Question 1

A manufacturing company is attempting to implement a just-in-time(JIT)purchase policy system by

negotiating with its primary suppliers to accept long-term purchase orders which result in more

frequent deliveries of smaller quantiteies of raw materials.if the JIT purchase policy is successful in

reducing the total inventory costs of the manufacturing company,which of the following

combinations of cost changes would be most likely to occur?

Cost category Cost category

To increase to decrease

Options :

A : Purchasing costs Stockout costs

B : Purchasing costs Quality costs

C : Quality costs Ordering costs

D : Stockout costs Carrying costs

Answer: C

Question 2

Which one of the following transactions would increase the current ratio and decrease net profit?

Options :

A : A federal income tax payment due from the previous year is paid

B : A stock dividend is declared

C : Uncollectible accounts receivable are written off against the allowance account

D : Vacant land is sold for less than the net book value

Answer: D

Question 3

Which one of the following would not be considered a caring cost associated with inventor?

Options :

A : Insurance costs.

B : Cost of capital invested in the inventory.

C : Cost of obsolescence.

D : Shipping costs

Answer: D

Question 4

The technique that measures the estimated performance of a capital investment by dividing the

project’s annual after4ax net income by the average investment cost is called the

Options :

A : Average rate of return method.

B : Internal rate of return method.

C : Capital asset pricing model.

D : Accounting rate of return method.

Answer: D

Question 5

Willis, Inc. has a desired rate of return of 15% and is considering the acquisition of a new machine

which costs $400,000 and has a useful life of 5 years. Willis projects that earnings and cash flow will

increase as follows:

What is the payback period of Willis’ investment?

Options :

A : 1.5 years.

B : 3.0 years.

C : 3.3 years.

D : 4.0 years.

Answer: B

Higher Test Marks with Free Online CMA Exam Practice

Buying Options: