IMA CMA Part 1: Financial Planning - Performance and Analytics Sample Questions:

1. Music Masters Inc. has three departments: Instrument Sales, Music Instruction and Recording Studio The three segments are staffed by different customer service personnel but share space and administrative staff Condensed income statement information follows.

Management wants to eliminate the Recording Studio because of its losses. Because of the configuration of the building it is doubtful the space could be sublet and none of the common fixed costs would be eliminated However, additional space allocated to either Instrument Sales or Music Instruction might increase revenue from those sources In making this decision, all of the following outcomes are correct except.

A) net income will remain the same if the Recording Studio is eliminated and Music Instruction revenue increases $20,000
B) elimination of the Recording Studio will decrease net income by $10,000
C) elimination of the Recording Studio will increase net income by $10,000
D) net income will increase if the Recording Studio is eliminated and instrument Sales increase $25,000

2. To prevent cyoeratiacks. a company recently implemented penetration testing wnich one of tne following statements best descnbes this test?

A) A series of attempts to flood the company's network with traffic
B) An email testing employee compliance with phishing guidelines
C) An authorized attempt to break through the company's firev.au
D) A staged break-in of the company s server room after business hours

3. would you recommend any changes to the job responsibilities of ZFl's payroll administrator from an internal control perspective? Explain why.
Essay
Zhiliang Foods Inc. (ZFI) is a privately-held food distributor ZFI has two production departments' the Meat Department is labor-intensive. while the Bakery Department is highly automated ZFI applies a single overhead allocation rate, using the number of pounds produced as an allocation base for the whole company The expected annual overhead costs of ZFI for 100 million pounds produced are as follows (¥ in millions).

ZFI has one payroll administrator in its Human Resources department, but most of the payroll related work is outsourced to a payroll service provider ZFI's payroll administrator is responsible for tracking the list of current employees and maintaining the most up-to-date employee information, including bank accounts for payroll direct deposits.
Each pay period, the payroll administrator emails the information for all current employees' hours worked to the payroll service provider. The service provider then processes the payroll, makes direct deposits to employees' bank accounts, mails payroll stubs to employees' homes and emails payroll reports to ZFI's payroll administrator. The payroll administrator then makes payroll journal entries to ZFI's accounting system based on the payroll reports received ZFI's accountant prepares a bank reconciliation each month to ensure ZFI s payroll payments on ZFI's bank statement match the amounts shown on the payroll reports from the service provider.
ZFl's management is evaluating the purchase of data encryption software and human resources management software next year. The human resource management software is expected to provide various human resources and payroll-related functions.
In addition, the human resource software can generate a report to indicate the monthly employee turnover rate and the average service length of employees who have resigned. The system can also generate a report to indicate the main reasons for resignations and identify current employees who are at risk of resigning. The system will recommend actions to help retain these employees, such as more training opportunities or a pay raise.

4. A company has prepared the following pro forma income statements. It plans to sell 10,000 units in the current year and 11.500 units next year.

A) Increase gross profit margin by 15%
B) Increase sales revenue by 15%.
C) Reduce operating expenses by $1.00 per unit
D) Reduce cost of goods sold by $1.00 per unit

5. After a recent earthquake in a nearby city the board of directors of a company has requested a review of the company s disaster recovery plan Which of the following would be classified as a weakness in the company's disaster recovery plan?

A) Members of the company's disaster recovery team maintain current copies of the disaster recovery plan m their homes.
B) Management has decided not to maintain a hot site because it was determined that the costs outweigh the benefits.
C) The details of the disaster recovery plan stipulate that internal audit should review the plan every other year rather than annually.
D) A cold site with backup data and documents is maintained on the basement level of the company s headquarters.

Solutions: