BUS 475 Final Exam 6
1) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. General corporate liability insurance
B. Cost of landscaping the corporate office
C. The western division’s vice president’s salary
D. Factory janitor
2) Balance sheet accounts are considered to be __________.
A. permanent accounts
B. capital accounts
C. nominal accounts
D. temporary stockholders’ accounts
3) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.
4) The major reporting standard for management accounts is __________.
A. the Sarbanes-Oxley Act of 2002
B. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management
C. generally accepted accounting principles
D. relevance to decisions
5) The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. generally accepted accounting principles
B. generally accepted accounting standards
C. standards of financial reporting
D. operating guidelines
6) Managerial accounting __________.
A. is governed by generally accepted accounting principles
B. is concerned with costing products
C. places emphasis on special-purpose information
D. pertains to the entity as a whole and is highly aggregated
7) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?
B. 4,600 units
C. 2,133 units
D. 6,200 units
8) These are selected account balances on December 31, 2008.
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
9) Which one of the following is a product cost?
A. Office salaries
B. Indirect labor
C. Advertising costs
D. Sales person’s salaries
10) One of Astro Company’s activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?
11) The income statement and balance sheet columns of Pine Company’s worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr .Dr .Cr.
$58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
A. $10,000 income
B. $48,000 income
C. not determinable
D. $10,000 loss
12) Multinational corporations __________.
A. are U.S. companies that sell goods and services in other countries
B. are U.S. companies that trade their securities on the exchanges in other countries
C. are required to use international accounting standards
D. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
13) What exists when budgeted costs exceed actual results?
A. A favorable difference
B. An excess profit
C. A budgeting error
D. An unfavorable difference
14) The primary purpose of the statement of cash flows is to __________.
A. prove that revenues exceed expenses if there is a net income
B. facilitate banking relationships
C. provide information about the investing and financing activities during a period
D. provide information about the cash receipts and cash payments during a period
15) A logical starting point from which the study of international trade begins is __________.
A. the recognition that government intervention in markets sometimes enhances the economic welfare of the society
B. the principle of comparative advantage
C. the recognition that not all markets are competitive
D. the principle of absolute advantage
16) Resources are __________.
A. plentiful for households but scarce for economies
B. plentiful for households and plentiful for economies
C. scarce for households but plentiful for economies
D. scarce for households and scarce for economies
17) Which of the following statements about GDP is correct?
A. Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
B. GDP increases if the total population increases.
C. GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
D. GDP is to a nation’s economy as household income is to a household.
18) One characteristic of an oligopoly market structure is:
A. firms in the industry have some degree of market power.
B. the actions of one seller have no impact on the profitability of other sellers.
C. firms in the industry are typically characterized by very diverse product lines.
D. products typically sell at a price that reflects their marginal cost of production.
19) If a binding price ceiling were imposed in the computer market, __________.
A. the supply of computers would decrease
B. the quality of computers would increase
C. the demand for computers would increase
D. a shortage of computers would develop
20) The general term for market structures that fall somewhere in-between monopoly and perfect competition is __________.
A. imperfectly competitive markets
B. oligopoly markets
C. monopolistically competitive markets
D. incomplete markets
21) A rational decision maker __________.
A. ignores the likely effects of government policies when he or she makes choices
B. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
C. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions
D. ignores marginal changes and focuses instead on “the big picture”
22) The political business cycle refers to __________.
A. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected
B. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle
C. changes in output created by the monetary rule the Fed must follow
D. the fact that about every four years some politician advocates greater government control of the Fed
23) Real GDP __________.
A. evaluates current production at the prices that prevailed in some specific year in the past.
B. is not a valid measure of the economy’s performance, since prices change from year to year.
C. is a measure of the value of goods only; it excludes the value of services.
D. evaluates current production at current prices.
24) The part of the balance of payments account that lists all long-term flows of payments is called the:
A. financial and capital account.
B. government financial account.
C. balance of trade.
D. current account.
25) In general, the longest lag for __________.
A. both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
B. monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
C. fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
D. both fiscal and monetary policy is the time it takes to change policy
26) The balance of payment account is made up of:
A. an import account and an export account.
B. an investment account and a consumption account.
C. a monetary account and a fiscal account.
D. a current account and a financial and capital account.
27) Most economists use the aggregate demand and aggregate supply model primarily to analyze _______.
A. the effects of macroeconomic policy on the prices of individual goods
B. the long-run effects of international trade policies
C. productivity and economic growth
D. short-run fluctuations in the economy
28) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n):
A. Large corporation
B. Small business
C. Online Business
D. Multinational corporation
E. Entrepreneurship venture
29) Which of these describes a vision, as it pertains to leadership?
