CMA Exam: Absolutely Free Online Practice

Free IMANET CMA Exam Questions

Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a

batch-density monitoring device attached to large industrial mixing machines used in flour, rubber,

petroleum, and chemical manufacturing. Precisionmix sells for $900 per unit. The following variable

costs are incurred to produce each Precisionmix device:

Madengrad’s income tax rate is 40% and annual fixed costs are $6,600,000. Except for an operating

loss incurred in the year of incorporation, the firm has been profitable over the last 5 years.For

Madengrad Company to achieve an after-tax net income of $540,000, annual sales revenue must be

Austin Manufacturing, which is subject to a 40% income tax rate, had the following operating data

for the period just ended.

Management plans to improve the quality of its sole product by (1) replacing a component that costs

$3.50 with a higher-grade unit that costs $5.50, and (2) acquiring a $180,000 packing machine. Austin

will depreciate the machine over a 10-year life with no estimated salvage value by the straight-line

method of depreciation. If the company wants to earn after-tax income of $172,800 in the upcoming

period, it must sell