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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?

Show Suggested Answer Hide 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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Lizette
21 days ago
Haha, upgrade decision? More like a 'downgrade' decision if you ask me. Who wants to be stuck making Xylene when you could be producing the much cooler sounding X-547?
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Norah
24 days ago
Hmm, I'm leaning towards C. The joint manufacturing costs to produce X-547 could have a significant impact on the upgrade decision. We can't ignore that information.
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Yvonne
2 months ago
I'm not so sure. What about V, the joint manufacturing costs? Shouldn't that be factored in as well? This seems like a tricky decision with a lot of moving parts.
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Iola
22 days ago
I agree. It's important to take all factors into account before making a decision.
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Audrie
26 days ago
Yes, you're right. Joint manufacturing costs to produce X-547 should definitely be considered.
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Charlena
2 months ago
I'm not sure, I think we should also look at item V to fully understand the joint manufacturing costs.
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Francoise
2 months ago
Well, the obvious choice is B. We need to consider all the relevant costs and revenue information to make the upgrade decision, including the selling price of X-547, the variable and fixed costs of the upgrade process, and the selling price of Xylene.
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Han
4 hours ago
Actually, I think option B is the most comprehensive choice. We need to review all the necessary items before making a decision.
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Raina
3 days ago
I'm leaning towards option C. We should also consider the joint manufacturing costs to produce X-547.
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Britt
5 days ago
Agreed, we can't make an informed decision without considering all the relevant information.
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Sang
7 days ago
I think option B is the best choice. We need to look at all the costs and revenue involved in the upgrade decision.
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Bea
2 months ago
I agree with Myong. Those are the key factors to consider for the upgrade decision.
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Myong
2 months ago
I think we should review items I, II, and IV only.
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