A. A mental image of a future state of an organization
B. The method through which leaders achieve goals
C. A short-term goal of an organization
D. A long-term goal of an organization
E. Likely to land you in a padded room
30) As related to managing of human resources, diversity refers to:
A. Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
B. Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
C. Differences in retention strategies (such as training, hiring, incentives, etc)
D. Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
E. Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
31) Which of the following best describes a mental image of a possible and desirable future state of the organization?
C. Horizontal communication
E. Vertical communication
32) A leader is:
A. The top level manager in a firm or business
B. A strategic level manager
C. Someone well-respected by others
D. Someone with authority over others
E. Someone who influences others to attain goals
33) Teams that operate separately from the regular work structure and exist temporarily are known as:
A. Parallel teams
B. Self-designing teams
C. Transnational teams
D. Management teams
E. Self-managed teams
34) Building a dynamic organization is another way of describing which function of management?
35) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:
E. Managerial ethics
36) The pursuit of lucrative opportunities by enterprising individuals is called:
D. Business incubating
E. Social experimentation
37) The best way for an employer to find out if a potential employee can do a job is by __________.
A. using a written test
B. using the interview process
C. administering an IQ test
D. having them spend a day in the office
E. using a performance simulation test
38) Having individuals actually do the job they are applying for as a test to see if they can do it is _______.
A. an approach with high face validity
B. an approach with low reliability
C. an approach with high reliability
D. an informal means of screening candidates
E. a formal means of screening candidates
39) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?
A. Entrepreneurs are their own bosses and completely independent
B. Anyone can start a business
C. Successful entrepreneurs take very careful, calculated risks
D. Money should not be considered a start-up ingredient
E. All entrepreneurs need venture capital in order to get started
40) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
A. Interpersonal and communication
B. Conceptual and decision
41) To be competitive in a global economy, Europeans must increase their level of:
B. Population density
C. Philanthropic contributions
D. Espionage activity
E. Financial subsidy
42) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.
For this sample, which measure of central tendency is least representative of the “typical” student?
43) From its 32 regions, the Federal Aviation Administration selects 5 regions, and then randomly audits 20 departing commercial flights in each region for compliance with legal fuel and weight requirements. This is __________.
A. judgment sampling
B. stratified random sampling
C. simple random sampling
D. cluster sampling
44) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.
In determining the p-value for reporting the study’s findings, which of the following is true?
A. The p-value is greater than .05.
B. The p-value is less than .05.
C. The p-value cannot be determined without specifying .
D. The p-value is equal to .05.
45) A financial institution wishes to estimate the mean balances owed by its credit card customers. The population standard deviation is estimated to be $300. If a 98 percent confidence interval is used and an interval of ±$75 is desired, how many cardholders should be sampled?
46) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice?
A. ± .00329
B. ± .04472
C. ± .08765
D. ± .07357
47) Use the following table to answer question:
P(MA) is approximately _____.
48) Which one of the following statements concerning production and staffing plans is best?
A. A staffing plan is the intermediate link between the business plan and the master production schedule.
B. A master production schedule is a projected statement of income, costs, and profits.
C. Aggregation can be performed along three dimensions: product families, labor, and time.
D. Production plans are based primarily on information from the master production plan.
49) Suppose the estimated quadratic model Yt = 500 + 20 t – t2 is the best-fitting trend of sales of XYZ Inc. using data for the past twenty years (t = 1, 2,.., 20).
Which statement is incorrect?
A. Latest year sales are no better than in year zero.
B. Sales are increasing by about 20 units per year.
C. The trend was higher in year 10 than in year 20.
D. The turning point would be in period 10.
50) You are faced with a linear programming objective function of:
Max P = $20X + $30Y
and constraints of:
3X + (Constraint A)
5X – (Constraint B)
You discover that the shadow price for Constraint A is 7.5 and the shadow price for Constraint B is 0. Which of these statements is TRUE?
A. For every additional unit of the objective function you create, you lose 0 units of B.
B. The most you would want to pay for an additional unit of A would be $7.50.
C. You can change quantities of X and Y at no cost for Constraint B.
D. For every additional unit of the objective function you create, the price of A rises by $7.50.
51) Which one of the following statements concerning production and staffing plans is best?
A. Production and staffing plans attempt to achieve several objectives, all of which must be consistent with one another.
B. When production and staffing plans are made, aggregation can be performed only along two dimensions: products and time.
C. The impact of production and staffing plans cuts across several functional areas of the firm.
D. Production and staffing plans specify production rates, workforce levels, and inventory holdings, but do not account for capacity limitations because they are aggregated.
52) Queuing models use an A/B/C notation. What do these variables represent?
A. average time between arrivals/average service time/number of parallel servers
B. maximum time between arrivals/maximum allowable service time/maximum number of parallel servers
C. minimum time between arrivals/minimum allowable service time/minimum number of parallel servers
D. distribution of time between arrivals/distribution of service times/number of parallel servers
53) The Global, Web-Based Platform enables individuals to do which of the following?
