Week 5 Final Test
1) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. provide information about the cash receipts and cash payments during a period
C. prove that revenues exceed expenses if there is a net income
D. provide information about the investing and financing activities during a period
2) 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. Cost of landscaping the corporate office
C. General corporate liability insurance
D. Factory janitor
3) Balance sheet accounts are considered to be __________.
A. nominal accounts
B. capital accounts
C. permanent accounts
D. temporary stockholders’ accounts
4) The cost of an asset and its fair market value are __________.
A. the same on the date of acquisition
B. irrelevant when the asset is used by the business in its operations
C. the same when the asset is sold
D. never the same
5) Which one of the following is a product cost?
A. Advertising costs
B. Sales person’s salaries
C. Office salaries
D. Indirect labor
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. 6,200 units
D. 4,600 units
7) 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
8) The conceptual framework developed by the Financial Accounting Standards Board __________.
A. is legally binding on all accountants
B. is viewed as providing a constitution for setting accounting standards for financial reporting
C. are rules that all accountants must follow
D. was approved by a vote of all accountants
9) Of the following companies, which one would not likely employ the specific identification method for inventory costing?
A. Hardware store
B. Antique shop
C. Farm implement dealership
D. Music store specializing in organ sales
10) What is value chain management best defined as?
A. All activities associated with providing a product or service
B. The incremental value of costs associated with hiring a new production floor leader
C. Management decisions that affect how quickly the production run occurs
D. A large chain that keeps the machines from falling on the production floor
11) The major reporting standard for management accounts is __________.
A. generally accepted accounting principles
B. relevance to decisions
C. the Sarbanes-Oxley Act of 2002
D. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management
12) If a company reports a net loss, it __________.
A. will not be able to make capital expenditures
B. will not be able to get a loan
C. will not be able to pay cash dividends
D. may still have a net increase in cash
13) The cost principle is the basis for preparing financial statements because it is __________.
A. the most accurate measure of purchasing power
B. an international accounting standard
C. relevant and objectively measured, and verifiable
D. a conservative value
14) 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?
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. usually exceed the opportunity cost of going to college
D. should be counted in full, regardless of the costs of eating and sleeping elsewhere
16) There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products. The names given to these market structures are __________.
A. duopoly and imperfect competition
B. duopoly and triopoly
C. perfect competition and monopolistic competition
D. monopolistic competition and oligopoly
17) A tax on an imported good is called a __________.
A. trade tax
C. supply tax
18) One characteristic of an oligopoly market structure is:
A. the actions of one seller have no impact on the profitability of other sellers.
B. firms in the industry have some degree of market power.
C. products typically sell at a price that reflects their marginal cost of production.
D. firms in the industry are typically characterized by very diverse product lines.
19) In economics, the cost of something is __________.
A. often impossible to quantify, even in principle
B. always measured in units of time given up to get it
C. what you give up to get it
D. the dollar amount of obtaining it
20) A rational decision maker __________.
A. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions
B. ignores the likely effects of government policies when he or she makes choices
C. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
D. ignores marginal changes and focuses instead on “the big picture”
21) A country's consumption possibilities frontier can be outside its production possibilities frontier if __________.
A. the country imports more than it exports
B. the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries
C. the country engages in trade
D. the country’s technology is superior to the technologies of other countries
22) The Federal Reserve will tend to tighten monetary policy when __________.
A. it thinks inflation is too high today, or will become too high in the future
B. it thinks the unemployment rate is too high
C. the growth rate of real GDP is quite sluggish
D. interest rates are rising too rapidly
23) The model of aggregate demand and aggregate supply explains the relationship between __________.
A. real GDP and the price level
B. unemployment and output
C. wages and employment
D. the price and quantity of a particular good
24) The Federal Open Market Committee __________.
A. is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment
B. is required to increase the money supply by a given growth rate each year
C. is required to keep the interest rate within a range set by Congress
D. operates with almost complete discretion over monetary policy
25) Real GDP __________.
A. is a measure of the value of goods only; it excludes the value of services.
B. evaluates current production at the prices that prevailed in some specific year in the past.
C. is not a valid measure of the economy's performance, since prices change from year to year.
D. evaluates current production at current prices.
26) Which of the following statements about GDP is correct?
A. Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
B. Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
C. Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
D. Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
27) Most economists use the aggregate demand and aggregate supply model primarily to analyze __________.
