NEWEST Certified Management
Accountant (CMA) Exam | ULTIMATE
EXAM WITH CORRECT ANSWERS AND
RATIONALES FOR CERTIFICATION
SUCCESS
1. The primary goal of financial management is to:
A) Maximize net income
B) Maximize shareholder wealth
C) Minimize taxes
D) Maximize market share
E) Minimize risk
Correct answer: B
Rationale: Shareholder wealth maximization is the
primary goal.
2. A company has sales of $1,000,000, variable costs
of $600,000, and fixed costs of $200,000. The
contribution margin ratio is:
A) 20%
B) 30%
C) 40%
,D) 50%
E) 60%
Correct answer: C
Rationale: Contribution margin = 1,000,000 - 600,000
= 400,000. Ratio = 400,000/1,000,000 = 40%.
3. The break-even point in units is calculated as:
A) Fixed costs / contribution margin per unit
B) Fixed costs / variable cost per unit
C) (Fixed costs + target profit) / contribution margin
ratio
D) Sales / contribution margin ratio
E) Variable costs / contribution margin
Correct answer: A
Rationale: Breakeven units = Fixed costs / (price -
variable cost per unit).
4. A company has a current ratio of 2.5 and a quick
ratio of 1.5. Inventory is $200,000. Current liabilities
are:
A) $200,000
B) $250,000
,C) $300,000
D) $400,000
E) $500,000
Correct answer: A
Rationale: Let CL = x, CA = 2.5x. Quick assets = CA -
Inv = 2.5x - 200,000. Quick ratio = (2.5x - 200,000)/x =
1.5 ⇒ 2.5x - 200,000 = 1.5x ⇒ x = 200,000.
5. In variance analysis, a favorable material price
variance occurs when:
A) Actual price is less than standard price
B) Actual price is greater than standard price
C) Actual quantity used is less than standard quantity
D) Actual quantity used is greater than standard
quantity
E) Actual price equals standard price
Correct answer: A
Rationale: Favorable price variance means actual
cost per unit is less than standard.
6. A company has an operating leverage of 3.0. If
sales increase by 10%, operating income will
increase by:
, A) 10%
B) 20%
C) 30%
D) 40%
E) 50%
Correct answer: C
Rationale: Operating leverage = % change in
operating income / % change in sales ⇒ 3 = X / 10% ⇒
X = 30%.
7. The net present value (NPV) of a project is $50,000.
The initial investment is $500,000. The profitability
index is:
A) 0.1
B) 0.9
C) 1.0
D) 1.1
E) 1.2
Correct answer: D
Rationale: PI = (NPV + Initial) / Initial =
550,000/500,000 = 1.1.
Accountant (CMA) Exam | ULTIMATE
EXAM WITH CORRECT ANSWERS AND
RATIONALES FOR CERTIFICATION
SUCCESS
1. The primary goal of financial management is to:
A) Maximize net income
B) Maximize shareholder wealth
C) Minimize taxes
D) Maximize market share
E) Minimize risk
Correct answer: B
Rationale: Shareholder wealth maximization is the
primary goal.
2. A company has sales of $1,000,000, variable costs
of $600,000, and fixed costs of $200,000. The
contribution margin ratio is:
A) 20%
B) 30%
C) 40%
,D) 50%
E) 60%
Correct answer: C
Rationale: Contribution margin = 1,000,000 - 600,000
= 400,000. Ratio = 400,000/1,000,000 = 40%.
3. The break-even point in units is calculated as:
A) Fixed costs / contribution margin per unit
B) Fixed costs / variable cost per unit
C) (Fixed costs + target profit) / contribution margin
ratio
D) Sales / contribution margin ratio
E) Variable costs / contribution margin
Correct answer: A
Rationale: Breakeven units = Fixed costs / (price -
variable cost per unit).
4. A company has a current ratio of 2.5 and a quick
ratio of 1.5. Inventory is $200,000. Current liabilities
are:
A) $200,000
B) $250,000
,C) $300,000
D) $400,000
E) $500,000
Correct answer: A
Rationale: Let CL = x, CA = 2.5x. Quick assets = CA -
Inv = 2.5x - 200,000. Quick ratio = (2.5x - 200,000)/x =
1.5 ⇒ 2.5x - 200,000 = 1.5x ⇒ x = 200,000.
5. In variance analysis, a favorable material price
variance occurs when:
A) Actual price is less than standard price
B) Actual price is greater than standard price
C) Actual quantity used is less than standard quantity
D) Actual quantity used is greater than standard
quantity
E) Actual price equals standard price
Correct answer: A
Rationale: Favorable price variance means actual
cost per unit is less than standard.
6. A company has an operating leverage of 3.0. If
sales increase by 10%, operating income will
increase by:
, A) 10%
B) 20%
C) 30%
D) 40%
E) 50%
Correct answer: C
Rationale: Operating leverage = % change in
operating income / % change in sales ⇒ 3 = X / 10% ⇒
X = 30%.
7. The net present value (NPV) of a project is $50,000.
The initial investment is $500,000. The profitability
index is:
A) 0.1
B) 0.9
C) 1.0
D) 1.1
E) 1.2
Correct answer: D
Rationale: PI = (NPV + Initial) / Initial =
550,000/500,000 = 1.1.
