Certified Management Accounting Exam Hack Part 1

Overview of Section B Preview 01:26

This lecture is a short video on all topics in Section B. Planning, Budgeting and Forecasting. Print off the the IMA Learning Outcomes for Section B - Budgeting that I have restated as questions for you to research.

This section is most important - 30% of MC questions will be in this area. Also a case question will likely be on budgeting - so know the learning objectives in section B 5.

Strategic Planning Overview Preview 02:31

Two basic strategies ;

1. Product differentiation

a. Offering products and services perceived by customers as being superior and

unique

b. Resulting in increase of brand loyalty and prices customers willing to pay

2. Cost leadership

a. Achieving low costs relative to competitors

b. Resulting in increase of market share and growth of company

CMA Learning Outcomes to be tested on Strategic Planning Preview 01:01

10 Past CMA Questions on strategic planning

Ten questions to expand your understanding of strategic planning.

Budgeting Concepts Overview Preview 01:46

IMA learning Outcomes to be tested

Section B.2. Budgeting concepts

The candidate should be able to:

a. describe the role that budgeting plays in the overall planning and performance evaluation process of an organization

b. explain the interrelationships between economic conditions, industry situation, and a firm's plans and budgets

c. identify the role that budgeting plays in formulating short-term objectives and planning and controlling operations to meet those objectives

d. demonstrate an understanding of the role that budgets play in measuring performance against established goals

e. identify the characteristics that define successful budgeting processes

f. explain how the budgeting process facilitates communication among organizational units and enhances coordination of organizational activities

g. describe the concept of a controllable cost as it relates to both budgeting and performance evaluation

h. explain how the efficient allocation of organizational resources are planned during the budgeting process

i. identify the appropriate time frame for various types of budgets

j. identify who should participate in the budgeting process for optimum success

k. describe the role of top management in successful budgeting

l. identify best practice guidelines for the budget process

m. demonstrate an understanding of the use of cost standards in budgeting

n. differentiate between ideal (theoretical) standards and currently attainable (practical) standards

o. differentiate between authoritative standards and participative standards

p. identify the steps to be taken in developing standards for both direct material and direct labor

q. demonstrate an understanding of the techniques that are used to develop standards such as activity analysis and the use of historical data

r. discuss the importance of a policy that allows budget revisions that accommodate the impact of significant changes in budget assumptions

s. explain the role of budgets in monitoring and controlling expenditures to meet strategic objectives

t. define budgetary slack and discuss its impact on goal congruence

16 MC Questions on Budgeting Concepts

Forecasting Techniques Overview Preview 01:33

Read the relevant chapter in your copy of Horngen. Chapter 10 - Determining how costs behave, go over the PPT;s and the notes .Answer the questions in this section.B3 - forecasting techniques. The IMA likes to test learning curves.

IMA Learning Outcomes to be tested

Part 1 – Section B.3. Forecasting techniques

The candidate should be able to:

a. demonstrate an understanding of a simple regression equation

b. define a multiple regression equation and recognize when multiple regression is an appropriate tool to use for forecasting

c. calculate the result of a simple regression equation

d. demonstrate an understanding of learning curve analysis

e. calculate the results under a cumulative average-time learning model

f. list the benefits and shortcomings of regression analysis and learning curve analysis

g. calculate the expected value of random variables

h. identify the benefits and shortcomings of expected value techniques

i. use probability values to estimate future cash flows

9 Minutes on Forecasting Techniques Problems

Try these questions

15 minute assignment on learning Curves

Questions on cumulative learning curves

15 minute assignment on Expected Value Techniques

expected value problems are on every exam. These mC questions are generally worth more marks than conceptual mcq"s

12 minutes assignment on Expected Value texchniques

Expect to see expected value problems

20 Past CMA Questions on forecasting techniques

Budget Methodologies Overview Preview 01:20

The lecture presents the learning objectives as published by the IMA re-phrased as questions. The downloadable file contains past student's answers to some of the questions. Study Horngren and the notes then attempt the questions.

