Question 1

A company decided to implement life-cycle costing in order to achieve cost leadership in its industry. An accountant prepared a draft presentation explaining that life-cycle costing covers costs from the production stage to the sales and service stage of the product. After reviewing the draft, her supervisor asked the accountant to include a statement that life-cycle costing

Options :

A : capitalizes upstream product-related costs to highlight their value added.

B : also covers upstream preproduction costs since those lock in most downstream costs.

C : identifies the benefits of learning that reduce product costs over the product life cycle.

D : analyzes activities to help improve the value of products over their life cycle.

Answer: B

Question 2

Elite Running Ltd has recently implemented a new evaluation process that bases bonuses primarily on the variance between budgeted andactual cost for cost centers. Individuals with budgeted to actual variances in excess of 20% will receive no bonus. Richard Banes overseesone cost center of Elite and is concerned that his bonus will be adversely impacted. He has a strong personal relationship with the controller,who is responsible for developing, reviewing, and approving budgets. He has asked the controller to accept his budget with estimated costshigher than would be reasonably expected for the next fiscal year. In appreciation for accepting these inflated costs, Banes offered thecontroller season tickets to the sport of his choice. Which one of the following standards of IMA’s Statement of Ethical Professional Practiceis relevant?

Options :

A : Confidentiality, if the controller fails to report the incident to the audit committee.

B : Integrity, if the controller accepts the tickets because acceptance would prejudice his ability to carry out his duties.

C : Competence, if the controller accepts the tickets because he has not performed his duties in accordance with established laws.

D : Credibility, if the controller shares Banes’ offer with another member of the management team.

Answer: B

Question 3

A company has net sales of $4,000,000, operating income of $1,200,000, and net income of $1,000,000. Average total assets are $9,000,000 and average total equity is $7,000,000. What is the company’s return on equity (ROE) and return on assets (ROA)?

Options :

A : ROE is greater than 12%, and ROA is less than 12%.

B : ROE is less than 12%, and ROA is greater than 12%.

C : ROE and ROA are both greater than 12%.

D : ROE and ROA are both less than 12%.

Answer: A

Question 4

Life-cycle costing

Options :

A : Is sometimes used as a basis for cost planning and product pricing.

B : Includes only manufacturing costs incurred over the life of the product.

C : Includes only manufacturing cost, selling expense, and distribution expense.

D : Emphasizes cost savings opportunities during the manufacturing cycle.

Answer: A

Question 5

A company had sales in its first year of operation of $3,450,800 and $4,576,000 in the second year. Salary expense for the business was $568,920 in year one and $622,310 in year two.What is the annual growth rate in salaries?

Options :

A : 9.38%.

B : 18.03%.

C : 8.58%.

D : 13.60%.

Answer: A

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