BUS 475 Final Exam 5
1) As Plant Controller, you are trying to determine which costs over which you have themost control on a day to day basis. Your goal is to achieve better profitability. The PlantOperations 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
2) Managerial accounting __________.
A. is concerned with costing products
B. is governed by generally accepted accounting principles
C. pertains to the entity as a whole and is highly aggregated
D. places emphasis on special-purpose information
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.
Totals $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) Of the following companies, which one would not likely employ the specific identification method for inventory costing?
A. Hardware store
B. Farm implement dealership
C. Music store specializing in organ sales
D. Antique shop
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) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company’s net income increase?
7) Balance sheet accounts are considered to be __________.
A. permanent accounts
B. capital accounts
C. nominal accounts
D. temporary stockholders’ accounts
8) 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
9) What effect do current technology changes have on managerial accounting?
A. Increase in product costs
B. Reduction of emphasis on the value chain
C. Reduction of reporting costs of managerial accounting information
D. Creation of the middleman
10) 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
11) 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
12) The cost of an asset and its fair market value are __________.
A. the same when the asset is sold
B. never the same
C. irrelevant when the asset is used by the business in its operations
D. the same on the date of acquisition
13) 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?
14) A well-designed activity-based costing system starts with __________.
A. computing the activity-based overhead rate
B. assigning manufacturing overhead costs for each activity cost pool to products
C. analyzing the activities performed to manufacture a product
D. identifying the activity-cost pools
15) 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
16) In computing GDP, market prices are used to value final goods and services because __________.
A. market prices do not change much over time, so it is easy to make comparisons between years
B. market prices reflect the values of goods and services
C. if market prices are out of line with how people value goods, the government sets price ceilings and price floors
D. Market prices are not used in computing GDP
17) In economics, the cost of something is __________.
A. often impossible to quantify, even in principle
B. the dollar amount of obtaining it
C. always measured in units of time given up to get it
D. what you give up to get it
18) A logical starting point from which the study of international trade begins is __________.
A. the principle of comparative advantage
B. the principle of absolute advantage
C. the recognition that not all markets are competitive
D. the recognition that government intervention in markets sometimes enhances the economic welfare of the society
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) What you give up to obtain an item is called your __________.
A. direct cost
B. explicit cost
C. opportunity cost
D. true cost
21) 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.
22) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.
A. the monetary policy reaction lag
B. the sacrifice ratio dilemma
C. the time inconsistency of policy
D. inflation targeting
23) 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
24) The model of short-run economic fluctuations focuses on the price level and __________.
C.the neutrality of money.
D.All of the above are correct.
25) 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.
26) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
A. Only item (2) is included in GDP and it is included in the investment component.
B. Item (1) is included in the consumption component, while item (2) is included in the investment component.
C. Item (1) is included in the investment component, while item (2) is included in the consumption component.
D. Both item (1) and item (2) are included in the consumption component of GDP.
27) 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 measures two things at once: the total income of everyone in the economy and the unemployment rate.
C. GDP is to a nation’s economy as household income is to a household.
D. GDP increases if the total population increases.
28) Which of these refers to the practices aimed at discovering and harnessing an organization’s intellectual resources?
A. Knowledge management
29) 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:
30) 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
31) When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a:
A. High-price strategy
B. Low-cost strategy
C. Diversification strategy
D. Differentiation strategy
E. High-cost strategy
32) 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
33) 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
34) 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
35) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:
A. Producing an imitation of the new technology that utilizes lower-quality and lower-cost materials
B. Technology followers are not successful at low-cost strategies
C. Mass-producing products that have an established market niche
D. Making subtle changes to the product, thereby avoiding patent restrictions
E. Learning from the leader thereby avoiding the costs and risks of technology leadership
36) 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:
C. Goal Coordination
37) To be competitive in a global economy, Europeans must increase their level of:
B. Population density
C. Philanthropic contributions
D. Espionage activity
38) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:
A. Just-in-time control (JIT)
B. Customer-based integration
C. Computer-integrated manufacturing (CIM)
D. Total quality management
E. ISO 9000
39) Teams that work on long-term projects but disband once the work is completed are known as:
A. Management teams
B. Traditional work groups
C. Project and development teams
D. Transnational teams
E. Parallel teams
40) The pursuit of lucrative opportunities by enterprising individuals is called:
D. Business incubating
41) 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
42) 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
43) Two events are complementary when __________.
