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IMANET Exam CMA Topic 5 Question 97 Discussion

Actual exam question for IMANET's CMA exam

Question #: 97
Topic #: 5

[All CMA Questions]

The Stewart Co. uses the economic order quantity (EOQ) model for inventory management.A decrease in which one of the following variables would increase the EOQ?

AAnnual sales.

BCost per order.

CSafety stock level.

DCarrying costs.

Show Suggested Answer

Suggested Answer: D

A firm enjoys a tax benefit upon recognizing a loss on disposal because the loss reduces book income. The old equipments book value is historical cost ($220,000) minus accumulated depreciation ($208,000).

The tax benefit is the accrual-basis loss on the disposal times the effective tax rate.

by Alonzo at Sep 18, 2024, 02:19 PM

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Pearlene

25 days ago

Hmm, this reminds me of that time I tried to calculate the perfect number of cookies to buy for a party. Spoiler alert: I ended up with way too many.

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Walton

26 days ago

Alright, time to channel my inner accountant. I'm going with D - a decrease in carrying costs. The lower the holding costs, the more you'll want to order at once.

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Magdalene

3 days ago

But what about B - cost per order? Wouldn't a decrease in that also increase the EOQ?

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Darrin

5 days ago

I think you're right, D makes sense. Lower carrying costs means ordering more at once.

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Allene

28 days ago

Wait, what? This is too much math for me. I'm just going to guess and hope for the best.

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Joseph

29 days ago

C, definitely C. Lowering the safety stock level would mean you need to order more, so the EOQ would go up. Easy peasy.

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Loren

5 days ago

But wouldn't increasing the cost per order also increase the EOQ?

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Willard

17 days ago

I agree, lowering the safety stock level would definitely increase the EOQ.

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Vallie

1 months ago

I'm pretty sure it's B - a decrease in the cost per order would increase the EOQ. Gotta love those inventory management models!

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Lore

2 days ago

I agree, it's interesting how small changes in variables can have a big impact on the EOQ.

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Leah

14 days ago

Yeah, that makes sense. It's all about finding that balance in inventory management.

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Michal

15 days ago

I think you're right, a decrease in the cost per order would definitely increase the EOQ.

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Owen

1 months ago

Hmm, a decrease in carrying costs seems like the obvious answer here. The EOQ formula is all about balancing ordering and holding costs.

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Chauncey

2 days ago

C: So, if carrying costs go down, the EOQ would go up to compensate for that change.

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Pansy

3 days ago

B: Yeah, that makes sense. The EOQ model is all about finding that balance between ordering and holding costs.

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Francene

29 days ago

A: I think a decrease in carrying costs would definitely increase the EOQ.

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William

2 months ago

I think a decrease in carrying costs would increase the EOQ because it would make it more expensive to hold inventory.

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Kaitlyn

2 months ago

I disagree, I believe a decrease in annual sales would increase the EOQ.

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Florinda

2 months ago

I think a decrease in cost per order would increase the EOQ.

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