Free IMA CMA Part 2 (Strategic Financial Management) Business Decision Analysis Practice Questions

Decision Analysis on CMA Part 2 covers cost-volume-profit analysis and relevant costing for short-term decisions (make-or-buy, special orders, drop-or-keep, sell-or-process-further), pricing methods, and marginal analysis. This is the most heavily weighted Part 2 section at 25%.

147 questions 57 easy 60 medium 30 hard 2026 syllabus

Sample Questions

Question 1 Easy
Larkspur Inc. sells a single product for $60 per unit with variable cost of $36 per unit. What is the contribution margin ratio?
Solution
A is correct. Contribution margin per unit = $60 − $36 = $24. Contribution margin ratio = $24 ÷ $60 = 0.40, or 40%.
Question 2 Medium
Glenbrook Industries reported sales of $800,000, fixed costs of $240,000, and a contribution margin ratio of 40%. What is Glenbrook's margin of safety in dollar terms?
Solution
C is correct. Breakeven sales = Fixed costs / CM ratio =240,0000.40=600,000= \frac{240{,}000}{0.40} = 600{,}000. Margin of safety = Actual sales − Breakeven sales:
800,000−600,000=200,000800{,}000 - 600{,}000 = 200{,}000
Question 3 Hard
Linwood Components is launching Product Z. Marketing projects annual sales of 20,000 units at $60 per unit. Linwood requires a 15% return on the $400,000 investment in the product line. Engineering currently estimates the unit cost at $62. Using target costing, by how much must Linwood reduce its per-unit cost to achieve the required return?
Solution
C is correct. Required profit =0.15×$400,000=$60,000= 0.15 \times \$400{,}000 = \$60{,}000. Total target revenue =20,000×$60=$1,200,000= 20{,}000 \times \$60 = \$1{,}200{,}000. Allowed total cost =$1,200,000−$60,000=$1,140,000= \$1{,}200{,}000 - \$60{,}000 = \$1{,}140{,}000. Target unit cost =$1,140,00020,000=$57= \frac{\$1{,}140{,}000}{20{,}000} = \$57. Required reduction =$62−$57=$5= \$62 - \$57 = \$5.
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