IMA learning outcomes to be tested

Part 1 – Section B.4. Budget methodologies

For each of the budget systems identified (annual/master budgets, project budgeting, activity-based budgeting, zero-based budgeting, continuous (rolling) budgets, and flexible budgeting), the candidate should be able to:

a. define its purpose, appropriate use, and time frame

b. identify the budget components and explain the interrelationships among the components

c. demonstrate an understanding of how the budget is developed

d. compare and contrast the benefits and limitations of the budget system

e. evaluate a business situation and recommend the appropriate budget solution

f. prepare budgets on the basis of information presented

g. calculate the impact of incremental changes to budg

20 minute quiz on Budgeting Methodologies Concepts

Annual Profit plan and Supporting Schedules Overview Preview 02:54

This section is most important. Research answers to the questions in this lecture. Know how the production and purchasing budgets are put together. Also know the supporting schedule for A/R and A/P in the cash flow budget are constructed.The file downloadable file Section B.5 are past candidates notes on the learning ourcomes.

Do the excel problem Vincent Co. and check the solution.

IMA Learning Outcomes to be tested

Section B.5. Annual profit plan and supporting schedules

The candidate should be able to:

a. explain the role of the sales budget in the development of an annual profit plan

b. identify the factors that should be considered when preparing a sales forecast

c. identify the components of a sales budget and prepare a sales budget

d. explain the relationship between the sales budget and the production budget

e. identify the role that inventory levels play in the preparation of a production budget and define other factors that should be considered when preparing a production budget

f. prepare a production budget

g. demonstrate an understanding of the relationship between the direct materials budget, the direct labor budget, and the production budget

h. explain how inventory levels and procurement policies affect the direct materials budget

i. prepare direct materials and direct labor budgets based on relevant information and evaluate the feasibility of achieving production goals on the basis of these budgets

j. demonstrate an understanding of the relationship between the overhead budget and the production budget

k. separate costs into their fixed and variable components

l. prepare an overhead budget

m. identify the components of the cost of goods sold budget and prepare a cost of goods sold budget

n. demonstrate an understanding of contribution margin per unit and total contribution margin, identify the appropriate use of these concepts, and calculate both unit and total contribution margin

o. identify the components of the selling and administrative expense budget

p. explain how specific components of the selling and administrative expense budget may affect the contribution margin

q. prepare an operational (operating) budget

r. prepare a capital expenditure budget

s. demonstrate an understanding of the relationship between the capital expenditure budget, the cash budget, and the pro forma financial statements

t. define the purposes of the cash budget and describe the relationship between the cash budget and all other budgets

u. demonstrate an understanding of the relationship between credit policies and purchasing (payables) policies and the cash budget

v. prepare a cash budge

22 minute quiz on Annual profit Planning Concepts

15 minute assignment on CMA past problems on budgeting

Budgeting questions will be almost a third of the exam. Know how to answer these problems on preparing a budget.

15 Minutes more on CMA past problems on budgeting.

You have to Know how to build a budget if you want to become a CMA.

15 minute Assignment on budgeting problems - past CMA

Take more time to answer these types of questions but make sure you get right

5 more past CMA questions on Budgeting

Make sure you practice these types of questions

Know your Cash Budgeting - 5 problems

Cash Budgets are so very important

The IMA loves to test cash budgets

Know your cash budget - cash disbursements and cash receipts timings.

