CMA Strategic Financial Management Exam Preparation Material | CMA Part 2: Strategic Financial Management Exam

CORRECT TEXT
How many units should be produced and sow it AMI'S target net income is $600,000? Snow your calculations.
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units.
The operating results are shown below.



Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.

CORRECT TEXT
Explain now QDD's share repurchase plan would affect each of the following measures EPS, the degree of operating leverage, and the interest coverage ratio No calculations required
Essay
Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows



QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3°o risk free rate of return
QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock. QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments

Harris Wholesale Grocery Company has gross sales per year of $7 million and grants credit terms to its customers of 2/5. net 15 As a result. 60% of customers pay on the discount date 20% pay on the net due date, and 20% pay on average 10 days after the due date Assuming that sales are uniform throughout the year and using a 360-day year In the calculation what is the approximate annual amount of discount that Hams customers are allowed to take?

Clark inc, expects to incur the following selected costs an a new product being planned for introduction early next.
✑ Design an development costs of $100,000 that will be incurred this year.
✑ Marketing costs of $50,000 to be incurred %50 this year %50 year
✑ Manufacturing costs of $500,000 to be incurred next year.
✑ In addition to external market factors, the pricing decision should be based on cost.
The product cost that should be used is

It there is sufficient capacity to fill the order, which of the following are relevant for a special order decision?