IMANET Exam CMA Topic 5 Question 107 Discussion

Actual exam question for IMANET's CMA exam

Question #: 107
Topic #: 5

[All CMA Questions]

Copeland Inc. produces X-547 in a joint manufacturing process. The company is studying whether to sell X-547 at the split-off point or upgrade the product to become Xylene. The

following information has been gathered:

I . Selling price per pound of X-547

II . Variable manufacturing costs of upgrade process

Ill . Avoidable fixed costs of upgrade process

IV . Selling price per pound of Xylene

V . Joint manufacturing costs to produce X-547

Which items should be reviewed when making the upgrade decision?

AI, II, and IV only.

BI, II, Ill, and IV only.

CI, II, IV, and V only.

DII and Ill only.

Show Suggested Answer

Suggested Answer: B

If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].

by Dong at Feb 08, 2025, 05:08 PM

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15 days ago

I think we should review items I, II, and IV only.

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