A. productivity and economic growth
B. the effects of macroeconomic policy on the prices of individual goods
C. the long-run effects of international trade policies
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. Online Business
B. Multinational corporation
C. Small business
D. Entrepreneurship venture
E. Large corporation
29) 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
C. ISO 9000
E. Total quality integration
30) The pursuit of lucrative opportunities by enterprising individuals is called:
A. Social experimentation
C. Business incubating
31) Which of these describes a vision, as it pertains to leadership?
A. A short-term goal of an organization
B. A long-term goal of an organization
C. The method through which leaders achieve goals
D. Likely to land you in a padded room
E. A mental image of a future state of an organization
32) 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. Customer-based integration
B. Total quality management
C. ISO 9000
D. Computer-integrated manufacturing (CIM)
E. Just-in-time control (JIT)
33) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
B. Conceptual and decision
E. Interpersonal and communication
34) 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. Work team
C. Project group
D. Project team
E. Working group
35) When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a:
A. Differentiation strategy
B. High-cost strategy
C. Low-cost strategy
D. Diversification strategy
E. High-price strategy
36) Which of these represent skills that managers need?
A. Interpersonal, quantitative, and professional
B. Interpersonal & communication, conceptual & decision making and professional
C. Professional, technical and interpersonal & communication
D. Conceptual & decision making, professional and technical
E. Technical, interpersonal & communication and conceptual & decision making
37) 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. having them spend a day in the office
D. administering an IQ test
E. using a written test
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. Less than $1; about 25
D. $2; about 25
E. About $2; about 15
39) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
A. A homogeneous workforce
B. A strategic alliance
C. Larger, faster facilities
D. Positive working relationships with all employees
E. A Learning advantage over their competition
40) 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. Money should not be considered a start-up ingredient
D. Successful entrepreneurs take very careful, calculated risks
E. Entrepreneurs are their own bosses and completely independent
41) The basic components of an effective sexual harassment policy include the following EXCEPT:
A. To establish a means for ongoing training
B. To develop an organization wide policy on sexual harassment
C. To establish a formal complaint procedure
D. To act immediately when employees complain of sexual harassment
E. To establish a performance appraisal system
42) 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 a left-tailed test at = .05 we would __________.
A. comfortably reject the claim
B. comfortably accept the claim
C. switch to alpha of 0.01 for a more powerful test
D. feel uncomfortable with either decision (too close)
43) 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?
44) 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.
Which outcomes would be likely in a bivariate regression on 45 randomly chosen U.S. cities in 2005 with
Y = number of robberies in each city (thousands of robberies) and
X = size of police force in each city (thousands of police)?
B. High R2 (due to city size).
C. No correlation.
D. Positive slope (due to city size).
45) 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. ± .04472
B. ± .07357
C. ± .08765
D. ± .00329
46) Use the following table to answer question:
P(M A) is approximately _____.
47) In a right-tail test, a statistician came up with a z test statistic of 1.469. What is the p-value?
48) A project has three paths. A–B–C has a length of 25 days. A–D–C has a length of 15 days. Finally, A–E–C has a length of 20 days. Which one of the following statements is TRUE?
A. The expected duration of this project is 25 + 15 + 20 = 60 days.
B. The expected duration of this project is 25 days.
C. A–D–C is the critical path.
D. A–B–C has the most slack.
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. Sales are increasing by about 20 units per year.
B. The turning point would be in period 10.
C. The trend was higher in year 10 than in year 20.
D. Latest year sales are no better than in year zero.
50) 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.
51) Companies using lean systems generally have:
A. suppliers who are low-cost producers.
B. suppliers that are willing to accept short-term contracts.
C. many suppliers to ensure that material shortages never occur.
D. suppliers that are located nearby to decrease delivery lead time.
52) You are faced with a linear programming objective function of:
Max P = $20X + $30Y
and constraints of:
3X + 4Y = 24 (Constraint A)
5X – Y = 18 (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. The most you would want to pay for an additional unit of A would be $7.50.
B. For every additional unit of the objective function you create, the price of A rises by $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, you lose 0 units of B.
53) When your purchases are swiped over the bar-code reader at the point-of-sale terminals at Wal-Mart, a _____ records the data.
A. enterprise resource planning system
B. office automation system
C. transaction processing system
D. functional area information system
54) Various organizations that promote fair and responsible use of information systems often develop __________.
