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  3. CIA-III

Financial CIA-III Exam (page: 61)
Financial The Certified Internal Auditor Part 3
Updated on: 17-Feb-2026

Viewing Page 61 of 312
CIA-III PDF 1554 Questions

One drawback of business process reengineering BPR), sometimes referred to as business process analysis, is:

  1. Improved efficiency in the business processes analyzed.
  2. Excess of cast over the benefit.
  3. Reduction of operational efficiency.
  4. Employee resistance to change.

Answer(s): D

Explanation:

Business process reengineering BPR), or business process analysis, involves process innovation and process redesign. Instead of improving existing procedures, it finds new ways of doing things. One major drawback of BPR is that employees may be resistant due to fear of layoffs, being replaced, or insecurity about new required skills or tasks that the employee now has to perform.



Heniser Pet Foods manufactures two products, X. and Y. The unit contribution margins for
Products X. and Y are US $30 and US $50, respectively. Each product uses Materials A and

  1. Product uses 6 pounds of Material A and 12 pounds of Material B. Product Y uses 12 pounds of Material A and 8 pounds of Material B. The company can purchase only 1,200 pounds of Material A and 1,760 pounds of Material B. The optimal mix of products to manufacture is:
  2. 146 units of and 0 units of Y.
  3. 0 units of X and 100 units of Y.
  4. 120 units of and 40 units of Y.
  5. 40 units of X. and 120 units of Y.

Answer(s): C

Explanation:

Linear programming is a technique used to maximize a contribution margin function or to minimize a cost function, subject to constraints such as scarce resources or minimum/maximum levels of production. Thus, linear programming is often used for planning resource allocations. In this problem, the equation to be maximized, called the objective function, is: U3 $30)K+ $50Y. This equation is to be maximized subject to the constraints on materials. The two constraint functions are:
Material A: 6X + 12Y < 1,200
Material B: I 2X + 8Y < 1,760
One way to solve this problem is to graph the constraint lines and determine the feasible area. The optimal production level is at an extreme point within the feasible area. The graph shows that a production level of 120 units of and 40 units of Y is a feasible production level that maximizes the contribution margin.



Dale has 20 days to complete production of an order for an important customer. The customer wants 96 units of product that may be painted either red or white. The red units can be produced at a rate of 4 per day. The white units, because of a different quality of paint, can be produced at a rate of 7 per day. The materials for the red units cost US $80 each, while the white units cost US $120 each. Dale wants to keep costs at a minimum.
What is the constraint that expresses the number of units to be produced?

  1. 4R + 7W = 20
  2. R 4) + W = 7) <20
  3. R + W = 20
  4. 4R + 7W = 96

Answer(s): B

Explanation:

The constraint function that expresses the number of units to be produced is R + W = --I 96, but that is not one of the answer choices. Another constraint is that the total quantities of red R) and white W) units must be produced in 20 or fewer days at a rate of 4 red units per day and 7 white units per day. Thus, the time constraint is R - 4) + W - 7) 20.



The data below were gathered on two different machine centers and two products.

Which item below would be part of a linear programming formulation of this problem?

  1. Maximize: Contribution > 4A + 5B.
  2. Subject to: A < O.
  3. Subject to: 2.5A + 4B < 60.
  4. Subject to: 4A + 5B < 130.

Answer(s): C

Explanation:

The linear programming solution is subject to constraints on the availability of machine hours in both centers. For example, products A and B require 2.5 and 4 hours per unit, respectively, in Machine Center 1, but only 60 hours are available. Hence, the optimal production of A and B to the following constraint:
2.5 A + 4B < 60



A firm must decide the mix of production of Product X and Product Y. There are only two resources used in the two products, resources A and B. Data related to the two products is given in the following table:


What is the appropriate objective function to maximize profit?

  1. 3X + 7Y
  2. 2X+Y
  3. 8X + 6Y
  4. 5X + 8Y

Answer(s): C

Explanation:

The objective function is the function to be optimized. This firm wishes to maximize profits on the sales of two products X and Y). Based on profits per unit US $8 and US $6, respectively), the objective function is 8X + 6Y.



Viewing Page 61 of 312



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