BUS 475 Final Exam 4
1) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools
2) “Generally accepted” in the phrase generally accepted accounting principles means that the principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
3) 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. not determinable
B. $10,000 loss
C. $10,000 income
D. $48,000 income
4) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Office Furniture 150,000
Accumulated Depreciation 450,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
5) The first step in activity-based costing is to __________.
A. identify the cost driver that has a strong correlation to the activity cost pool
B. assign manufacturing overhead costs for each activity cost pool to products
C. identify and classify the major activities involved in the manufacture of specific products
D. compute the activity-based overhead rate per cost driver
6) 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?
A. 2,133 units
B. 4,600 units
C. 6,200 units
7) Sam’s Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?
8) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
9) The income statement and balance sheet columns of Pine Company’s worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
Closing entries are necessary for __________.
A. permanent or real accounts only
B. permanent accounts only
C. both permanent and temporary accounts
D. temporary accounts only
10) 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. The western division’s vice president’s salary
B. Factory janitor
C. Cost of landscaping the corporate office
D. General corporate liability insurance
11) The cost of an asset and its fair market value are __________.
A. the same on the date of acquisition
B. never the same
C. the same when the asset is sold
D. irrelevant when the asset is used by the business in its operations
12) 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?
13) The cost principle is the basis for preparing financial statements because it is __________.
A. the most accurate measure of purchasing power
B. a conservative value
C. relevant and objectively measured, and verifiable
D. an international accounting standard
14) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Additional information
B. Adjusted trial balance
C. Comparative balance sheets
D. Current income statement
15) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.
A. cooperate rather than compete with each other
B. collude with each other
C. form various degrees of cartels
D. compete rather than cooperate with each other
16) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms’ production levels as given. Then in equilibrium the output effect __________.
A. can be larger or smaller than the price effect
B. must dominate the price effect
C. must be smaller than the price effect
D. must balance with the price effect
17) The price of a good that prevails in a world market is called the
A. world price.
B. absolute price.
C. relative price.
D. comparative price.
18) A country’s consumption possibilities frontier can be outside its production possibilities frontier if __________.
A. the country imports more than it exports
B. the country’s technology is superior to the technologies of other countries
C. the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries
D. the country engages in trade
19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.
A. double the quantity supplied
B. less than quantity supplied
C. greater than quantity supplied
D. equal to quantity supplied
20) If a binding price ceiling were imposed in the computer market, __________.
A. the quality of computers would increase
B. the supply of computers would decrease
C. the demand for computers would increase
D. a shortage of computers would develop
21) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________.
A. plus the cost of tuition, equals the opportunity cost of going to college
B. should be counted only to the extent that they are more expensive at college than elsewhere
C. should be counted in full, regardless of the costs of eating and sleeping elsewhere
D. usually exceed the opportunity cost of going to college
22) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.
A. demanded for the purpose of importing foreign goods and services
B. supplied for the purpose of buying assets abroad
C. supplied for the purpose of selling assets domestically
D. demanded for the purpose of buying U.S. net exports of goods and services
23)The part of the balance of payments account that records the amount of foreign currency the government buys or sells is the:
A. balance of trade.
B. financial and capital account.
C. current account.
D. government financial account.
24) The balance of payment account is made up of:
A. a monetary account and a fiscal account.
B. an import account and an export account.
C. a current account and a financial and capital account.
D. an investment account and a consumption account.
25) The model of aggregate demand and aggregate supply explains the relationship between __________.
A. real GDP and the price level
B. unemployment and output
C. the price and quantity of a particular good
D. wages and employment
26) The open-economy macroeconomic model includes __________.
A. neither the market for loanable funds or the market for foreign-currency exchange
B. only the market for foreign-currency exchange
C. only the market for loanable funds
D. both the market for loanable funds and the market for foreign-currency exchange
27) The principal lag for monetary policy __________.
A. is the time it takes for policy to change spending. The principal lag for fiscal policy is the time it takes to implement it
B. is the time it takes to implement policy. The principal lag for fiscal policy is the time it takes for policy to change spending
C. and fiscal policy is the time it takes for policy to change spending
D. and fiscal policy is the time it takes to implement policy
28) Which of the following best describes a mental image of a possible and desirable future state of the organization?
