IMA CMA-Strategic-Financial-Management Exam Questions : CMA Part 2: Strategic Financial Management Exam

Management is responsible for identifying potential events mat could represent opportunities or threats. Which one of the following is not a viable event identification technique?

• A. Loss event data methodologies
• B. Process flow analysis
• C. Review of control categories
• D. Facilitated workshops and interviews

Custom Ceramics produces two hand-painted items a large bowl and a large platter. Relevant information for each of these items is shown below

• A. The company should produce only bowls because the contribution margin per bowl is higher.
• B. The company should produce only bowls because the sales price per Bowl is higher
• C. The company should produce only platters because the contribution margin per painting hour is higher
• D. The company should produce only platters because the variable cost per platter is lower

IF a company does not have a code of conduct, the company most likely

• A. is missing important guidance on ethical decision making
• B. can use its statement of values instead to implement ethics in daily decision making
• C. will lack an expressed statement of values regarding ethical behavior
• D. must find another way to express its ethical principles

Explain the impact of a sales price adjustment on AMI's operating income if AMI' s operating leverage is higher than that of other companies in its market.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL's newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country 's leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL's total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go's sales were only 20% of the industry leader's sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL's requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)

A company with idle capacity has been contacted by a new customer to supply 10,000 units of its products for a special batch order its costs are as follows.

The company's normal soling price is SI00 per unit but the customer is wiling to pay only S70 pet unit Should the company accept the special order''

• A. Yes, because the special order will increase operating profit by S100 000
• B. No, because the special order will reduce operating profit by S50 000
• C. No, because the special order will reduce operating profit by $250 000
• D. Yes, because the special order will increase operating profit by S250 000