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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:


by Gertude at Feb 26, 2023, 09:04 AM

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Jordan
1 months ago
Let's see, variable costs are those that vary with the level of output. I'd say B) Cost of raw material is the most fitting example here. Not a hard question, really.
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Alfreda
9 days ago
Yeah, that makes sense. It's a clear example of a variable cost.
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Amber
16 days ago
I agree, the cost of raw material definitely varies with the level of output.
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Eve
1 months ago
Hmm, the president's salary as a variable cost? That's like saying the CEO has to take a pay cut every time production goes down. I'll go with B.
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Apolonia
User 3: Definitely, raw material costs fluctuate depending on production needs.
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German
3 days ago
User 2: I think raw material costs are a better example of a variable cost.
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Kimberlie
28 days ago
User 1: I agree, the president's salary doesn't change based on production levels.
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Denise
1 months ago
B) Cost of raw material is the correct answer. Variable costs change depending on the output, while fixed costs like interest charges and property taxes remain the same.
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Ronald
2 months ago
But what about A) The corporate president's salary? It can also change based on performance.
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Nana
2 months ago
I agree with Floyd, raw material cost can vary based on production levels.
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Raymon
2 months 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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James
3 hours ago
The president's salary is also a fixed cost, unlike raw material costs.
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Bea
7 days ago
Interest charges and property taxes are fixed costs that do not change with production.
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Sabra
15 days ago
I agree, the cost of raw material is directly tied to production levels.
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Dorothy
20 days ago
Yes, raw material costs can change based on production levels, making it a clear example of a variable cost.
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Pamella
27 days ago
I agree, the cost of raw material is definitely a variable cost.
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Floyd
2 months ago
B) Cost of raw material is the best example of a variable cost.
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