A. access information, services, and entertainment
B. produce and sell goods and services
C. all of these are true
D. exchange knowledge
E. connect, compute, communicate, collaborate, and compete everywhere and all the time
54) Networks enable which of the following applications?
B. Web services
C. All of the these
55) Which of the following is NOT an advantage of the buy option for acquiring IS applications?
A. software can be tried out
B. company will know what it is getting
C. saves money
D. saves time
E. few types of off-the-shelf software are available, thus limiting confusion
56) Zappos built the majority of its information systems using which of the following?
A. Proprietary software
B. Free software
D. Open source software
E. Vendor software
57) When customers access a Web site and make purchases, they generate __________.
B. Web data
C. Hyperlink data
D. Clickstream data
E. Tracking cookies
58) International Game Technology’s new ERP system produced all of the following benefits except:
A. Company was able to maintain its original business processes
B. ERP system connected the company’s global operations
C. The company gained flexibility in manufacturing products
D. Operations employees were able to access manufacturing process details at their workstations
E. Integrated the company’s business functions
59) A company wants to use data from past promotional mailings to identify people who would likely respond favorably to future mailings. This company would most likely use _____.
A. multidimensional data analysis
B. neural networks
C. expert systems
D. data mining
E. structured query language
60) Which of the following statements about information systems is not correct?
A. Information systems tend to follow the structure of the organization.
B. Information systems are based on the needs of employees.
C. Any information system can be strategic.
D. Managing information systems is difficult.
E. Information systems are concentrated in the IS Department.
61) Computer support is greatest for which of the following problems?
A. Unstructured and operational control
B. Structured and operational control
C. Semistructured and management control
D. Structured and management control
E. Semistructured and strategic planning
62) Competitive advantage for an organization manifests as all of the following except:
A. higher quality
B. increased time to market
C. increased profits
D. increased speed
E. lower costs
63) Mortgage bonds:
A. are secured by a lien on real property.
B. usually pay little or no interest.
C. can only be issued by financial institutions.
D. are a type of debenture.
64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
A. Cash flow statement
B. Income statement
C. Quarterly statement
D. Balance sheet
65) You hold a portfolio with the following securities:
Security of Portfolio Beta Return
X Corporation 20% 1.35 14%
Y Corporation 35% 0.95 10%
Z Corporation 45% 0.75 8%
Compute the expected return and beta for the portfolio.
A. 9.9%, 1.02
B. 10.67%, 1.02
C. 34.4%, .94
D. 9.9%, .94
66) An increase in future value can be caused by an increase in the __________.
A. starting value
B. annual interest rate and number of compounding periods
C. rate of return
D. dividends paid
E. original amount invested
67) What is the yield to maturity of a nine-year bond that pays a coupon rate of 20% per year, has a $1,000 par value, and is currently priced at $1,407? Round your answer to the nearest whole percent and assume annual coupon payments.
68) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows:
Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?
69) Bondholders have a priority claim on assets ahead of:
B. common and preferred stockholders.
70) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.
A. more, less
B. more, more
C. less, more
D. less, less
71) The common stockholders are most concerned with:
A. the size of the firm’s beginning earnings per share.
B. the spread between the return generated on new investments and the investor’s required rate of return.
C. the percentage of profits retained.
D. the risk of the investment.
72) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?
73) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)
74) Which of the following best represents operating income?
A. Earnings before interest and taxes
B. Income from discontinued operations
C. Income after financing activities
D. Income from capital gains
75) Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520.
76) Coca-Cola is taking advantage of the new willingness of Chinese leaders to engage in international trade by marketing its soft drinks in China. What type of opportunity is Coke pursuing?
B. market penetration
C. test marketing
D. market development
E. product development
77) When one considers the strategy decisions organized by the four Ps, branding is related to packaging as:
A. production is to marketing.
B. personal selling is to mass selling.
C. pricing is to promotion.
D. branding is to pricing.
E. store location is to sales force selection.
78) The statement, “Of course people will buy our product–each of its features is better than the competition,” most closely reflects which consumer behavior concept?
A. reference groups
B. competitive advantage
C. the economic-buyer theory
79) Analysis of demographic dimensions:
A. considers income and sex, but not age.
B. can be used along with analysis of other dimensions to identify attractive target markets.
C. only considers age.
D. is the most important step to successful segmentation.
E. is the most effective way to identify unmet consumer needs.
80) Regarding organizational buying, the people who have the power to select or approve the supplier–especially for larger purchases–are called:
A. helps strategy planners see how customers view competitors’ offerings.
B. is concerned with obtaining the best shelf space in retail outlets.
C. is useful for combining but not for segmenting.
D. applies to new products–but not existing products.
E. eliminates the need for judgment in strategy planning.
82) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. marketing programming.
