Build Your CMA Confidence: 5 Sample Exam Questions

Test your knowledge with these five sample questions (with correct answers) from the CMA exam.

You can also check out these additional practice multiple-choice and essay questions (in PDF format) and try the interactive practice quiz, available on the IMA® (Institute of Management Accountants) website, to assess your skills and expertise. You can also take this free CMA Simulation Exam, available through Prometric.

 

CMA Exam Part 1:

1.  One approach for developing standard costs incorporates communication, bargaining, and interaction among product line managers, the immediate supervisors for whom the standards are being developed, and the accountants and engineers, before the standards are accepted by top management. This approach would best be characterized as a(n):

  1. imposed approach.
  2. authoritative approach.
  3. engineering approach.
  4. participative approach.
  • Correct answer d. The involvement of all those affected in the development of standard costs is the team development approach. The alternative answers presented generally include those who are not operationally involved.

 

2.  A company planned to produce 50,000 units with $500,000 of manufacturing overhead. The budgeted machine hours per unit is two hours. The company’s actual results indicated it spent $505,000 for manufacturing overhead, produced 49,000 units, and used 99,000 machine hours. Under a standard cost system that allocates overhead based upon machine hours, the manufacturing overhead traced to the products would total:

  1. $505,000.
  2. $500,000.
  3. $495,000.
  4. $490,000.
  • Correct answer d.
    $500,000 / (50,000 × 2) = $5 per machine hour; $5 × 49,000 × 2 = $490,000

 

CMA Exam Part 2:

3.  Firms with high degrees of financial leverage would be best characterized as having

  1. high debt-to-equity ratios.
  2. zero coupon bonds in their capital structures.
  3. low current ratios.
  4. high fixed-charge coverage.
  • Correct answer a. Financial leverage is defined as the use of financing with a fixed charge such as interest. Firms with a high degree of financial leverage make significant use of debt and, therefore, have high debt-to-equity ratios.

 

4.  A company sells two products that are manufactured in the same production department on two different machines. The contribution margin per unit of the two products is $120 and $80, respectively. When deciding if the second product should be discontinued, which one of the following pieces of information is needed to make the correct decision?

  1. Alternative use of the second product’s space.
  2. Commissions paid on the second product’s sales.
  3. Depreciation expense of the second product’s machinery.
  4. Production department manager’s salary.
  • Correct answer a. A different product may generate more profit; the relevant information is the opportunity (alternative) use of the space.

 

5.  A rice farmer has decided to protect against possible price fluctuations at the time of harvest by purchasing some rice options. What type of risk response strategy has the rice farmer engaged in?

  1. Avoidance.
  2. Reduction.
  3. Sharing.
  4. Acceptance.
  • Correct answer c. In a financial transaction the purchasing of options to cover price movement fluctuations is considered a risk transfer or risk sharing strategy.