Question 1

The formula used to calculate the Contribution Margin Ratio is:

Accepted Answer

The Contribution Margin Ratio is calculated using the formula Contribution Margin Ratio = (sales - variable costs) / sales. This formula shows the percentage of each dollar of sales that is available to cover fixed costs and contribute to profits after the variable costs have been paid. Therefore, option D is the correct choice.

Question 2

What is the formula used for to calculate the Total Cost?

Accepted Answer

The formula for calculating total cost is (variable cost per unit * units of production) + Fixed cost. This is because fixed costs are constant regardless of the level of production, while variable costs change based on the number of units produced. Therefore, multiplying the variable cost per unit by the number of units produced and adding the fixed cost gives us the total cost.

Question 3

Although it is desirable to establish attainable goals, it is undesirable to plan lower goals than may be possible, this is known as:

Accepted Answer

Planning lower goals than are possible is known as creating "budgetary slack." This practice can lead to a lack of motivation and underperformance, as employees may feel that the goals are easily attainable and not strive for higher levels of achievement. It is important to establish realistic and challenging goals in order to encourage high performance and progress.

Question 4

The formula to calculate the Sales (units) is:

Accepted Answer

The formula to calculate Sales (units) is Sales (units) = (Fixed costs + Target profit) / Unit contribution margin. This formula takes into account the fixed costs, target profit, and unit contribution margin which is the amount by which the sale of one unit contributes towards covering the fixed costs and generating profit.

Question 5

What provides a separate record for the cost of each quantity of product that passes through the factory?

Accepted Answer

A job order cost system provides a separate record for the cost of each quantity of product that passes through the factory, allowing for accurate tracking of costs and pricing decisions. The other options (B and C) are not specific enough or do not relate directly to the question.

Question 6

The relative mix of a business's variable costs and fixed costs is measured by:

Accepted Answer

The mix of a business's variable costs (costs that vary with the level of production or sales) and fixed costs (costs that remain the same regardless of production or sales) is measured by operating leverage. It is a measure of a company's ability to use fixed costs to generate profits (or losses). A high operating leverage means that a larger portion of a company's costs are fixed, which can lead to higher profits when sales increase, but also greater losses if sales decrease.

Question 7

The purchasing of supplies, services and raw materials for use in the production process, known as:

Accepted Answer

Procurement refers to the process of acquiring supplies, services, and raw materials for use in the production process. Disbursement refers to the outflow of funds to pay for these purchases. Foot-holding and leveraging are not relevant terms in this context.

Question 8

What is the excess of sales revenues over variable costs?

Accepted Answer

The excess of sales revenues over variable costs is known as the contribution margin. Choice B is the only one that correctly identifies this term. Total margin (A) is the excess of sales revenues over all costs, including fixed costs. Absolute margin (C) and computing margin (D) are not standard accounting terms.

Question 9

Design for manufacturability and assembly collaborate on achieving which of the following objectives of product design?

Accepted Answer

Design for manufacturability and assembly aim to achieve multiple objectives of product design, including producibility, cost-effectiveness, and improved quality. By considering manufacturing and assembly processes during the product design phase, companies can create products that are easier, cheaper, and faster to produce while maintaining high quality standards. Therefore, the best answer is D, which includes all of the above options.

Question 10

The recognition of the importance of operations to the firm's success and the involvement of the operations managers in the organization's strategic planning is known as:

Accepted Answer

The recognition of the importance of operations to the firm's success and the involvement of the operations managers in the organization's strategic planning is known as operations strategy. Organizational strategy is a broader term that encompasses all of the functional areas of a firm's operations. Integrated-enterprise strategy may refer to a strategy that involves collaborating with other firms or business units within the same company. Industry current strategy is not a recognized term in the field of operations management.

Question 11

The heart of the organization's production of its product or service is:

Accepted Answer

The technical core refers to the heart of the organization's production process, which includes the technology, knowledge, and skills required to produce the product or service. Centralized planning and control processes are important aspects of organizational management, but they are not necessarily the heart of production. Structural design may play a role in facilitating production, but it is not the core of the production process.

Question 12

The field of management that focuses on the physical production of goods or services and uses specialized techniques for solving manufacturing problems is called:

Accepted Answer

Operations management specifically deals with the physical production of goods or services and focuses on using efficient and effective methods to solve manufacturing problems. Manufacturing management may be considered a subcategory of operations management, but control management is a more generic term that could refer to any type of management focused on monitoring or regulating processes.

Question 13

Which budget presents the expected receipts and payments of cash for a period of time?

Accepted Answer

The cash budget presents the expected receipts and payments of cash for a period of time, providing information about a company's cash position and helping to plan for future cash needs. The other options listed (cost budget, direct labor budget, purchases budget) focus on different aspects of a company's budgeting process, but do not specifically address cash receipts and payments.

Question 14

The level of operations at which a business's revenues and expired costs are exactly equal is called:

Accepted Answer

The break-even point is the level of operations where a business's revenues and expired costs are exactly equal, meaning there is no profit or loss. Option B is incorrect because although sales are a factor in determining the break-even point, it is not the correct terminology. Option C is incorrect because break-even cost is not a commonly used term. Option D is incorrect because break-even analysis is the process of determining the break-even point, not the actual point itself.

Question 15

An approach that requires purchasing to view the entire world as a potential source for parts, components, services, and finished goods is called:

Accepted Answer

The approach that requires purchasing to view the entire world as a potential source for parts, components, services, and finished goods is called global sourcing. This involves identifying and evaluating suppliers from different countries and making decisions based on factors such as cost, quality, lead time, and logistics. It is a strategic approach that allows companies to tap into the advantages of globalization and leverage the strengths of different regions and markets.

Question 16

_____________ requires an analysis of the number of suppliers required currently and in the future for each purchased item.

Accepted Answer

Optimization involves analyzing and maximizing efficiency in various aspects of the supply chain, including the number of suppliers needed for each purchased item. By conducting an analysis and determining the optimal number of suppliers, a company can reduce costs and improve quality control. Neutralization, Balancing, and Counterbalance do not accurately describe this process.

Question 17

The process in which all machines that perform a similar function or task are grouped together is called:

Accepted Answer

The process layout is a type of manufacturing layout where similar machines are grouped together based on their functions or tasks. This helps to improve the flow of materials and reduce the time taken to move products from one stage to another. Therefore, the correct answer is option C.

Question 18

A small or medium sized automated production line that can be adopted to produce more than one product line is known as:

Accepted Answer

A flexible manufacturing system is designed to be adaptable to different product lines, allowing for efficient production of a variety of products without requiring significant reconfiguration or setup time. The other answer choices do not accurately describe this type of production system.

Question 19

The formula to calculate Rate of return in investment (ROI) is:

Accepted Answer

The formula for ROI is calculated by multiplying the profit margin by the investment turnover.

Question 20

An organization that produces non-physical outputs that require customer involvement and cannot be stored in inventory is called:

Accepted Answer

A service organization produces non-physical outputs such as knowledge, experience, and expertise, which require customer involvement and cannot be stored in inventory. Examples of service organizations include banks, hospitals, education institutions, and consulting firms.

Exam 1: Certified Business Manager