IMANET Exam CMA Topic 1 Question 64 Discussion

Actual exam question for IMANET's CMA exam

Question #: 64
Topic #: 1

[All CMA Questions]

In the decision making process, differential cost is a (n)

ASunk cost of alternative courses of action.

BFixed cost of alternative courses of action.

COpportunity cost of alternative courses of action.

DCost that changes among alternative courses of action.

Show Suggested Answer

Suggested Answer: B

The net initial investment for a capital project consists of three components: the purchase of new equipment, the increase in working capital, and the after-tax proceeds from the disposal of old equipment For this company, the first of these is $54,000 ($50,000 + $4,000), and the second is $1,000. The calculation of the after-tax proceeds from the disposal of the old equipment is as follows:

by Erick at Jan 04, 2023, 12:29 PM

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Theola

7 days ago

Differential cost, huh? Sounds like something you'd find in a physics lab, not a decision-making process. Well, I'm going with D. Might as well roll the dice on this one!

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Gladys

8 days ago

Ooh, this is a good one. I was tempted by the opportunity cost angle, but I think the correct answer is D. The cost that changes among the alternatives.

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