QUESTION: 45 Topic 1: Part 1 Sec One (1 to 46) L1El

Which of the following activities would likely not be a consideration in strategic planning?

New product development
Capital budgeting
Mergers
Materials procurement

Answer(s): D

Explanation:

Strategic, or long-term, planning covers long periods of time and is concerned with matters such as new product development, capital budgeting; major financing, and mergers, acquisitions, and divestitures. Operational matters, such as materials procurement, are not a part of strategic planning, but they are a consideration in short- term, or operational , planning.

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QUESTION: 46 Topic 1: Part 1 Sec One (1 to 46) L1El

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Which one-of the following best describes tactical profit plans?

Details, short-term, broad responsibilities qualitative
Broad, short-term responsibilities at all levels, quantitative
Detailed, short-term responsibilities at all levels, quantitative
Broad long-term broad responsibilities qualitative

Answer(s): C

Explanation:

A tactical profit plan, also called a budget, must be detailed enough that middle managers know exactly what cost and revenue targets they are responsible for. Tactical plans necessarily focus on the short term, and they must detail responsibilities at all levels of the organization. Lastly, they must be quantitative so that managers know exactly what their goals are.

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QUESTION: 177 Topic 4: Part 3 Sec Four (177 to 248)

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The following data pertain to a 4-year project being considered by Metro Industries: · A depreciable as set that costs $1, 200,000 will be acquired on January 1 . The asset, which is expected to have a $200,000 salvage value at the end of 4 years, qualifies as 3- year property' under the Modified Accelerated Cost Recovery System (MACPS). · The new asset will replace an existing asset that has a tax basis of $150,000 and can be sold on the same January 1 for $180,000.
· The project is expected to provide added annual sales of 30,000 units at $20. Additional cash operating costs are: variable, $12 per unit fixed, $90,000 per year. · A $50,000 working capital investment that is fully recoverable at the end of the fourth year is required.
Metro is subject to a 40% income tax rate and rounds all computations to the nearest dollar. Assume that any gain or loss affects the taxes paid at the end of the year in which it occurred. The company uses the net present value method to analyze investments and will employ the following factors and rates.

The discounted cash flow for the fourth year MACPS depreciation on the new asset is

$0
$17,920
$21,504
$26,880

Answer(s): C

Explanation:

Tax law allows taxpayers to ignore salvage value when calculating depreciation under MACPS. Thus1 the depreciation deduction is 7% of the initial $1 .200000 cost, or $84,000. Ata4O% tax rate, the deduction will save the company $33,600 in taxes in the fourth year. The present value of this savings is $21,504 ($33,600 x 0.64 present value of $1 at 12% for four periods).

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QUESTION: 178 Topic 4: Part 3 Sec Four (177 to 248)

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The following data pertain to a 4-year project being considered by Metro Industries:
· A depreciable asset that costs $1 .200.000 will be acquired on January 1. The asset, which is expected to have a $200,000 salvage value at the end of 4 years, qualifies as 3- year property under the Modified Accelerated Cost Recovery System (MACPS). · The new asset will replace an existing asset that has a tax basis of $150,000 and can be sold on the same January 1 for $180,000.
· The project is expected to provide added annual sales of 30,000 units at $20. Additional cash operating costs are: variable, $12 per unit fixed, $90,000 per year. · A $50,000 working capital investment that is fully recoverable at the end of the fourth year is required.
Metro is subject to a 40% income tax rate and rounds all computations to the nearest dollar. Assume that any gain or loss affects the taxes paid at the end of the year in which it occurred. The company uses the net present value method to analwe investments and will employ the following factors and rates.

The discounted, net-of-tax amount that relates to disposal of the existing asset is

$168,000
$169,320
$180,000
$190,680

Answer(s): B

Explanation:

The cash in flow from the existing asset is $180,000, but that amount is subject to tax on the $30,000 gain ($180,000-- $150,000 tax basis). The tax on the gain is $12,000 ($30,000 x 40%). Because the tax will not be paid until year-end1 the discounted value is $10,680 ($12,000 x .89 PV of $1 at 12% for one period). Thus, the net-of-tax inflow is $169,320 ($180,000--$10,680). NOTE: This as set was probably a Section 1231 asset, and any gain on sale qualifies for the special capital gain tax rates. Had the problem not stipulated a 40% tax rate, the capital gains rate would be used. An answer based on that rate is not among the options.

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Free CMA Exam Braindumps (page: 12)

QUESTION: 45 Topic 1: Part 1 Sec One (1 to 46) L1El

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QUESTION: 46 Topic 1: Part 1 Sec One (1 to 46) L1El

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QUESTION: 177 Topic 4: Part 3 Sec Four (177 to 248)

Explanation:

QUESTION: 178 Topic 4: Part 3 Sec Four (177 to 248)

Explanation: