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IMANET Exam CMA Topic 3 Question 66 Discussion

Actual exam question for IMANET's CMA exam
Question #: 66
Topic #: 3
[All CMA Questions]

Which of the following is the best example of a variable cost?

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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:


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Ronald
2 days ago
But what about A) The corporate president's salary? It can also change based on performance.
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Nana
3 days ago
I agree with Floyd, raw material cost can vary based on production levels.
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Raymon
6 days ago
The cost of raw material is definitely the best example of a variable cost. It fluctuates with the level of production, unlike the president's salary or property taxes.
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Floyd
16 days ago
B) Cost of raw material is the best example of a variable cost.
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