A. responsibility charters
B. a goals outline
C. a code of ethics
D. a strategic plan
E. a mission statement
55) Success in the _____ phase of the decision making process results in resolving the original problem, and failure leads to a return to previous phases.
56) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
A. physical, financial
B. digital, e-commerce
C. e-commerce, digital
D. physical, digital
E. digital, physical
57) It is very difficult to manage data for which of the following reasons?
A. data security is easy to maintain
B. data are scattered throughout organizations
C. amount of data stays about the same over time
D. data are stored in the same format throughout organizations
E. decreasing amount of external data needs to be considered
58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
A. Multidimensional data analysis, neural networks
B. Data mining, multidimensional data analysis
C. Multidimensional data analysis, structured query language
D. Multidimensional data analysis, data mining
E. Data mining, expert system
59) Competitive advantage for an organization manifests as all of the following except:
A. increased profits
B. higher quality
C. lower costs
D. increased speed
E. increased time to market
60) _____ is a process that helps organizations identify, select, organize, disseminate, transfer, and apply expertise that are part of the organization’s memory and typically reside inside the organization in an unstructured manner.
A. Online analytical processing
B. Knowledge management
D. Data mining
E. Decision support
61) Computer support is greatest for which of the following problems?
A. Semistructured and management control
B. Unstructured and operational control
C. Semistructured and strategic planning
D. Structured and management control
E. Structured and operational control
62) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.
B. Management control
C. Operational control
E. Strategic planning
63) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?
64) You hold a portfolio with the following securities:
Percent of Portfolio
Compute the expected return and beta for the portfolio.
A. 34.4%, .94
B. 9.9%, 1.02
C. 10.67%, 1.02
D. 9.9%, .94
65) The common stockholders are most concerned with:
A. the risk of the investment.
B. the size of the firm’s beginning earnings per share.
C. the percentage of profits retained.
D. the spread between the return generated on new investments and the investor’s required rate of return.
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) 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.)
68) Which of the following best represents operating income?
A. Income from capital gains
B. Earnings before interest and taxes
C. Income after financing activities
D. Income from discontinued operations
69) 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.
70) 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?
71) Mortgage bonds:
A. usually pay little or no interest.
B. are a type of debenture.
C. are secured by a lien on real property.
D. can only be issued by financial institutions.
72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
A. Under all conditions, the project’s payback would be less than the profitability index.
B. In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
C. The project would add value to the firm.
D. The project’s IRR would have to be less that the firm’s discount rate.
73) 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
Cost of preferred stock
Cost of common stock
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?
74) An increase in future value can be caused by an increase in the __________.
A. rate of return
B. annual interest rate and number of compounding periods
C. starting value
D. original amount invested
E. dividends paid
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.
Net Cash Flow
76) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. strategic (management) planning.
B. management by objective.
C. marketing programming.
D. marketing strategy planning.
E. market planning.
77) Good marketing strategy planners know that:
A. the terms "mass marketing" and "mass marketer" mean basically the same thing.
B. firms like Nabisco and Wal-Mart are too large to aim at clearly defined target markets.
C. target marketing does not limit one to small market segments.
D. mass marketing is often very desirable and effective.
E. target markets cannot be large and spread out.
78) When doing "positioning," a marketing manager should:
A. plan physical product changes rather than image changes.
B. avoid targeting strategies.
C. focus on specific product features of all generic competitors.
D. rely on how customers think about proposed and/or existing brands in a market.
E. exclusively use focus groups.
79) The difference between target marketing and mass marketing is that target marketing:
A. does not rely on e-commerce but mass marketing does.
B. means focusing on a small market.
C. focuses on short-run objectives, while mass marketing focuses on long-run objectives.
D. focuses on specific customers, while mass marketing aims at an entire market.
E. aims at increased sales, while mass marketing focuses on increased profits.
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
81) "Marketing strategy planning" means:
A. selecting an attractive marketing mix.
B. finding attractive opportunities and developing profitable marketing strategies.
C. finding attractive opportunities and selecting a target market.
D. selecting an attractive target market.
E. selecting a target market and developing a marketing strategy.
82) Clustering techniques applied to segmenting markets __________.
