Hello CMA Candidates, welcome to another episode of the Free CMA Exam Mastery Course.
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This episode focuses on the widely feared, stress-invoking essay section of the CMA exam. Many candidates worry about this portion of the exam, but knowing exactly what to expect will help you feel more at ease. I will give you an overview of the whole exam, including the percentage each section counts for, and then tell you what you can expect of the essay section in terms of content, structure, and feedback.
Holding the Exam Under the Loop
The exam is designed to test your knowledge and skills in 2 ways, through multiple-choice questions and essay questions. Let’s break it down.
Part 1 – Financial Reporting, Planning, Performance, and Control
The specifics: 4 hours in total, 3 hours for 100 multiple-choice questions (75% of the exam), and two30-minute essay scenarios (25% of the exam).
External Financial Reporting Decisions (15% of the exam)
Planning, Budgeting, and Forecasting (30% of the exam)
Performance Management (20% of the exam)
Cost Management (20% of the exam)
Internal Controls (15% of the exam)
Part 2 – Financial Decision Making
The specifics: 4 hours in total, 3 hours for 100 multiple-choice questions (75% of the exam), and two 30-minute essay scenarios (25% of the exam).
Financial Statement Analysis (25% of the exam)
Corporate Finance (20% of the exam)
Decision Analysis (20% of the exam)
Risk Management (10% of the exam)
Investment Decisions (15% of the exam)
Professional Ethics (10% of the exam)
Knowing what to expect will be a great help to you on the day of the exam. Therefore, you should know in advance what the rules are, how your answers will be graded, and what the lay-out looks like.
What Can You Expect on Exam Day?
Four hours may seem like a long time, but believe me –it’s not! Before starting the essay portion, you have three hours to finish the multiple-choice question section. If you finish that section before the three-hour limit, the remaining time is carried over to the essay section. Otherwise you only have one hour to complete the essay questions. If you take into account that both essay questions present a business scenario with multiple questions, you will start to realize how valuable your time is!
Every essay question focuses on testing your ability to understand certain business concepts and apply them to specific scenarios. The essay section centers around written and quantitative analysis and responses. Therefore, all CMA candidates should be well versed in word processing and electronic spreadsheet programs.
Be careful! If you don’t score at least 50% on the multiple-choice section, you can’t start working on the essay section. If you are not directed to the essay section during the exam, it means you failed the multiple-choice questions.You can’t return to the first section once you’ve advanced to the essay section. In other words, you have to be both fast and accurate.
How Your Essay Responses Will Be Scored
The evaluators use a grading guide to score your essay responses, in which there are more points than can actually be awarded. For example, where 120 possible points are available, only 100 can be awarded to you. The evaluator’s goal is not to deduct points from your essay answers, but to award points.
Bear in mind that partial answers also provide points. For example, if you had to calculate 10ratios but were only able to calculate 6, the experts will award you partial points for your answer. In other words, if you get a tough essay question, try to complete as much of it as possible and be sure to display your calculations. Even if you can’t finish it, you will still get some points.
What Does an Essay Question Look Like?
Below you can see an example question of the essay section. You are supposed to type your response into the text box. If you are familiar with MS Word, this module won’t be an issue at all, since it is even easier. As you can see, the module displays the number of questions in the top left-hand corner and your remaining time in the top right-hand corner.
Knowledge Is Power
The essay questions can be daunting, but with the right preparation and information, you will be able to fulfill them successfully. Don’t worry too much about what can go wrong, but focus on what you know and be aware of what you can expect.
How to Crush Your Essay Questions
The time crunch can be daunting, but don’t let it get to you. By learning a few exam strategies, you’ll be much better equipped to tackle the essay questions. I will provide you with first-rate preparation advice, a vital strategy, twelve unbeatable essay hacks, and one ultimate piece of advice. With the right tools you will ace the essay portion.
