BUS 475 FinalExam 7
1) 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
2) Managerial accounting __________.
A. is governed by generally accepted accounting principles
B. pertains to the entity as a whole and is highly aggregated
C. places emphasis on special-purpose information
D. is concerned with costing products
3) 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
4) 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. $10,000 income
B. not determinable
C. $10,000 loss
D. $48,000 income
5) “Generally accepted” in the phrase generally accepted accounting principles means that the principles __________.
A. have substantial authoritative support
B. have been approved for use by the managements of business firms
C. have been approved by the Internal Revenue Service
D. are proven theories of accounting
6) If a company reports a net loss, it __________.
A. will not be able to pay cash dividends
B. will not be able to make capital expenditures
C. will not be able to get a loan
D. may still have a net increase in cash
7) 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?
B. It should sell an equal quantity of both
C. Selling either results in the same additional income for the company
8) The first step in activity-based costing is to __________.
A. compute the activity-based overhead rate per cost driver
B. identify the cost driver that has a strong correlation to the activity cost pool
C. identify and classify the major activities involved in the manufacture of specific products
D. assign manufacturing overhead costs for each activity cost pool to products
9) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Comparative balance sheets
B. Adjusted trial balance
C. Current income statement
D. Additional information
10) What exists when budgeted costs exceed actual results?
A. A favorable difference
B. A budgeting error
C. An unfavorable difference
D. An excess profit
11) Which list below best describes the major services performed by public accountants?
A. Employee training, auditing, bookkeeping
B. Bookkeeping, mergers, budgets
C. Auditing, taxation, management consulting
D. Cost accounting, production scheduling, recruiting
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) 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?
14) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.
15) Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her income. Lucy is a __________.
A. saver who supplies money to the financial system
B. saver who demands money from the financial system
C. borrower who demands money from the financial system
D. borrower who supplies money to the financial system
16) 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.
17) A logical starting point from which the study of international trade begins is __________.
A. the recognition that government intervention in markets sometimes enhances the economic welfare of the society
B. the recognition that not all markets are competitive
C. the principle of absolute advantage
D. the principle of comparative advantage
18) 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
19) 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 __________.
A. the value to Maurice of Options A, C and D combined
D. the value to Maurice of the option he would have chosen had Option B not been available
20) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.
A. form various degrees of cartels
B. compete rather than cooperate with each other
C. cooperate rather than compete with each other
D. collude with each other
21) Resources are __________.
A. plentiful for households but scarce for economies
B. scarce for households and scarce for economies
C. plentiful for households and plentiful for economies
D. scarce for households but plentiful for economies
22) Many U.S. business leaders argue that the current state of U.S. net exports is the result of __________.
A. free trade policies of foreign governments.
B. unproductive U.S. workers.
C. unfair foreign competition.
D. U.S. export subsidies.
23) The balance of payment account is made up of:
A. an import account and an export account.
B. an investment account and a consumption account.
C. a monetary account and a fiscal account.
D. a current account and a financial and capital account.
24) 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.
25) The model of aggregate demand and aggregate supply explains the relationship between __________.
A. unemployment and output
B. wages and employment
C. real GDP and the price level
D. the price and quantity of a particular good
26) 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
27) Over the past two decades, the United States has __________.
A. had trade deficits in about as many years as it has trade surpluses.
B. persistently had a trade surplus.
C. persistently had a trade deficit.
D. generally had, or been very near to a trade balance.
28) 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
29) A leader is:
A. The top level manager in a firm or business
B. Someone well-respected by others
C. Someone who influences others to attain goals
D. Someone with authority over others
E. A strategic level manager
30) The pursuit of lucrative opportunities by enterprising individuals is called:
B. Social experimentation
E. Business incubating
31) 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
32) A manager’s ability to stimulate people to be high performers is referred to as:
33) 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 ceiling
B. Black box theory
C. Job enrichment theory
D. Job enlargement concept
E. Glass floor
34) 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
35) Which of these refers to the practices aimed at discovering and harnessing an organization’s intellectual resources?
A. Knowledge management
36) Which of these represent skills that managers need?
