CMA Final — Answer Writing
Final asks for decisions rather than computations: which cost driver, which structure, which treatment, and why. The numbers still have to be right, but the recommendation on top of them is what is being marked.
Answer Question No. 1 which is compulsory and any four from the rest. Working notes should form part of the answer.
- 1. (a)A company is considering dropping a product line showing a loss. Explain the relevant cost approach to this decision and identify the information you would need.(8 Marks)
- (b)Explain target costing and its application in a competitive market.(6 Marks)
- 2. (a)Compute the learning curve effect on labour cost from the data given above and advise on the quotation.(8 Marks)
One CMA Final answer, from question to marked report
A real question, an attempt with the weaknesses a real attempt has, and the report an AI examiner hands back — in the marking unit CMA Final genuinely uses. This is the whole product; there is nothing else to sign up for.
Scoped to the paper and topic you pick, at the marks it is genuinely set at.
A company is considering dropping a product line showing a loss. Explain the relevant cost approach to this decision and identify the information you would need.
Type it, dictate it, or write on paper and photograph the page — your handwriting is read.
Photographed, read, and marked in red — every expected step scored down the right margin and the omissions written in.
The company should not look at the reported loss because it includes fixed costs which are allocated. Only relevant costs should be considered. If the product gives a positive contribution it should be continued.? Information needed is sales, variable cost and any avoidable fixed cost. Relevant costs are the future costs which will actually change if the decision is taken, and costs already incurred cannot be changed by any decision taken now. Allocated head office expenses, depreciation on machinery already bought and the salaries of staff who will be retained in any case will continue even if the line is dropped, so all of them should be left out of the working. What matters is the sales value which will be lost, the variable costs which will be saved and the fixed costs which will actually stop.
- The three relevance tests stated by name
- Opportunity cost of the released capacity
- Qualitative factors: product line interdependence, customer perception, employee impact
Model answer for this question
Principle: a relevant cost is future, incremental and cash-based; sunk and allocated costs are excluded. Distinguish allocated fixed cost, which persists after the drop, from avoidable fixed cost, which does not. Decision rule: retain if contribution exceeds avoidable fixed cost, otherwise drop, and add the opportunity value of the capacity released. Information required: line-wise sales and variable costs, avoidable fixed cost identification, capacity alternatives, and evidence on demand interdependence. Close on the qualitative factors.
Photograph the page from your phone and the Studio reads your handwriting — the only way to practise the speed and layout the paper actually tests.
Fast enough to write, read the report and rewrite the same answer in one sitting — which is where the improvement actually comes from.
The scoring behind those pen marks: every expected step, what it was worth, what you earned, and a model answer.
- Relevance principle — future, incremental, cash1/2
Applied implicitly; state the three tests explicitly.
- Allocated versus avoidable fixed cost distinguished2/2
Correctly distinguished and correctly used.
- Decision rule stated precisely1/2
Under-qualified — contribution must exceed avoidable fixed cost.
- Qualitative and strategic factors0/2
None given. Complementary demand, capacity release and customer relationships all matter here.
CMA Final at a glance
| Conducting body | The Institute of Cost Accountants of India (ICMAI) |
|---|---|
| Mode | Handwritten, with an elective paper |
| Papers | 8 |
| Marking | CMA Final — step marking |
What CMA Final sets
The papers you sit, and what each is worth.
- Marked to the CMA Final scheme
- Model answer, every time
- Handwriting read from a photo
- AI viva on any topic
- Full timed papers
- Every attempt kept in your archive
- WriteA question, answered and marked.
- VivaQuestioned on Transfer pricing and more.
- Full paperA timed paper, one scorecard.