B. marketing strategy planning.
C. strategic (management) planning.
D. management by objective.
E. market planning.
83) The “four Ps” of a marketing mix are:
A. Production, Personnel, Price, and Physical Distribution
B. Promotion, Production, Price, and People
C. Potential customers, Product, Price, and Personal Selling
D. Product, Price, Promotion, and Profit
E. Product, Place, Promotion, and Price
84) The basic objective of the U.S. market-directed economic system is to:
A. satisfy consumer needs as they–the consumers–see them.
B. provide each person with an equal share of the economic output.
C. achieve an annual growth rate of at least 10 percent.
D. minimize inflation.
E. make the most efficient use of the country’s resources.
85) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
A. income tends to be evenly distributed among consumers in most countries.
B. GDP estimates may not be very accurate for very different cultures and economies.
C. GDP measures show the degree of competition in a market.
D. GDP measures show people’s tendency to buy particular products.
E. Other countries most likely don’t use the US Dollar as their primary currency.
86) An Australian wine producer, facing declining sales at home, set up a new channel of distribution to sell wine in the United States. This seems to be an effort at:
B. market penetration.
C. product development.
D. market development.
87) Which of the following is a business or organizational customer?
A. a retailer.
B. a wholesaler.
C. a government agency.
D. producers of goods or services.
E. All of these are business and organizational customers.
88) Probable cause is most directly associated with which step of the criminal process?
C. Plea bargaining
E. Jury deliberations
89) Justin was hired in February of 2004 as a salesperson. There is no written employment contract, and Justin is paid on a commission basis. Justin’s manager has said to Justin on several occasions that if Justin continues to meet his sales quotas, that the company “will keep him around for a long time.” Justin has always met his sales quotas, but is told one day that they have decided to replace him because he does not project the image that the company wants. If Justin is an at-will employee, which of the following is true?
A. Because there is no written employment contract, the employer can terminate Justin.
B. As an at will employee, there are no restrictions on the employer terminating Justin.
C. The employer can terminate Justin only if the employer would suffer a loss by not terminating him.
D. The statements by the manager could likely give Justin contract rights that could amount to an exception to the at-will doctrine.
E. The employer would not be able to fire Justin on the basis of public policy.
90) In a criminal proceeding, what is the difference between an indictment and an information?
A. Guilt or innocence is determined in an indictment, but not in an information.
B. The defendant is charged with a crime in an indictment, but not in an information.
C. A grand jury issues an indictment, but does not issue an information.
D. An indictment requires proof beyond a reasonable doubt, but an information does not.
91) Under Section 2 of the Sherman Act, rather than making a presumption whether monopoly power exists, the courts will examine all the facts and circumstances to determine whether monopoly power exists when the defendant holds between _____ percent and _____ percent of the relevant market:
92) Which of the following is true about the Sherman Act?
A. Liability under Section 2 for monopolization requires agreement with another party, but liability under Section 1 for restraint of trade does not.
B. Liability under Section 1 for restraint of trade requires agreement with another party, but liability under Section 2 for monopolization does not.
C. Liability under either Section 1 or Section 2 requires agreement with another party.
D. A business can be liable under either Section 1 or Section 2 without any agreement with another party.
93) Which of the following is correct with regard to the relationship between law and ethics?
A. The law may not .permit something that would be ethically wrong.
B. Although much of law is based on ethical standards, not all ethical standards have been enacted as law.
C. Lawful conduct is always ethical conduct.
D. The rule of law and the golden rule of ethics demand the same response.
94) What is the major convention that provides international protection to patents?
A. The General Agreement on Tariffs and Trade (GATT).
B. The Digital Millennium Treaty.
C. The Paris Convention.
D. The Berne Convention of 1786.
95) For which of the following kinds of intellectual property is a filing or registration required in order to receive protection?
A. Patents and Trademarks
B. Copyright and Service marks
C. Service marks
96) The Houston-based energy company that filed for Chapter 11 bankruptcy and whose business conduct is one of the grossest examples of corporate greed and fraud in America was:
A. Exxon Corporation.
B. Mobil Oil Company.
C. Enron Corporation.
D. Houston Oil and Gas Corporation.
E. Shell Oil Company.
97) Which of the following is true about trademark registration?
A. Once a trademark is registered, protection cannot be lost.
B. The registration of a trademark can be renewed an unlimited number of times.
C. A trademark must be registered prior to its actual use in commerce.
D. Trademark registration is optional because protection is automatic.
98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States’ second largest trading partner.
A. Canada, Mexico
B. Mexico, Venezuela
C. Great Britain, Paraguay
D. Mexico, Canada
E. Canada, Venezuela
99) Which country does the text describe as becoming the largest producer and consumer of many of the world’s goods?
100) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. About $2; about 15
B. $2; about 25
C. Less than $1; about 40
D. Less than $1; about 25
E. Less than $1; about 15
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