Challenging Questions on Budgets - Know these

Top-level Planning and Analysis Overview Preview 01:28

IMA Learning Outcomes to be tested

Section B.6. Top-level planning and analysis

The candidate should be able to:

a. define the purpose of a pro forma income statement, a pro forma balance sheet, and a pro forma statement of cash flows; and demonstrate an understanding of the relationship among these statements and all other budgets

b. prepare pro forma income statements based on several revenue and cost assumptions

c. evaluate whether a company has achieved strategic objectives based on pro forma income statements

d. use financial projections to prepare a pro forma balance sheet and a pro forma statement of cash flows

e. identify the factors required to prepare medium- and long-term cash forecasts

f. use financial projections to determine required outside financing and dividend policy

12 Minute quiz on Top Level Planning Concepts

Cost and Variance Measures Overview Preview 03:45

Explain the difference between a static budget and a flexible budget. Explain what is meant by a static budget variance and a flexible budget variance.

7 Past CMA questions on Cost and Variance Measures

Responsibility Centers and reporting Segments Overview Preview 01:57

IMA learning outcomes to be tested

Section C.2. Responsibility centers and reporting segments

The candidate should be able to:

a. identify and explain the different types of responsibility centers

b. recommend appropriate responsibility centers given a business scenario

c. calculate a contribution margin

d. analyze a contribution margin report and evaluate performance

e. identify segments that organizations evaluate, including product lines, geographical areas, or other meaningful segments

f. explain why the allocation of common costs among segments can be an issue in performance evaluation

g. identify methods for allocating common costs such as stand-alone cost allocation and incremental cost allocation

h. define transfer pricing and identify the objectives of transfer pricing

i. identify the methods for determining transfer prices and list and explain the advantages and disadvantages of each method

j. identify and calculate transfer prices using variable cost, full cost, market price, negotiated price, and dual-rate pricing

k. explain how transfer pricing is affected by business issues such as the presence of outside suppliers and the opportunity costs associated with capacity usage

l. describe how special issues such as tariffs, exchange rates, taxes, currency restrictions, expropriation risk, and the availability of materials and skills affect performance evaluation in multinational companies

8 Past CMA questions on Responsibility Centres

Performance Measures Overview Preview 02:50

IMA learning outcomes to be tested

Section C.3. Performance measures

The candidate should be able to:

a. explain why performance evaluation measures should be directly related to strategic and operational goals and objectives; why timely feedback is critical; and why performance measures should be related to the factors that drive the element being measured, e.g., cost drivers and revenue drivers

b. explain the issues involved in determining product profitability, business unit profitability, and customer profitability, including cost measurement, cost allocation, investment measurement, and valuation

c. calculate product-line profitability, business unit profitability, and customer profitability

d. evaluate customers and products on the basis of profitability and recommend ways to improve profitability and/or drop unprofitable customers and products

e. define and calculate return on investment (ROI)

f. analyze and interpret ROI calculations

g. define and calculate residual income (RI)

h. analyze and interpret RI calculations

i. compare and contrast the benefits and limitations of ROI and RI as measures of performance

j. explain how revenue and expense recognition policies may affect the measurement of income and reduce comparability among business units

k. explain how inventory measurement policies, joint asset sharing, and overall asset measurement policies may affect the measurement of investment and reduce comparability among business units

l. define key performance indicators (KPIs) and discuss the importance of these indicators in evaluating a firm

m. define the concept of a balanced scorecard and identify its components

n. identify and describe the perspectives of a balanced scorecard, including financial, customer, internal process, and learning and growth

o. identify and describe the characteristics of successful implementation and use of a balanced scorecard

p. analyze and interpret a balanced scorecard and evaluate performance on the basis of the analysis

q. recommend performance measures and a periodic reporting methodology given operational goals and actual results