A. is time consuming and expensive
B. usually require computers to group people based on data from market research
C. remove the need for managerial judgment
D. eliminate the need for marketing managers to specify in advance what dimensions might be relevant for grouping consumers
E. doesn’t apply to demographic data
83) A firm's "marketing mix" decision areas would NOT include:
84) The three basic tasks of ALL managers, according to the text, are:
A. hiring, training, and compensating.
B. planning, implementation, and control.
C. execution, feedback, and control.
D. marketing, production, and finance.
E. planning, staffing, and evaluating.
85) The clustering techniques that can be used in segmenting:
A. group people together based on age.
B. looks for differences between groups of people.
C. try to find similar patterns within sets of data.
D. group people together into heterogeneous product-market segments.
E. eliminate the need for management intuition and judgment.
A. is only propaganda.
B. not important if you have a good product.
C. reflects existing social values in the short run--while reinforcing these values in the long run.
D. turns consumers into puppets.
E. creates materialistic values which did not exist before.
87) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
A. GDP measures show the degree of competition in a market.
B. Other countries most likely don’t use the US Dollar as their primary currency.
C. GDP estimates may not be very accurate for very different cultures and economies.
D. income tends to be evenly distributed among consumers in most countries.
E. GDP measures show people's tendency to buy particular products.
88) Overtime pay is required to be paid to nonexempt employees who work:
A. Over 40 hours per week.
B. Over 50 hours per week.
C. Over 12 hours per day.
D. Over 10 hours per day.
E. Over 8 hours per day.
89) Which of the following statements is not true under the Fair Labor Standards Act?
A. Persons age 18 or over may work unlimited hours in nonhazardous jobs.
B. Persons age 18 or over may work unlimited hours in hazardous jobs.
C. Children ages 16 and 17 may work unlimited hours in nonhazardous jobs.
D. Children ages 14 and 15 may work limited hours in nonhazardous jobs.
E. Children under 14 cannot work at all, except on farms.
90) Which of the following is true about the power of administrative agencies to grant licenses?
A. Administrative agency procedures granting licenses do not allow for public comment by anyone other than the party applying for the license.
B. Courts generally defer to the expertise of an agency in licensing matters.
C. Administrative agencies have implied powers to grant licenses for the area in which they regulate.
D. Administrative agency decisions are subject to very active and rigorous judicial review.
E. Administrative agencies are seldom granted the power to grant licenses.
91) The tort of palming off involves:
A. Making false statements about the goods of another.
B. Representing one’s own goods to be those of a competitor.
C. Failing to credit another for that other person’s legal accomplishments.
D. Blaming another for one’s own actions and communicating that blame to at least one other person.
E. Knowingly selling goods that are defective.
92) In responding to a constitutional challenge to the Computer Decency Act, the U.S. Supreme Court ruled that:
A. The Act was unconstitutional because its provisions were too vague to define.
B. The Internet was similar to television and that restrictions similar to those on television programming were appropriate.
C. Obscene materials could not be available between 6:00 a.m. and 10:00 p.m. local time.
D. The Act was constitutional because obscene speech receives no protection.
E. 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.
93) Generally, which of the following statements relating to contractual capacity is correct?
A. Minors make void contracts.
B. People who have been adjudicated insane make voidable contracts.
C. People with no competence make voidable contracts.
D. People with limited competence make void contracts.
E. Persons with full competence make enforceable contracts.
94) If the value of the collateral is less than the debt owed to the secured party, then:
A. The secured party gets to take some other property as collateral so his entire debt is secured.
B. The secured party is unsecured for the entire debt.
C. The secured party loses the excess of debt over the value of the security.
D. The secured party is unsecured for the excess of debt over the value of the security.
E. The secured party is still secured for the entire debt owed him.
95) A professional corporation is one that:
A. Is typically used as a form of doing business by doctors and lawyers.
B. Has been in existence long enough to reasonably assure that it will be profitable in the near future.
C. Does not have shareholders.
D. Is formed with the assistance of a lawyer.
96) Which of the following is correct with regard to the relationship between law and ethics?
A. Lawful conduct is always ethical conduct.
B. The law may not .permit something that would be ethically wrong.
C. Although much of law is based on ethical standards, not all ethical standards have been enacted as law.
D. The rule of law and the golden rule of ethics demand the same response.
97) For which of the following kinds of intellectual property is a filing or registration required in order to receive protection?
B. Patents and Trademarks
C. Copyright and Service marks
E. Service marks
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. Mexico, Canada
B. Canada, Mexico
C. Great Britain, Paraguay
D. Canada, Venezuela
E. Mexico, Venezuela
99) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. Less than $1; about 25
B. About $2; about 15
C. Less than $1; about 40
D. Less than $1; about 15
E. $2; about 25
100) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?