A.the joint probability of the two events is one
B. the sum of their probabilities is one
C. they are mutually exclusive
D.None of these
44) 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
45) Use the following table to answer question:
Are Service provider and county independent events?
A. Insufficient information to determine
46) 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
47) 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 less than .05.
B. The p-value is equal to .05.
C. The p-value is greater than .05.
D. The p-value cannot be determined without specifying α.
48) In lean systems, if a defective product is found, which of the following is generally NOT done?
A. The defective unit is passed on to the next workstation.
B. The defective unit is returned to the worker responsible for creating the defect.
C. The production line is made aware of the problem without stopping the line.
D. The production line is stopped.
49) 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
50) 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.
51) 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.
52) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571.
Which conclusion is not correct?
A. The absolute annual growth (in dollars per share) is increasing.
B. Few investments could match the astounding growth rate.
C. The stock’s true intrinsic value is $4.12.
D. At the end of year 3 the stock price would be nearly $80.
53) The Global, Web-Based Platform enables individuals to do which of the following?
A. at the end of year 3 the stock price would be nearly $80
B. the absolute annual growth (in dollars per share) is increasing
C. few investments could match the astounding growth rate
D. the stock’s true intrinsic value is $4.12
54) A set of programs that enable the hardware to process data is _____.
55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
B. business environment
56) What is _____ is not necessarily _____.
A. Ethical, legal
B. Unethical, illegal
C. Ethical, illegal
D. Unethical, legal
E. Illegal, unethical
57) Which of the following is not a source for external data?
A. commercial databases
B. corporate databases
E. government reports
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) _____ 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
60) 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
61) Which of the following is not a reason that managers need IT support?
A. Decisions are becoming more complex
B. Decision makers are often in different locations
C. Decisions must typically be made under time pressure
D. Need to access remote information sources
E. Number of alternatives are decreasing
62) Credit card companies would most likely use which of the following to check for fraudulent credit card use?
A. Data mining
B. Expert systems
C. Neural networks
D. Multidimensional data analysis
E. Structured query language
63) Exchange rate risk:
A. applies only to certain types of domestic businesses.
B. has been phased out due to recent international legislation.
C. doesn’t affect trades made in US Dollars.
D. arises from the fact that the spot exchange rate on a future date is a random variable.
64) PepsiCo calculates unlevered betas for each peer group in order to:
A. eliminate competitive factors.
B. eliminate judgment factors.
C. eliminate different financial risks.
D. eliminate different business risks.
65) At 8% compounded annually, how long will it take $750 to double?
A. 48 months
B. 6.5 years
C. 9 years
D. 12 years
66) 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?
67) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
68) 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
69) 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.
Year Net Cash Flow
3 $ 500
70) 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.
71) Which of the following best represents the stream of income that is available to common stockholders?
A. Operating profit
B. Gross profit
C. Net profit after tax and after preferred dividend payments
D. Earnings before interest and taxes
72) 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.)
73) 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 appropriate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.
74) 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
75) Bondholders have a priority claim on assets ahead of:
D. common and preferred stockholders.
76) Clustering techniques applied to segmenting markets __________.
A. eliminate the need for marketing managers to specify in advance what dimensions might be relevant for grouping consumers
B. remove the need for managerial judgment
C. usually require computers to group people based on data from market research
D. doesn’t apply to demographic data
E. is time consuming and expensive
77) 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
78) The difference between target marketing and mass marketing is that target marketing:
A) means focusing on a small market.
B) focuses on short-run objectives, while mass marketing focuses on long-run objectives.
C) focuses on specific customers, while mass marketing aims at an entire market.
D) does not rely on e-commerce but mass marketing does.
E) aims at increased sales, while mass marketing focuses on increased profits.
79) 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.
80) In an effort to increase its total sales, Champion has started exporting its spark plugs for use by several German auto producers. Champion is pursuing a _____ opportunity.
