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CMA Final Strategic Cost Management Flashcards
51 question-and-answer cards covering Strategic Cost Management as it is examined in CMA Final. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Strategic Cost Management deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
List major tools/techniques of Cost Reduction.
Value analysis/value engineering, work study (method + work measurement), standardization, variety reduction, business process re-engineering, JIT, Kaizen costing, and quality control.
What is Kaizen Costing?
A continuous improvement approach (applied during the manufacturing stage) that seeks ongoing small incremental cost reductions over a product's production life, complementing target costing used at the design stage.
What is Business Process Re-engineering (BPR) as a cost reduction tool?
Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, service and speed — focusing on whole processes rather than incremental fixes.
Define Value Analysis (VA).
A systematic, organized study of the functions of an existing product/process to provide the required function at the lowest total cost without reducing quality, reliability or performance.
How does Value Engineering differ from Value Analysis?
Value Engineering is applied at the design/development stage of a new product (before production); Value Analysis is applied to existing products already in production. Both aim to maximize value (function/cost).
State the value formula used in Value Analysis.
Value = Function (or Worth/Utility) / Cost. Value is improved by increasing function for the same cost, maintaining function at lower cost, or both.
Name the types of 'value' considered in Value Analysis.
Use (functional) value, Esteem (prestige) value, Exchange (market) value, and Cost value.
List the main phases of a Value Analysis job plan.
Information, Function analysis, Creative (idea generation), Evaluation, Development/Recommendation, and Implementation/Follow-up phases.
What is a Transfer Price?
The price at which goods or services are transferred between divisions, departments or units of the same organization (or associated enterprises), used to record inter-divisional transactions.
What are the main objectives of transfer pricing in a decentralized firm?
Goal congruence, fair divisional performance evaluation, divisional autonomy, and optimal resource allocation/profit maximization for the firm as a whole.
List the principal methods of setting transfer prices.
1) Cost-based (marginal/variable cost, full/absorption cost, cost-plus); 2) Market-based (market price); 3) Negotiated transfer price; 4) Opportunity-cost/dual pricing.
What is a market-based transfer price and when is it ideal?
Setting the transfer price equal to the external market price of the intermediate product. It is ideal when a competitive (perfect) external market exists, promoting goal congruence and fair performance measurement.
What is a cost-plus transfer price?
A transfer price set at the supplying division's cost (variable or full) plus an agreed markup/profit margin, allowing the selling division to earn a profit on internal transfers.
What is a negotiated transfer price and its key drawback?
A price arrived at by bargaining between buying and selling divisions. Drawback: it can be time-consuming, may depend on relative bargaining power, and can lead to sub-optimal (non-goal-congruent) outcomes or conflict.
State the general economic rule for the minimum transfer price.
Minimum transfer price = Marginal (variable) cost of the supplying division + Opportunity cost per unit to the firm of transferring internally. With spare capacity, opportunity cost = 0, so minimum = marginal cost.
What is dual transfer pricing?
A system where the selling division records the transfer at one price (e.g., market or cost-plus) and the buying division records it at another (e.g., marginal cost), with the difference adjusted at the corporate level.
What is the Arm's Length Principle (ALP) in transfer pricing?
The principle that prices for transactions between associated enterprises should be the same as those that would be charged between independent (unrelated) parties in comparable transactions under comparable conditions.
Which sections of the Indian Income-tax Act, 1961 govern transfer pricing?
Sections 92 to 92F (computation of income from international/specified domestic transactions at arm's length), supported by Rules 10A to 10E of the Income-tax Rules.
What is an 'Associated Enterprise' under Indian transfer pricing regulations?
An enterprise that participates directly/indirectly in the management, control or capital of another enterprise (or both controlled by common persons), as defined in Section 92A — making their transactions subject to ALP.
List the methods prescribed under Indian transfer pricing rules for determining arm's length price.
Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and 'Other Method' as prescribed.
What is a 'Specified Domestic Transaction' in Indian transfer pricing?
Certain domestic transactions between related parties (per Section 92BA) exceeding a prescribed monetary threshold, to which arm's length provisions apply even though they are not international transactions.
What is an Advance Pricing Agreement (APA)?
An agreement between a taxpayer and the tax authority (CBDT in India) that fixes, in advance, the transfer pricing method and arm's length price for specified future international transactions, providing certainty and avoiding disputes.
What is the Comparable Uncontrolled Price (CUP) method?
A transfer pricing method that compares the price charged in a controlled transaction (between associated enterprises) with the price charged in a comparable uncontrolled transaction between independent parties to test arm's length compliance.
What factors influence international transfer pricing decisions of multinationals?
Differences in tax rates across countries, customs/import duties, exchange-rate and currency restrictions, profit repatriation rules, inflation, and compliance with each country's transfer pricing regulations.
What this deck covers
The Strategic Cost Management deck follows the CMA Final Strategic Cost Management syllabus — 3 chapters and 9 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 17.0 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 192 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Strategic Cost Management flashcards FAQ
How many Strategic Cost Management flashcards are in this CMA Final deck?
51 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these CMA Final flashcards free?
Yes. The preview here is free to read with no signup, and the full 51-card deck is free inside the Examius app.
What do the Strategic Cost Management cards cover?
They follow the CMA Final Strategic Cost Management syllabus — 3 chapters and 9 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.