What You Can Do to Prepare
The following tips will make your preparation solid as a rock:
Practice, practice, practice. Understand the content of essay questions and practice answering them. It’s very easy to go on a tangent on a response, so practice staying focused.
Calculate what is actually asked of you, not what you think is asked of you. For example, if you are asked to calculate liquidity ratios, don’t calculate activity or solvency ratios because you think they’ll be needed. Stay focused on the task at hand.
Know your formulas very well. You may need to calculate figures before you can begin to answer the question at hand. The best way to memorize formulas is to write them down and remain aware of them. Make sure not to daydream while you practice.
Get your hands on essay question samples to practice writing real essays.
Your Crucial Strategy
Each essay question has clues to guide you to the correct answer, but you need to pay attention to them. Keep an eye open for the following verbs, as they will help you determine the question’s requirements:
If, for example, a question asks you to calculate financial ratios, don’t try to interpret them (unless interpretation is a follow-up question).Your time is valuable, so it’s important to focus your energy on what the question asks you to do. A quick way to know if you are answering correctly is to use the same verbs in your essay. It confirms you are responding to what the question is asking you, and that your response is complete.
If you can prepare an analysis, elaborate on the main points of a specific subject, and examine its implications, you are ready for the essay portion.You’ll be required to support your answers with explanations and calculations, in order to demonstrate your ability to understand and apply your skills to the various scenarios presented on your exam.Don’t forget about the clues mentioned above – they will guide you to the correct answer!
The 12 Ultimate Essay Hacks
Want to avoid hot flushes and minor panic attacks during the exam? These hacks will help you!
Stay positive and stop fearing the essay section.
Write down your calculations, work, and assumptions. It will earn you partial credits.
Expect three to six questions for each essay scenario.
Scroll between questions and scenarios within the essay section before you start answering. It will help you assess how much time you’ll need for the responses.
Pay close attention to verbs. If you read compare or contrast, don’t spend your time defining something. Only do what is asked.
Read the entire question to understand all the requirements.
Focus on organization, clarity, and the use of Standard English.
Be aware that graders look for effective writing skills.
Be concise and to the point. Bullet points are okay.
Don’t leave questions blank. If you are running out of time, at least write an outline of your main points.
Make it easy for the graders to give you points by showing them what you have done.
Use all the time available to you, and use it well.
The Ultimate Piece of Advice
My number-one piece of advice for you is to understand the material you are studying. If you are just memorizing without understanding the why of things, it will be very difficult to pass the exams and do well in the essay questions – and that’s not why you’re doing this. The essay section will test your comprehension of the material in a real business scenario, so make sure you know what you’re talking about. It will be worth it.
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Until next week.
© Copyright 2014 Institute of Certified Management Accountants 3 CMA Part 1 Essay Practice Questions (Answers begin on Page 61) Question 1.1 Coe Company Coe Company is a manufacturer of semi-custom motorcycles. The company used 500 labor hours to produce a prototype of a new motorcycle for one of its key customers. The customer then ordered three additional motorcycles to be produced over the next six months. Coe estimates that the manufacturing process for these additional motorcycles is subject to a 90% learning curve. Although the production manager was aware of the learning curve projections, he decided to ignore the learning curve when compiling his budget in order to provide a cushion to prevent exceeding the budgeted amount for labor. REQUIRED: 1. By using the cumulative average-time learning curve, estimate the total number of labor hours that are required to manufacture the first four units of product. Show your calculations. 2. additional units if the cost of direct labor is $25 per hour. Show your calculations. 3. a. Define budgetary slack. b. Identify and explain two negative effects that budgetary slack can have on the budgeting process. 4. Assume that Coe actually used 1,740 labor hours to produce the four units at a total cost of $44,805. a. If the company ignored the learning curve when creating the budget, for the four units 1. direct labor rate (price) variance. 2. direct labor efficiency variance. b. How would the above two variances differ if the learning curve had been considered when creating the budget? Show your calculations.