IMA CMA Strategic Financial Management Practice Exams
Last updated on Oct 22,2026- Exam Code: CMA Strategic Financial Management
- Exam Name: CMA Part 2: Strategic Financial Management Exam
- Certification Provider: IMA
- Latest update: Oct 22,2026
CORRECT TEXT
Calculate AMI’s degree of operating leverage. Show your calculations.
Essay
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units.
The operating results are shown below.
Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.
A company plans to purchase equipment for $110 000. The equipment is expected to generate an annual cash flow o( $44 500 (of the next three years The company has a predetermined hurdle rate of 9% Using the internal rate of return (IRR). should the company purchase this equipment?
- A . No, the IRR is less than the hurdle rate
- B . No, the IRR is greater than the hurdle rate
- C . Yes, the IRR is less than the hurdle rate
- D . Yes, the IRR is greater than the hurdle rate
Marsalls Products Inc. manufactures and sells two products CD-ROMs and DVD’s. The latest forecast on me products and their costs tor the coming year is shown in the following table.
Note 1: Fixed manufacturing cost of Si.500 000 per year is allocated to products based on the number of machine hours required to produce the product at a rate of S3 per machine
hour
The Manufacturing Team leader just informed the CEO that a fire occurred at one of the manufacturing lines and that line would be unavailable for the next 12 months. The result is that mere will only be 400 000 machine Hours available The CEO requested the management team to revise the plan for the coming year based on the new constraint. The Marketing Team leader stated that in order to minimize customer complaints about the shortage, a minimum of 100,000 units of each product should be produced With the new information from the Manufacturing and Marketing teams what is the optimal product mix for the coming 12 months” Assume Marsalls can sell allot its production.
- A . 100,000 CD-ROM’s and 150,000 DVD'[s
- B . 120.000 CD-ROM’s 140,000 DVD.
- C . 150.000 CD-ROMS and 125.000 DVD
- D . 200,000 CD-ROm’s a dn 100,000 DVD
CORRECT TEXT
Define the term structure of interest rates and explain now it could impact QDD’s objective of obtaining the lowest coupon rate
Essay
Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows
QDD’s stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3°o risk free rate of return QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock. QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments
CORRECT TEXT
How many units should be produced and sow it AMI’S target net income is $600,000? Snow your calculations.
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units.
The operating results are shown below.
Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.
It there is sufficient capacity to fill the order, which of the following are relevant for a special order decision?
- A . Incremental sales revenue incremental variable cost and incremental fixed cost
- B . Incremental sales revenue, incremental contribution and incremental variable cost
- C . Incremental sales revenue, incremental net income, and incremental variable cost
- D . Incremental fixed cost incremental contribution and incremental variable cost
A capital budgeting analysis involves an initial investment of $500. The expected cash inflow in Year 1 is $300, and the expected cash inflow in Year 2 is $350.
Which one of the following equations can get the correct internal rate of return (IRR) of this project?
- A . $500 = $300/(1 + IRR) + $350/(1 + IRR)
- B . $500 = $300/(1 + IRR) + $350/(1 + IRR)2
- C . -$500 = $300′(1 + IRR) + 5350/(1 + IRR)2
- D . $0 = $300/(1 + IRR) + $350/11 + IRR)2
CORRECT TEXT
Identify the market structure in which OLI operates and explain how OLi’s pricing is affected by this mantel structure
Essay
Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country. It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of 300.
OLI estimates the new sales office can bring 300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic business English. The price of the new course is 500 per student, the variable cost is 300 per student, and the total fixed cost of the new course is 300.000 per year OLI spent 200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI’s highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees in the new course if OLI would agree to a special price of 350 per employee If OLI accepts this offer, an additional 10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.
A company is considering a capital project that includes the purchase of a new machine costing $100,000. The machines estimated useful life is five years with no salvage value. The annual operating cash inflows from the project are shown below.
Given an effective income tax rate of 20% and using straight-line depreciation, what would be the projects net cash flow in Year 3?
- A . $16,000
- B . $20,000
- C . $32,000
- D . $36,000
Studler’s Restaurant is considering a contract to supply the weal senior citizen center with 10,000 meals. Regular sales at regular prices would be unaffected. The food cost for each meal s S3 Additional costs incurred as a result of the contract would De variable overhead of S 50 and variable selling general and administrative costs of S SO per meal sold. The selling price per meal would be $5, A total of $20,000 in fixed costs would be allocated at $2 per meal. The fixed costs are part of an overall total of $500,000 in annual fixed costs incurred regardless of the contract.
What will be the effect on pretax income if Studiers takes the special order?
- A . $10, 000 increase
- B . $10.000 decrease
- C . $20, 000 increase
- D . $20.000 decrease