A. Horizontal communication
B. Vertical communication
29) Sebastian Stabilio just joined a team of people from throughout his organization whose primary task is to recommend valuable uses for the scrap generated in the manufacturing process. The team meets twice per week; otherwise members work within the usual organizational structure. The team, not permanent, which Sebastian has joined, would be considered a:
A. Parallel team
B. Project team
C. Working group
D. Work team
E. Project group
30) An invisible barrier that makes it difficult for certain groups, such as minorities and women, to move beyond a certain level in the organizational hierarchy is referred to as the:
A. Glass floor
B. Job enlargement concept
C. Glass ceiling
D. Black box theory
E. Job enrichment theory
31) 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:
A. Managerial ethics
32) Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity?
A. behavioral assessment
B. aptitude tests
C. integrity evaluations
D. intelligence tests
E. work sampling
33) To be competitive in a global economy, Europeans must increase their level of:
A. Financial subsidy
B. Philanthropic contributions
D. Population density
E. Espionage activity
34) Teams that operate separately from the regular work structure and exist temporarily are known as:
A. Transnational teams
B. Management teams
C. Self-managed teams
D. Self-designing teams
E. Parallel teams
35) A manager’s ability to stimulate people to be high performers is referred to as:
36) The best way for an employer to find out if a potential employee can do a job is by __________.
A. using a performance simulation test
B. using the interview process
C. administering an IQ test
D. having them spend a day in the office
E. using a written test
37) 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. All entrepreneurs need venture capital in order to get started
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. Entrepreneurs are their own bosses and completely independent
38) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. Less than $1; about 40
B. Less than $1; about 15
C. $2; about 25
D. Less than $1; about 25
E. About $2; about 15
39) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:
B. Six Sigma Quality
D. ISO 9000
E. Total quality integration
40) __________ is the process of working with people and resources to accomplish organizational goals.
C. Decision making
41) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:
E. Goal Coordination
42) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income.
Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.
A. increase by 428
B. decrease by 50
C. increase by 500
D. increase by 50
43) Sampling error can be reduced by __________.
A. none of the these affect sampling error
B. increasing the sample size
C. decreasing the sample size
D. utilizing simple random samples
44) Use the following table to answer question:
P(M A) is approximately _____.
45) Use the following table to answer question:
Are Service provider and county independent events?
A. Insufficient information to determine
46) 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?
47) Jolly Blue Giant Health Insurance (JBGHI) is concerned about rising lab test costs and would like to know what proportion of the positive lab tests for prostate cancer are actually proven correct through subsequent biopsy. JBGHI demands a sample large enough to ensure an error of ± 2% with 90% confidence. What is the necessary sample size?
48) Which one of the following statements concerning production and staffing plans is best?
A. The impact of production and staffing plans cuts across several functional areas of the firm.
B. Production and staffing plans specify production rates, workforce levels, and inventory holdings, but do not account for capacity limitations because they are aggregated.
C. Production and staffing plans attempt to achieve several objectives, all of which must be consistent with one another.
D. When production and staffing plans are made, aggregation can be performed only along two dimensions: products and time.
49) Likely reasons for inaccurate control limits would include which of the following?
A. Process variation was not zero, as expected.
B. The engineers were underpaid for their work.
C. The engineering parameter for variance is unknown.
D. There was insufficient preliminary sampling.
50) The one-worker, multiple machines approach functions as:
A. a way to create uniform workstation loads.
B. a production bottleneck.
C. a one-person production line.
D. a poka-yoke device.
51) In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.
A. precedence relationships; time
B. activities; precedence relationships
C. activities; time
D. events; activities
52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
A. you would lose $80 if one of your workers missed an entire 8 hour shift.
B. you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.
C. the next worker that offers to work an extra 8 hours should receive at least $80.
D. you would be willing pay up to $60 for someone to work another 6 hours.
53) The force behind globalization in _____ was the amount of muscle, horsepower, wind power, or steam power that a country could deploy.
A. None of these
B. Globalization 2.0
C. Globalization 1.0
D. Globalization 3.0
54) In the _____ phase of the decision making process, managers test potential solutions “on paper.”
55) A set of programs that enable the hardware to process data is _____.
56) What is _____ is not necessarily _____.
A. Ethical, legal
B. Unethical, illegal
C. Ethical, illegal
D. Unethical, legal
E. Illegal, unethical
57) The Global, Web-Based Platform enables individuals to do which of the following?
A. all of these are true
B. produce and sell goods and services
C. exchange knowledge
D. access information, services, and entertainment
E. connect, compute, communicate, collaborate, and compete everywhere and all the time
58) The management cockpit best exemplifies which type of system?
A. Group decision support system
B. Functional area information system
C. Digital dashboard
D. Expert system
E. Decision support system
59) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.