10 Past CMA questions on Performance Measures

Measurement Concepts Overview Preview 02:26

IMA learning outcomes to be tested

Section D.1. Measurement concepts

The candidate should be able to:

a. demonstrate an understanding of the behavior of fixed and variable costs in the long and short terms and how a change in assumptions regarding cost type or relevant range affects these costs

b. identify cost objects and cost pools and assign costs to appropriate activities

c. demonstrate an understanding of the nature and types of cost drivers and the causal relationship that exists between cost drivers and costs incurred

d. demonstrate an understanding of the various methods for measuring costs and accumulating work-in-process and finished goods inventories

e. identify and define cost measurement techniques such as actual costing, normal costing, and standard costing; calculate costs using each of these techniques; identify the appropriate use of each technique; and describe the benefits and limitations of each technique

f. demonstrate an understanding of variable (direct) costing and absorption (full) costing and the benefits and limitations of these measurement concepts

g. calculate inventory costs, cost of goods sold, and operating profit using both variable costing and absorption costing

h. demonstrate an understanding of how the use of variable costing or absorption costing affects the value of inventory, cost of goods sold, and operating income

i. prepare summary income statements using variable costing and absorption costing

j. determine the appropriate use of joint product and by-product costing

k. demonstrate an understanding of concepts such as split-off point and separable costs

l. determine the allocation of joint product and by-product costs using the physical measure method, the sales value at split-off method, constant gross profit (gross margin) method, and the net realizable value method; and describe the benefits and limitations of each method

Test Your Understanding - Level A ( Knowledge Questions) Preview 04:17

We go over a number of multiple choice questions that I have chosen to highlight the major concepts.

Level A questions test your knowledge of the concepts in this section.

You can download the questions and try them before viewing the video or you can keep pausing the video and answer before I do,

Test Your Understanding- Level B - (Application Problems) Preview 05:23

We go over a number of multiple choice questions that I have chosen to highlight the major concepts.

 and test your understanding.

Level B questions are designed to test your ability to apply the management concepts in this section.

You can download the questions and try them before viewing the video or you can keep pausing the video and answer before I do,

Problem demo on Variable and absorption costing Preview 04:11

Costing Systems Preview 01:57

Ima Learning Outcomes as questions

Section D.2. Costing systems

For each cost accumulation system identified (job order costing, process costing, activity-based costing, life-cycle costing), the candidate should be able to:

a. define the nature of the system, understand the cost flows of the system, and identify its appropriate use

b. calculate inventory values and cost of goods sold

c. demonstrate an understanding of the proper accounting for normal and abnormal spoilage

d. discuss the strategic value of cost information regarding products and services, pricing, overhead allocations, and other issues

e. identify and describe the benefits and limitations of each cost accumulation system

f. demonstrate an understanding of the concept of equivalent units in process costing and calculate the value of equivalent units

g. define the elements of activity-based costing such as cost pool, cost driver, resource driver, activity driver, and value-added activity

h. calculate product cost using an activity-based system and compare and analyze the results with costs calculated using a traditional system

i. explain how activity-based costing can be utilized in service firms

j. demonstrate an understanding of the concept of life-cycle costing and the strategic value of including upstream costs, manufacturing costs, and downstream costs

8 Past CMA questions on Costing Systems

Questions on ABC Preview 2 pages

Here is a small multiple choice quiz for you to practice. Download a copy, print off and try it. Then check the answers

Overhead Costs Preview 01:59

IMA learning Outcomes to be tested

Section D.3. Overhead costs

The candidate should be able to:

a. distinguish between fixed and variable overhead expenses

b. determine the appropriate time frame for classifying both variable and fixed overhead expenses

c. demonstrate an understanding of the different methods of determining overhead rates, e.g., plant-wide rates, departmental rates, and individual cost driver rates

d. describe the benefits and limitations of each of the methods used to determine overhead rates

e. identify the components of variable overhead expense

f. determine the appropriate allocation base for variable overhead expenses

g. calculate the per unit variable overhead expense

h. identify the components of fixed overhead expense

i. identify the appropriate allocation base for fixed overhead expense

j. calculate the fixed overhead application rate

k. describe how fixed overhead can be over or under applied and how this difference should be accounted for in the cost of goods sold, work-in-process, and finished goods accounts

l. compare and contrast traditional overhead allocation with activity-based overhead allocation

m. calculate overhead expense in an activity-based costing setting

n. identify and describe the benefits derived from activity-based overhead allocation

o. explain why companies allocate the cost of service departments such as Human Resources or Information Technology to divisions, departments, or activities

p. calculate service or support department cost allocations using the direct method, the reciprocal method, the step-down method, and the dual allocation method

q. estimate fixed costs using the high-low method and demonstrate an understanding of how regression can be used to estimate fixed

