Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. Financial
  5. CMA

Financial CMA Exam
Certified Management Accountant (Page 28 )

Updated On: 1-Feb-2026
Page 28 of 270
PDF with 1336 Questions
View Related Case Study

Vince, Inc. has developed and patented a new laser disc reading device that will be marketed internationally. Which of the following factors should Vince consider in pricing the device?

I). Quality of the new device
Il). Life of the new device
Ill). Customers' relative preference for quality compared with price

  1. I and II only.
  2. I and Ill only.
  3. II and Ill only.
  4. I, II, and Ill.

Answer(s): D

Explanation:

Product pricing is a function of consumer demand, competitive factors, and the seller's cost structure and profit objectives. Thus, the seller must consider the trade-off between the price and quality effects on demand. A better-quality' product, for example, one with a relatively long useful life, is more costly to produce and therefore sells for a higher price, which in turn reduces the amount demanded.



View Related Case Study

Clay Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs:
Fixed costs $21,000
Variable costs 33,000
The fixed costs include a normal $3,700 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $7,750. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job?

  1. $36,700
  2. $40,750
  3. $54,000
  4. $58,050

Answer(s): B

Explanation:

Given excess capacity, the company presumably will not incur opportunity costs if it accepts the special order. Assuming also that fixed costs will be unaffected, the incremental cost of the order (the minimum acceptable price) will be $40,750 ($33,000 VC + $7,750 cost of external design).



View Related Case Study

When only differential manufacturing costs are taken into account for special-order pricing, an essential assumption is that

  1. Manufacturing fixed and variable costs are linear.
  2. Selling and administrative fixed and variable costs are linear.
  3. Acceptance of the order will not affect regular sales.
  4. Acceptance of the order will not cause unit selling and administrative variable costs to increase.

Answer(s): C

Explanation:

Granting a lower-than-normal price for a special order has potential ramifications for regular sales because other customers may demand the same price. Thus, the decision to consider differential manufacturing costs only should be based on a determination that all other costs are not relevant, that is, that these other costs do not vary with the option chosen.



View Related Case Study

Which of the following cost allocation methods is used to determine the lowest price that can be quoted for a special order that will use idle capacity within a production area?

  1. Job order.
  2. Process.
  3. Variable.
  4. Standard.

Answer(s): C

Explanation:

If idle capacity exists, the lowest feasible price for a special order is one covering the variable cost. Variable costing considers fixed cost to be a period cost, not a product cost. Fixed costs are not relevant to short term inventory costing with idle capacity because the fixed costs will be incurred whether or not any production occurs. Any additional revenue in excess of the variable costs will decrease losses or increase profits.



View Related Case Study

When considering a special order that will enable a company to make use of currently idle capacity. which of the following costs is irrelevant?

  1. Materials.
  2. Depreciation.
  3. Direct labor.
  4. Variable overhead.

Answer(s): B

Explanation:

Because depreciation will be expensed whether or not the company accepts the special order, it is irrelevant to the decision. Only the variable costs are relevant.



Viewing page 28 of 270
Viewing questions 136 - 140 out of 1336 questions



Post your Comments and Discuss Financial CMA exam prep with other Community members:

Join the CMA Discussion