IMANET CMA Exam - Topic 1 Question 64 Discussion

Actual exam question for IMANET's CMA exam

Question #: 64
Topic #: 1

[All CMA Questions]

In the decision making process, differential cost is a (n)

ASunk cost of alternative courses of action.

BFixed cost of alternative courses of action.

COpportunity cost of alternative courses of action.

DCost that changes among alternative courses of action.

Show Suggested Answer

Suggested Answer: B

The net initial investment for a capital project consists of three components: the purchase of new equipment, the increase in working capital, and the after-tax proceeds from the disposal of old equipment For this company, the first of these is $54,000 ($50,000 + $4,000), and the second is $1,000. The calculation of the after-tax proceeds from the disposal of the old equipment is as follows:

by Erick at Jan 04, 2023, 12:29 PM

Limited Time Offer

25%

Off

Get Premium CMA Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Isidra

7 months ago

Nope, definitely not sunk costs! It's about what changes.

upvoted 0 times

...

Kathrine

7 months ago

Really? I thought differential costs were just sunk costs.

upvoted 0 times

...

Sabina

7 months ago

Wait, isn't it more about opportunity costs?

upvoted 0 times

...

Tasia

7 months ago

Totally agree, it's all about the costs that vary!

upvoted 0 times

...

Jerilyn

7 months ago

Differential cost refers to costs that change among alternative courses of action.

upvoted 0 times

...

Tandra

8 months ago

I'm pretty confident that differential cost is not a sunk or fixed cost, so that rules out A and B. I think D makes the most sense here.

upvoted 0 times

...

Erick

8 months ago

I keep mixing up differential cost with opportunity cost. I feel like they overlap, but I can't recall which one is which in this context.

upvoted 0 times

...

Kate

8 months ago

I remember practicing a question similar to this, and I think the answer was about costs that vary with different choices. So, I might lean towards option D.

upvoted 0 times

...

Carolynn

8 months ago

I think differential cost refers to costs that change between different options, but I'm not entirely sure if that's the right definition.

upvoted 0 times

...

Viola

8 months ago

Okay, let's see. HTTP, RESTful, and Web Service are all common protocols used in cloud computing, so those are probably not the answer. PPPoE is more for traditional internet connections, so that's my best guess.

upvoted 0 times

...

Sherrell

8 months ago

Okay, I've got an idea. The "ref_contributions" attribute must be related to field decorations somehow. I'll try to reason through the true/false options.

upvoted 0 times

...

Holley

8 months ago

I remember studying something about code versions in our last session, but I feel like it wasn't the main factor for the primary key server selection.

upvoted 0 times

...

Theola

1 year ago

Differential cost, huh? Sounds like something you'd find in a physics lab, not a decision-making process. Well, I'm going with D. Might as well roll the dice on this one!

upvoted 0 times

Ettie

11 months ago

I agree, D) Cost that changes among alternative courses of action.

upvoted 0 times

...

Rosendo

11 months ago

I'll go with D) Cost that changes among alternative courses of action.

upvoted 0 times

...

Lorrine

11 months ago

I'm going with A) Sunk cost of alternative courses of action.

upvoted 0 times

...

Nicholle

11 months ago

I think it's C) Opportunity cost of alternative courses of action.

upvoted 0 times

...

Davida

11 months ago

I'm not sure, but B) Fixed cost of alternative courses of action sounds right to me.

upvoted 0 times

...

Viola

12 months ago

I agree with D) Cost that changes among alternative courses of action.

upvoted 0 times

...

Tammi

12 months ago

I'm going with A) Sunk cost of alternative courses of action.

upvoted 0 times

...

Hyun

12 months ago

I think it's C) Opportunity cost of alternative courses of action.

upvoted 0 times

...

Gladys

1 year ago

Ooh, this is a good one. I was tempted by the opportunity cost angle, but I think the correct answer is D. The cost that changes among the alternatives.

upvoted 0 times