10 Past CMA questions of Cost Management

Purpose of the Income Statement Preview 4 pages

The income statement measures the success of enterprise operations for a given period of time. This statement assists the business community in determining profitability, investment value, and credit worthiness of a particular business enterprise

Purpose of the Balance Sheet Preview 6 pages

If a balance sheet is examined carefully, users can gain a considerable amount of information related to liquidity, solvency, and financial flexibility.

Purpose of the Cash Flow Statement Preview 1 page

The primary purpose of the statement of cash flows is to allow users to assess the capacity of the enterprise to generate cash and cash equivalents and the needs of the enterprise for cash resources. In accomplishing its purpose, the statement focuses attention on three different activities related to cash flows:

• Operating activities represent the principal revenue-producing activities of the enterprise and all other activities that are not investing or financing activities.
• Investing activities represent the acquisition and disposal of long-term assets and other investments not included in "cash equivalents."
• Financing activities represent activities that result in changes in the size and composition of the equity capital and borrowing of the enterprise.

Preparing a Cash Flow Statement Preview 09:47

15 min. assignment on Cash Flow analysis Problems

Cash Flow questions requiring caulations

Recognition, Measurement, Valuation and Disclosure Preview 04:42

Valuation of Liabilities Preview 4 pages

liabilities involve future disbursements of assets or other future economic benefits (HB Section 1000). A liability is said to have three essential characteris­tics: a) It is an obligation to others that entails settlement by future transfer or use of cash or other assets, provision of goods or services on a determinable date, or on the occurrence of some specified event; b) the entity has little or no discretion to avoid the obligation; and c) the transaction or other event creating the obligation has already occurred.

Revenue Recognition Preview 4 pages

The concept of performance has two components: the company has earned the revenues and the revenues are measurable. Revenues are earned when the entity can measure the revenue and when it has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, that is when the earnings process is complete or virtually completed

32 Past CMA questions on Financial Statements

Governance, Risk and Compliance Preview 02:24

Section E. (15%) Level A- This cognitive level represents the “lowest" or most basic level and includes items that require the recall of facts and the recognition of principles.

Read the notes and any other information that you can find on the net. Develop answers to the learning outcomes that may be tested

Internal Auditing Preview 00:38

Read the notes and any other information that you can find on the net. Develop answers to the learning outcomes that may be tested

12 Past questions on Internal Controls Concepts

CMA Practice Exam #1

Here are 100 multiple choice questions from past CMA exams. Try to complete the exam in three hours. I give some explanations as to why a particular answer is correct - so you can give yourself a few more minutes on this exam if you take the time to read explanations.

Some questions are Level A, others Level B and the more difficult ones are  Level c. Levels B & C are questions you will have to work out "on the side" as they are the application questions and are worth considerably more than the knowledge questions.

Remember that if you do not know the answer immediately - then begin to eliminate possible answers to increase your odds of getting the right answer.

Be sure to answer all questions.

In resources I will let you know which questions are level a,b or c and you can mark your own exam out of 500. You need an overall mark of 360 to proceed to Part 2 of this exam.

Why the IMA tests you with cases (essay questions) Preview 02:13

Analysis of the types of cases Preview 02:07

What the marker is looking for Preview 02:07

Sample Practice exam 1 - Two essay questions - one hour

Here are two past exam questions. Try and complete in one hour. Check thew video solutions,

Video solutions to Sample Practice exam 1 - two essay questions Preview 06:11

Sample Practice Exam 2 - Two Essay Questions

Video Solutions to sample practice exam 2 - essay questions Preview 04:11