C. Strategic planning
D. Management control
E. Operational control
60) International Game Technology’s new ERP system produced all of the following benefits except:
A. Operations employees were able to access manufacturing process details at their workstations
B. The company gained flexibility in manufacturing products
C. ERP system connected the company’s global operations
D. Company was able to maintain its original business processes
E. Integrated the company’s business functions
61) Which of the following are not provided by digital dashboards?
A. Exception reporting
B. Key performance indicators
C. Status access
D. Transaction processing
E. Drill down
62) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
A. Multidimensional data analysis, data mining
B. Multidimensional data analysis, neural networks
C. Data mining, expert system
D. Data mining, multidimensional data analysis
E. Multidimensional data analysis, structured query language
63) An increase in future value can be caused by an increase in the __________.
A. dividends paid
B. rate of return
C. original amount invested
D. starting value
E. annual interest rate and number of compounding periods
64) 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:
Cost of debt 8%
Cost of preferred stock 12%
Cost of common stock 16%
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?
65) Disadvantages of using current liabilities as opposed to long-term debt include:
A. certainty of interest costs
B. greater risk of illiquidity, and uncertainty of interest costs
C. decreased risk of liquidity
D. uncertainty of future liabilities
E. higher cash flow exposure
66) Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?
67) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the approximate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.
68) Forward rates are quoted:
A. on financial statements
B. in direct form and at a premium or discount
C. by the FDIC
D. in an indirect form
69) 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?
70) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
A. The project’s IRR would have to be less that the firm’s discount rate.
B. In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
C. Under all conditions, the project’s payback would be less than the profitability index.
D. The project would add value to the firm.
71) According to the hedging principle, permanent assets should be financed with _____ liabilities.
72) Exchange rate risk:
A. doesn’t affect trades made in US Dollars.
B. arises from the fact that the spot exchange rate on a future date is a random variable.
C. applies only to certain types of domestic businesses.
D. has been phased out due to recent international legislation.
73) The common stockholders are most concerned with:
A. the spread between the return generated on new investments and the investor’s required rate of return.
B. the percentage of profits retained.
C. the size of the firm’s beginning earnings per share.
D. the risk of the investment.
74) Which of the following is most consistent with the hedging principle in working capital management?
A. Fixed assets should be financed with short-term notes payable.
B. Inventory should be financed with preferred stock.
C. Accounts receivable should be financed with short-term lines of credit.
D. Borrow on a floating rate basis to finance investments in permanent assets.
75) You hold a portfolio with the following securities:
Security Percent of Portfolio Beta Return
X Corporation 20% 1.35 14%
Y Corporation 35% .95 10%
Z Corporation 45% .75 8%
Compute the expected return and beta for the portfolio.
A. 9.9%, .94
B. 10.67%, 1.02
C. 9.9%, 1.02
D. 34.4%, .94
76) Economists’ economic-buyer theory assumes that __________.
A. consumers only want the cheapest price
B. buyers logically compare choices in order to maximize their satisfaction
C. demographic data are very useful for predicting consumer behavior
D. consumers should purchase only low-priced products
E. consumers always make rational decisions
77) 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. the economic-buyer theory
B. reference groups
E. competitive advantage
78) The three basic tasks of ALL managers, according to the text, are:
A. planning, implementation, and control.
B. marketing, production, and finance.
C. planning, staffing, and evaluating.
D. execution, feedback, and control.
E. hiring, training, and compensating.
79) A cluster analysis of the “toothpaste market” would probably show that:
A. most consumers are concerned about cost.
B. most consumers are mainly concerned about brightness of teeth.
C. the broad product-market can be served effectively with one marketing mix.
D. factors such as taste, price, and “sex appeal” are not important.
E. different market segments seek different product benefits.
80) “Marketing strategy planning” means:
A. selecting a target market and developing a marketing strategy.
B. finding attractive opportunities and selecting a target market.
C. finding attractive opportunities and developing profitable marketing strategies.
D. selecting an attractive target market.
E. selecting an attractive marketing mix.
81) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. market planning.
