Free CMA Mock Exam – Practice Online Confidently

Donnelly Corporation manufactures and sells T-shirts imprinted with collage names and slogans. Lastyear, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit,The company needed to sell 20.000 shirts to break even. The net income last year was $5,040.Donnelly’s expectations for the coming year include the following:• The sales price of the T-shirts will be $9• Variable cost to manufacture will increase by one-third• Fixed costs will increase by 10%• The income tax rate of 40% will be unchangedSales for the coming year are expected to exceed last year’s by 1000 units. If this occurs. Donnelly’ssales volume in the coming year will be?

AA Company has purchased one share of QQ Company common stock and one put option. It has alsosold one call option. The options are written on one share of QQ Company common stock and havethe same maturity date and exercise price. The exercise price ($40) is the same as the share price.Moreover, the options are exercisable only at the expiration date. Assuming the present value of theexercise price is $36 and the value of the call is $4.50. the value of the put in accordance with theput-call panty theorem is

In equipment-replacement decisions, which one of the following does not affect the decision-makingprocess?

A manufacturer has been approached by a new customer who wants to place a one-time order for acomponent similar to one that the manufacturer makes for another customer. Existing sales will notbe affected by acceptance of this order. The manufacturer has a policy of setting its targeted sellingprice at 60% over full manufacturing cost. The manufacturing costs and the targeted selling price forthe existing product are presented as follows.The manufacturer has excess capacity to produce the quantity of the component desired by the newcustomer. The direct materials used in the component for the new customer would cost themanufacturer $0.25 less than the component currently being made. The variable selling expenses(packaging and shipping) would be the same, or $0.90 per unit. Under these circumstances, theminimum unit price at which the manufacturer would accept the special order is one exceeding.

Assume that each day company writes and receives checks totaling $10,000. If it takes 5 days for thechecks to clear and be deducted from the company’s account, and only 4 days for the deposits toclear, what is the float?