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Financial CMA Exam
Certified Management Accountant (Page 3 )

Updated On: 19-Jan-2026
Page 3 of 270
PDF with 1336 Questions
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Zero-based budgeting force managers to?

  1. Estimate a product's revenues and expenses over its expected life cycle.
  2. Prepare a budget based on historical costs.
  3. Formulate a budget by objective rather than function.
  4. Justify all expenditures at the beginning of every budget period.

Answer(s): D

Explanation:

Zero-based budget is a planning process in which each manager must justify his/her department's full budget for each period. The purpose is to encourage periodic reexamination of all costs in the hope that some can be reduced or eliminated.



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In planning and controlling capital expenditures, the most logical sequence is to begin with?

  1. Analyzing capital addition proposals.
  2. Making capital expenditure decision.
  3. Analyzing and evaluating all promising alternatives.
  4. Identifying capital addition projects and other capital needs.

Answer(s): D

Explanation:

Capital budgeting is a long-term planning process for investments. This process beings with the identification of capital needs, that is of projects required to achieve organization goals. The next step is to search for specific investments. The third step is to acquire and analyze information about the potential choices. The fourth step is to select specific investments after considering both qualitative and quantitative factors. The fifth step is to finance the undertakings. Yhe final step is implementation and monitoring.



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Which of the following best describes a market synergy?

  1. Technology transfer from one product to another
  2. Bundling of products distributed through the same channels
  3. Production of multiple products at one facility
  4. Use of complementary management skills to achieve entry into a new market

Answer(s): B

Explanation:

Market synergy arises when products or services have positive complementary effects. Shopping malls reflect this type of synergy. Also, bundling of products, distribution through the same distribution channels, and usage of the same sales force are other examples of market synergies.



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Which of the following is not an example of synergy?

  1. A shopping mail with several businesses providing different products and performing different services
  2. A store provides warranties on automobile parts in order to maximize customer value
  3. A manufacturing company hires a new manager with technological experience lacking in the company
  4. Military Huumvees are converted into sports utility vehicles for sale to civilians

Answer(s): B

Explanation:

Synergy occurs when the combination of formerly separate elements has a greater effect than the sum of their individual effects. It is unclear here whether the store is a car dealership or a parts shop. Therefore, this is seen more as an operational service strategy that seeks to gain a competitive advantage and maximize customer value by providing services such as warranties, rather than market synergy. Market synergy arises when products or services have positive complementary effects. (i.e., a parts shop and a service warranty on parts)



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What type of synergy exists when products or services have positive complementary effects?

  1. Market synergy
  2. Cost Synergy
  3. Technological synergy
  4. Management synergy

Answer(s): A

Explanation:

Market synergy arises when products or services have positive complementary effects Shopping mails reflect this type of synergy.



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