CMA EXAM QUESTIONS WITH VERIFIED ANSWERS
Budget - Answers - A planning tool, control tool, motivational tool, and a communication
tool. Helps communicate to all employees what goals the firm is trying to accomplish.
Incremental goals - Answers - must be achieved each month or week. especcially
important in seasonal business
controllability - Answers - Extent to which a manager can influence activities and related
revenues and costs.
Controllable costs - Answers - Costs that are under the discretion of a particular
manager
Noncontrollable costs - Answers - Costs to which another level of the organization has
committed, removing the manager's discretion.
The planning process... - Answers - Coordinates the efficeint allocation of organization
resources
Standard costs - Answers - Predetermined expectation about how much a unit of input,
a unit of output, or a given activity should cost.
Authoritative(top-down) Approach to standard setting - Answers - Ensures total
consistency accross all functional areas. Far less complex and time-consuming than
coordinating input from the middle and lower levels
Participative(Grass Roots) Approach - Answers - Uses input from middle- and lower-
level employees. Participation encourages employees too have a sense of ownersip of
the output of the process.
Correlation - Answers - Linear relationship between two variables, expressed
mathematically in terms of the coeffcient of correlation(r). Range from 1(perfect
correlation) to -1(perfect inverse correlation)
Coefficient of determination - Answers - R^2. A measure of how good the fit is between
the two variables. The proportion of the totla variation in the dependent varialbe that is
account for by the independent variable.
Regression(least-squares) analysis - Answers - process of deriving the liner equation
that describes the relationship btwn two variables with a nonzero coeffcient of
correlation. y=a+bx. Good for buydgeting and cost accounting
Learning curve analysis - Answers - Common number is 80%.
Budget - Answers - A planning tool, control tool, motivational tool, and a communication
tool. Helps communicate to all employees what goals the firm is trying to accomplish.
Incremental goals - Answers - must be achieved each month or week. especcially
important in seasonal business
controllability - Answers - Extent to which a manager can influence activities and related
revenues and costs.
Controllable costs - Answers - Costs that are under the discretion of a particular
manager
Noncontrollable costs - Answers - Costs to which another level of the organization has
committed, removing the manager's discretion.
The planning process... - Answers - Coordinates the efficeint allocation of organization
resources
Standard costs - Answers - Predetermined expectation about how much a unit of input,
a unit of output, or a given activity should cost.
Authoritative(top-down) Approach to standard setting - Answers - Ensures total
consistency accross all functional areas. Far less complex and time-consuming than
coordinating input from the middle and lower levels
Participative(Grass Roots) Approach - Answers - Uses input from middle- and lower-
level employees. Participation encourages employees too have a sense of ownersip of
the output of the process.
Correlation - Answers - Linear relationship between two variables, expressed
mathematically in terms of the coeffcient of correlation(r). Range from 1(perfect
correlation) to -1(perfect inverse correlation)
Coefficient of determination - Answers - R^2. A measure of how good the fit is between
the two variables. The proportion of the totla variation in the dependent varialbe that is
account for by the independent variable.
Regression(least-squares) analysis - Answers - process of deriving the liner equation
that describes the relationship btwn two variables with a nonzero coeffcient of
correlation. y=a+bx. Good for buydgeting and cost accounting
Learning curve analysis - Answers - Common number is 80%.
