when Donehart signs the contract.
    - A learning curve factor of 75% will be applied through the first 640 units produced, and all
    benefits derived from the learning factor will accrue to Donehart.
    - Donehart must pay the actual labor cost incurred plus a 5% margin.

    [86] Gleim #: 1.3.86 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart manufactures the units in-house, what is the average labor hours per unit after
    manufacturing 640 units?

    Select one of the following:

    • 60

    • 30.72

    • 23.63

    • 23.04

    Explanation

    Question 87 of 100

    1

    [87] Gleim #: 1.3.87 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart manufactures the units in-house, how many total hours will it take to complete
    1,000 units?

    Select one of the following:

    • 8,294.4 hours

    • 19,660.8 hours.

    • 24,330 hours

    • 27,955.2 hours

    Explanation

    Question 88 of 100

    1

    [88] Gleim #: 1.3.88 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart manufactures the units in-house, how much additional cost will the company incur
    after the first batch in order to produce a total of 1,000 units?

    Select one of the following:

    • $416,793.60

    • $463,104

    • $503,193.60

    • $559,104

    Explanation

    Question 89 of 100

    1

    [89] Gleim #: 1.3.89 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart subcontracts the order to Midland, what is the total number of labor hours required
    to produce the 640 units on the learning curve?

    Select one of the following:

    • 15,120 hours

    • 18,350 hours

    • 19,530 hours

    • 35,840 hours

    Explanation

    Question 90 of 100

    1

    [90] Gleim #: 1.3.90 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart subcontracts the order to Midland, how many hours will it take to complete a unit
    after the initial 640 units on the learning curve are finished?

    Select one of the following:

    • 11.81 hours

    • 15.75 hours

    • 21.50 hours

    • 23.625 hours

    Explanation

    Question 91 of 100

    1

    [91] Gleim #: 1.3.91 -- Source: Publisher
    (Refers to Fact Pattern #6)
    If Donehart subcontracts the order to Midland, how much additional cost will Donehart incur
    after the first batch in order to obtain a total of 1,000 units?

    Select one of the following:

    • $302,400

    • $330,220.80

    • $390,600

    • $426,535.20

    Explanation

    Question 92 of 100

    1

    [92] Gleim #: 1.3.92 -- Source: CIA 1193 III-69
    Management of a bookkeeping company observed that the average time spent to perform
    identical tasks using a new software package decreases as the number of tasks performed
    increases. The following information on the use of the new software was collected.
    Number of Total Time to Average Time
    Tasks Perform All to Perform
    Performed Tasks Each Task
    1 10 minutes 10 minutes
    2 18 minutes 9 minutes
    4 32.4 minutes 8.1 minutes
    If this learning effect continues, what is the average time to perform each of the first eight
    tasks?

    Select one of the following:

    • 7.29 minutes.

    • 8.1 minutes

    • 6.56 minutes

    • 5.90 minutes

    Explanation

    Question 93 of 100

    1

    [93] Gleim #: 1.3.93 -- Source: CMA 1289 4-10
    Learning curves are best used to predict

    Select one of the following:

    • Unit material costs

    • Overhead variances

    • Total unit costs

    • Unit direct labor costs.

    Explanation

    Question 94 of 100

    1

    [Fact Pattern #7]
    Aerosub, Inc. has developed a new product for spacecraft that includes the production of a complex
    part. The manufacture of this part requires a high degree of technical skill. Management believes
    there is a good opportunity for its technical force to learn and improve as they become accustomed to
    the production process. The production of the first unit requires 10,000 direct labor hours.
    Management projects an 80% learning curve and wants to produce a total of eight units.
    [94] Gleim #: 1.3.94 -- Source: CMA 0408 1-142
    (Refers to Fact Pattern #7)
    Upon completion of the eighth unit, Aerosub’s cumulative average direct labor hours required
    per unit of the product will be

    Select one of the following:

    • 5,120 hours

    • 6,400 hours

    • 8,000 hours

    • 10,000 hours

    Explanation

    Question 95 of 100

    1

    [95] Gleim #: 1.3.95 -- Source: CMA 0408 1-145
    (Refers to Fact Pattern #7)
    Upon completion of the eighth unit, Aerosub’s cumulative direct labor hours will be

    Select one of the following:

    • 29,520 hours.

    • 40,960 hours

    • 64,000 hours

    • 80,000 hours

    Explanation

    Question 96 of 100

    1

    [96] Gleim #: 1.3.96 -- Source: CMA 0408 1-149
    (Refers to Fact Pattern #7)
    After completing the first unit, the estimated total direct labor hours Aerosub will require to
    produce the seven additional units will be

    Select one of the following:

    • 30,960 hours

    • 40,960 hours.

    • 56,000 hours.

    • 70,000 hours.

    Explanation

    Question 97 of 100

    1

    [97] Gleim #: 1.3.97 -- Source: CMA 0408 1-144
    A manufacturing company has the opportunity to submit a bid for 20 units of a product on
    which it has already produced two 10-unit lots. The production manager believes that the
    learning experience observed on the first two lots will continue for at least the next two lots.
    The direct labor required on the first two lots was as follows:
    5,000 direct labor hours for the first lot of 10 units
    3,000 additional direct labor hours for the second lot of 10 units
    The learning rate experienced by the company on the first two lots of this product is

    Select one of the following:

    • 40.0%

    • 60.0%

    • 62.5%

    • 80.0%

    Explanation

    Question 98 of 100

    1

    [Fact Pattern #8]
    Proper Propeller, Inc. plans to manufacture a newly designed high-technology propeller for
    airplanes. Proper Propeller forecasts that as workers gain experience, they will need less time to
    complete the job. Based on prior experience, Proper Propeller estimates a 70% cumulative learning
    curve and has projected the following costs.
    Cumulative number Manufacturing Projections
    of units produced Average cost per unit Total costs
    1 $20,000 $20,000
    2 14,000 28,000
    [98] Gleim #: 1.3.98 -- Source: CMA 0408 1-148
    (Refers to Fact Pattern #8)
    If Proper Propeller produces eight units, the average manufacturing cost per unit will be

    Select one of the following:

    • $1,647

    • $6,860

    • $9,800

    • $14,000

    Explanation

    Question 99 of 100

    1

    [99] Gleim #: 1.3.99 -- Source: CMA 0408 1-146
    (Refers to Fact Pattern #8)
    If Proper Propeller produces eight units, the total manufacturing cost will be

    Select one of the following:

    • $50,660

    • $54,880

    • $62,643

    • $112,000

    Explanation

    Question 100 of 100

    1

    [100] Gleim #: 1.3.100 -- Source: CMA 0408 1-151
    (Refers to Fact Pattern #8)
    After completing production of the first propeller, the estimated cost for Proper Propeller to fill
    an order for seven additional propellers is

    Select one of the following:

    • $34,880

    • $54,880

    • $92,000

    • $98,000

    Explanation