A. mass marketing
C. market penetration
D. product development
E. market development
A. helps strategy planners see how customers view competitors’ offerings.
B. eliminates the need for judgment in strategy planning.
C. applies to new products–but not existing products.
D. is concerned with obtaining the best shelf space in retail outlets.
E. is useful for combining but not for segmenting.
82) The basic objective of the U.S. market-directed economic system is to:
A. satisfy consumer needs as they–the consumers–see them.
B. minimize inflation.
C. achieve an annual growth rate of at least 10 percent.
D. provide each person with an equal share of the economic output.
E. make the most efficient use of the country’s resources.
83) 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.
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.
85) The clustering techniques that can be used in segmenting:
A. group people together into heterogeneous product-market segments.
B. eliminate the need for management intuition and judgment.
C. group people together based on age.
D. try to find similar patterns within sets of data.
E. looks for differences between groups of people.
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) 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
88) Bob, an employee of Risky Manufacturing, Inc. is accidentally injured by a fellow worker while working his shift. Under workers’ compensation, Bob can:
A. Seek workers’ compensation only.
B.Sue Risky or seek workers’ compensation recovery, but not both.
C.Sue Risky or seek workers’ compensation recovery.
D.Recover from workers’ compensation only if Risky was negligent in allowing the injury to occur.
89) Which of the following statements is not true under the Fair Labor Standards Act?
A) Children under 14 cannot work at all, except on farms.
B) Children ages 14 and 15 may work limited hours in nonhazardous jobs.
C) Children ages 16 and 17 may work unlimited hours in nonhazardous jobs.
D) Persons age 18 or over may work unlimited hours in nonhazardous jobs.
E) Persons age 18 or over may work unlimited hours in hazardous jobs.
90) Which of the following terms need not be disclosed under the Truth-in-Lending Act?
A) the annual percentage rate (APR)
B) the cash price of the product
C) the terms available from competitors
D) the total finance charge
E) amount of payments
91) Which of the following is correct about litigating commercial disputes?
A. Commercial disputes, because of their specialized nature, are first heard at the appellate court level.
B. Nearly all states have specialized trial courts that hear commercial disputes.
C. Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
D. A few states have established specialized trial courts for commercial disputes.
E. In all states, commercial disputes must be heard in a limited-jurisdiction court.
92) Minimum wages, hours of employment, and child labor are regulated by the:
A. Regulated Hours Act
B. Right to Work Laws
C. Federal Employment Act of 1940
D. Fair Labor Standards Act
93) An agent’s duty of notification can best be described as a duty to:
A) notify any third parties that the agent is acting as an agent
B) notify any third parties as to the identity of the principal
C) notify the principal about any material information that the agent learns relative to the subject matter of the agency
D) notify the principal in a reasonable period of time in advance of terminating the agency arrangement
94) Which of the following is correct about the states’ powers regarding foreign affairs?
A. The states can pass laws and enter into treaties with foreign nations so long as they do not unduly burden foreign commerce.
B. The states have no power over foreign affairs because the U.S. Constitution grants that power exclusively to the federal government.
C. Because of the sharing of powers between the federal government and the states, states have powers over foreign affairs equal to the powers of the federal government.
D. The states can pass laws so long as they do not unduly burden foreign commerce, but the states have no authority to enter into treaties with foreign nations.
E. The states can pass laws affecting foreign commerce and enter into treaties with foreign nations so long as they first obtain the consent of the Senate.
95) 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.
96) What makes a publicly held corporation different from a public corporation?
A. A publicly held corporation is entitled to limited liability, but a public corporation is not.
B. A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose.
C. They are two terms that have the same meaning.
D. A publicly held corporation has many shareholders rather than being a corporation owned by a governmental entity.
97) The theory of business social responsibility that holds that a business owes duties solely to produce the highest return for its shareholders is:
a. The moral minimum theory.
b. The maximizing profits theory.
c. The stakeholder interest theory.
d. The corporate citizenship theory.
e. The social audit theory.
98) 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 15
D. Less than $1; about 40
E. Less than $1; about 25
99) Which country does the text describe as becoming the largest producer and consumer of many of the world’s goods?
100) 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. Canada, Venezuela
D. Great Britain, Paraguay
E. Mexico, Canada