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| Vendor: | IMANET |
|---|---|
| Exam Code: | CMA |
| Exam Name: | Certified Management Accountant |
| Exam Questions: | 1336 |
| Last Updated: | January 7, 2026 |
| Related Certifications: | Certified Management Accountant |
| Exam Tags: | Accounts Management Advanced Account ManagersFinancial Analysts |
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A company sells two products, X and Y. The sales mix consists of a composite unit of 2 units of X for even 5 units of Y (2:5). Fixed costs are $49,500 The unit contribution margins for X and Y are $2.50 and $1.20. respectively. If the company had a profit of $22,000. the unit sales must have been?
Unit sales can be computed by adding profit to fixed costs and &widing by the composite contribution margin. Thus. 13.000 units of Product X and 32.500 units of Product Y must have been sold
The profitability index (present value index)
The profitability index, also known as the excess present value index, is the ratio of the present value of future net cash inflows to the initial net cash investment (discounted cash outflows). This tool is a variation of the NPV method that facilitates comparison of different-sized investments.
Which one of the following financial instruments generally provides the largest source of short-term credit for small firms?
Trade credit is a spontaneous source of financing because it arises automatically as part of a purchase transaction. Because of its ease in use, trade credit is the largest source of short-term financing for many firms both large and small.
The accounting rate of return
The accounting rate of return (also called the unadjusted rate of return or book value rate of return) is calculated by dividing the increase in accounting net income by the required investment. Sometimes the denominator is the average investment rather than the initial investment. This method ignores the time value of money and focuses on income as opposed to cash flows.
A company that sells its single product for $40 per unit uses cost-volume-profit analysis in its planning. The compans after-tax net income for the past year was $1.1 88,000 after applying an effective tax rate of 40%. The projected costs for manufacturing and selling its single product in the coming year are in the next column.
The dollar sales volume required in the coming year to earn the same after4ax net income as the past year is
The desired after---tax net income is $1,188,000 (the past year's amount). Given a 40% tax rate, the pretax equivalent is $1,980,000 [$1,188,000 (1.0--- .40)]. Pretax net income equals dollar sales(unit sales x $40), minus total fixed costs, minus total variable costs (unit sales x unit variable cost). Hence, the contribution margin (sales --- variable costs) is equated with the sum of fixed costs and the targeted pretax net income. Unit sales (S) equal 540,000, and sales dollars equal $21,600,000 (540,000 units x $40).
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