B. marketing strategy planning.
C. marketing programming.
D. management by objective.
E. strategic (management) planning.
82) Regarding organizational buying, the people who have the power to select or approve the supplier–especially for larger purchases–are called:
83) The economists’ view of buyers:
A. None of these are true
B. assumes that they always buy the lowest-price alternative.
C. is based on the idea that consumers value time and select the first alternative they learn about.
D. puts a great deal of emphasis on differences in buying behavior related to individual differences among consumers.
E. emphasizes psychological variables rather than social influences.
84) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
A. Customer relationship management (CRM)
B. Market scanning
D. Brand familiarity
E. Market segmentation
85) When evaluating macro-marketing:
A. one must consider the society’s role in the marketing system.
B. one must determine how efficiently the society’s resources are used.
C. the best approach is to consider the profit generated by individual firms within the overall system.
D. the evaluation is necessarily subjective.
E. one must consider each individual firm’s role in the marketing system.
A. not important if you have a good product.
B. reflects existing social values in the short run–while reinforcing these values in the long run.
C. turns consumers into puppets.
D. creates materialistic values which did not exist before.
E. is only propaganda.
87) Clustering techniques applied to segmenting markets __________.
A. doesn’t apply to demographic data
B. eliminate the need for marketing managers to specify in advance what dimensions might be relevant for grouping consumers
C. remove the need for managerial judgment
D. usually require computers to group people based on data from market research
E. is time consuming and expensive
88) Product disparagement differs from defamation of a nonpublic figure in that:
A. Intent is only required in a disparagement case.
B. Publication to a third party is required in the defamation case, but not in the disparagement case.
C. Publication to a third party is required in the disparagement case, but not in the defamation case.
D. Intent is required for the disparagement case, but not in the defamation case.
E. Intent is required for the defamation case, but not in the disparagement case.
89) Mary arrived at work one day, and her boss said to her, “That’s the ugliest dress I have ever seen. Because you wore that to work today, you are fired.” Assuming that Mary is an at-will employee, which of the following is true?
A. Mary can be fired only if it is in the best interest of the employer.
B. If none of the exceptions to the at-will rule apply, Mary can be fired.
C. If Mary has the will to work, she cannot be fired without cause.
D. Mary can be fired for any reason.
90) Which of the following is correct about interpretive rules?
A. Interpretive rules are not subject to judicial review.
B. All federal administrative agencies have implied power to make interpretive rules.
C. They must be accompanied by substantive rules.
D. They do not establish new law.
E. They require public notice and participation to create.
91) In responding to a constitutional challenge to the Computer Decency Act, the U.S. Supreme Court ruled that:
A. The Internet was similar to television and that restrictions similar to those on television programming were appropriate.
B. The Act was unconstitutional because its provisions were too vague to define.
C. Obscene materials could not be available between 6:00 a.m. and 10:00 p.m. local time.
D. Computers and the Internet were not covered by the free speech provisions of the U.S. Constitution because they did not exist when the Constitution was drafted.
E. The Act was constitutional because obscene speech receives no protection.
92) In a criminal proceeding, what is the difference between an indictment and an information?
A. An indictment requires proof beyond a reasonable doubt, but an information does not.
B. A grand jury issues an indictment, but does not issue an information.
C. Guilt or innocence is determined in an indictment, but not in an information.
D. The defendant is charged with a crime in an indictment, but not in an information.
93) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?
A. Corporate social audit.
B. Corporate citizenship.
C. Stakeholder interest.
D. Maximizing profits.
E. Moral minimum.
94) If a minor wishes to be bound to a contract after becoming an adult, she must:
A. Bring an action to verify the contract.
B. Give back the goods or services received as a minor.
C. Disaffirm the contract.
D. Ratify the contract.
95) Which of the following statements is true regarding the relationship of law and ethics?
A. Depending on the circumstances, the law can require a higher, lower, or the same standard of conduct as ethics demands.
B. The legal requirements will almost always be the same as the ethical requirement because the law is based on the ethical standards.
C. In some cases ethics will require a higher standard of conduct than the law, but never vice versa.
D. In some cases the law will require a higher standard of conduct than ethics, but never vice versa.
96) Information which comes to the knowledge of an agent is:
A. Will result in termination of the agency arrangement if it is not communicated to the principal.
B. Required to be communicated to the principal in all circumstances.
C. Is imputed to the principal.
D. Can be disclosed to the principal only with the third party’s consent.
97) Which of the following is true about “proof of claims?”
A. They can generally be filed any time within one year of the filing of the bankruptcy petition.
B. They must be field by both secured and unsecured creditors in order for the creditor to receive a distribution from the bankruptcy estate.
C. They need not be filed by secured creditors whose security covers the amount of their debt.
D. They are never used by secured creditors.
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. Great Britain, Paraguay
B. Canada, Venezuela
C. Canada, Mexico
D. Mexico, Canada
E. Mexico, 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. Less than $1; about 40
B. Less than $1; about 15
C. About $2; about 15
D. Less than $1; about 25
E. $2; about 25