BUS 475 Final Exam

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1. 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?

2. 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?

3. The cost of an asset and its fair market value are __________.

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

Inventory 300,000

Equipment 675,000

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. H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?

6. The first step in activity-based costing is to __________.

7. 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?

8. Which one of the following items is not generally used in preparing a statement of cash flows?

9. What is value chain management best defined as?

10. If a company reports a net loss, it __________.

11. “Generally accepted” in the phrase generally accepted accounting principles means that the principles __________.

12. Multinational corporations __________.

13. The cost principle is the basis for preparing financial statements because it is __________.

14. Which one of the following is a product cost?

15. In economics, the cost of something is __________.

16. When a firm sells a good or a service, the sale contributes to the nation’s income __________.

17. A rational decision maker __________.

18. To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.

19. Which of the following would be most likely to contribute to the breakdown of a cartel in a natural resource (e.g., bauxite) market?

20. The general term for market structures that fall somewhere in-between monopoly and perfect competition is __________.

21. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is __________.

22. In general, the longest lag for __________.

23. Which of the following is not correct?

24. Which of the following statements about GDP is correct?

25. In the open-economy macroeconomic model, other things the same, a decrease in the interest rate shifts __________.

26. The part of the balance of payments account that lists all long-term flows of payments is called the:

27. 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 __________.

28. Japanese manufacturers’ kaizen (continuous improvement) programs enable them to maintain:

29. 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:

30. Managers will utilize __________ skills with increasing frequency as they rise within an organization.

31. A manager’s ability to stimulate people to be high performers is referred to as:

32. One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

33. 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:

34. The basic components of an effective sexual harassment policy include the following EXCEPT:

35. 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:

36. The most dominant areas in the global economy include:

37. Teams that work on long-term projects but disband once the work is completed are known as:

38. Teams that operate separately from the regular work structure and exist temporarily are known as:

39. When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a:

40. Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity?

41. 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:

42. Independent events A and B would be consistent with which of the following statements:

43. 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?

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.

Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.

45. Use the following table to answer question:

P(M A) is approximately _____.

46. To estimate the average annual expenses of students on books and class materials a sample of size 36 is taken. The average is $850 and the standard deviation is $54. A 99% confidence interval for the population mean is __________.

47. 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, the standard deviation is approximately _____.

48. Assume that the arrival of airplanes at a one-runway airport is a Poisson distribution with a mean rate of = 8 planes per hour. The landing time is an exponential distribution with a mean of 5 minutes per plane. What is the mean number of planes in the system?

49. Which is not a tool of statistical quality control?

50. In a network diagram, an activity:

51. Which one of the following statements about managerial inputs to production and staffing plans is best?

52. In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.

53. When customers access a Web site and make purchases, they generate __________.

54. In the _____ phase of the decision making process, managers test potential solutions “on paper.”

55. Search engines and metasearch engines are examples of which network application?

56. Which of the following are disadvantages of the buy option for acquiring IS applications?

57. When your purchases are swiped over the bar-code reader at the point-of-sale terminals at Wal-Mart, a _____ records the data.

58. International Game Technology’s new ERP system produced all of the following benefits except:

59. Information-based industries are most susceptible to which one of Porter’s five forces?

60. __________ integrate the planning, management, and use of all of an organization’s resources, and are designed to tightly integrate the functional areas of the organization.

61. _____ 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.

62. The end result of the Data Life Cycle is the generation of _____.

63. According to the hedging principle, permanent assets should be financed with _____ liabilities.

64. 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?

65. 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

1 $1,000

2 $1,500

3 $ 500

66. 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.

67. Forward rates are quoted:

68. 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.

69. At 8% compounded annually, how long will it take $750 to double?

70. 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?

71. Mortgage bonds:

72. 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?

73. 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.

74. Exchange rate risk:

75. 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?

76. Regarding organizational buying, the people who have the power to select or approve the supplier–especially for larger purchases–are called:

77. The “four Ps” of a marketing mix are:

78. Clustering techniques applied to segmenting markets __________.

79. “Positioning”:

80. Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:

81. When looking at demographic dimensions, marketers should:

82. Which of the following is a business or organizational customer?

83. The three basic tasks of ALL managers, according to the text, are:

84. The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

85. A firm’s “marketing mix” decision areas would NOT include:

86. Marketing:

87. The basic objective of the U.S. market-directed economic system is to:

88. Which of the following activities by an administrative agency requires public notice and participation?

89. The tort of palming off involves:

90. Which of the following is correct about interpretive rules?

91. Which of the following statements is not true under the Fair Labor Standards Act?

92. Which of the following is correct about litigating commercial disputes?

93. An agent’s duty of notification can best be described as a duty to:

94. Which of the following is correct with regard to the relationship between law and ethics?

95. Generally speaking, the contract of a minor:

96. What is the major convention that provides international protection to patents?

97. What was the holding of the U.S. Supreme Court in its 2000 decision regarding a Massachusetts law affecting firms doing business with the nation of Myanmar (formerly Burma)?

98. One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

99. Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States’ second largest trading partner.

100. Which country does the text describe as becoming the largest producer and consumer of many of the world’s goods?

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