A. Technical, interpersonal & communication and conceptual & decision making
B. Professional, technical and interpersonal & communication
C. Conceptual & decision making, professional and technical
D. Interpersonal, quantitative, and professional
E. Interpersonal & communication, conceptual & decision making and professional
37) 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
38) Building a dynamic organization is another way of describing which function of management?
39) 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
40) The most dominant areas in the global economy include:
A. North America, Mexico and Asia
B. North America, South America and Western Europe
C. North America, Asia and Africa
D. Western Europe, Asia and Africa
E. North America, Western Europe and Asia
41) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
A. Interpersonal/communication skills
B. Diagnostic skills
C. Professional skills
E. Technical skills
42) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.
For this sample, the median is _____.
43) 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. ± .07357
C. ± .04472
D. ± .08765
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
of robberies in each city (thousands of robberies) and
of police force in each city (thousands of police)?
A. Positive slope (due to city size).
B. High R2 (due to city size).
D. No correlation.
45) In a random sample of 810 women employees, it is found that 81 would prefer working for a female boss. The width of the 95% confidence interval for the proportion of women who prefer a female boss is _____.
A. ± .0196
B. ± .0105
C. ± .0288
D. ± .0207
46) Independent events A and B would be consistent with which of the following statements:
A. P (A) = .3, P (B) = .5, P (A B) = .4
B. P (A) = .4, P (B) = .3, P (A B) = .5
C. P (A) = .5, P (B) = .4, P (A B) = .3
D. P (A) = .4, P (B) = .5, P (A B) = .2
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) 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) In a network diagram, an activity:
A. is the smallest unit of work effort consuming both time and resources that a project manager can schedule and control.
B. must always have a single, precise estimate for the time duration.
C. should always be something the company has had experience with.
D. is the largest unit of work effort consuming both time and resources that a project manager can schedule and control.
50) Which is not a tool of statistical quality control?
A. Pareto chart
B. Deming chart
C. Attribute control chart
D. Fishbone diagram
51) 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.
If we fit a linear trend to data that are growing exponentially __________.
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
52) The one-worker, multiple machines approach functions as:
A. a production bottleneck.
B. a way to create uniform workstation loads.
C. a poka-yoke device.
D. a one-person production line.
53) Zappos built the majority of its information systems using which of the following?
A. Proprietary software
B. Free software
D. Open source software
E. Vendor software
54) Search engines and metasearch engines are examples of which network application?
B. Web services
C. Local Area Network
55) In the _____ phase of the decision making process, managers test potential solutions “on paper.”
56) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
A. digital, e-commerce
B. physical, digital
C. e-commerce, digital
D. physical, financial
E. digital, physical
57) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
B. business environment
58) Which of the following are not provided by digital dashboards?
A. Transaction processing
B. Exception reporting
C. Drill down
D. Key performance indicators
E. Status access
59) A company wants to use data from past promotional mailings to identify people who would likely respond favorably to future mailings. This company would most likely use _____.
A. multidimensional data analysis
B. data mining
C. structured query language
D. expert systems
E. neural networks
60) 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
61) Computer support is greatest for which of the following problems?
A. Unstructured and operational control
B. Structured and management control
C. Semistructured and strategic planning
D. Semistructured and management control
E. Structured and operational control
62) 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. Operations employees were able to access manufacturing process details at their workstations
C. Integrated the company’s business functions
D. The company gained flexibility in manufacturing products
E. ERP system connected the company’s global operations
63) Disadvantages of using current liabilities as opposed to long-term debt include:
A. uncertainty of future liabilities
B. greater risk of illiquidity, and uncertainty of interest costs
C. decreased risk of liquidity
D. higher cash flow exposure
E. certainty of interest costs
64) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
A. The project would add value to the firm.
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’s IRR would have to be less that the firm’s discount rate.
65) An increase in future value can be caused by an increase in the __________.
A. starting value
B. annual interest rate and number of compounding periods
C. rate of return
D. original amount invested
E. dividends paid
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) 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
68) 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
69) 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?
70) 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.
71) According to the hedging principle, permanent assets should be financed with _____ liabilities.
72) 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.
73) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
B. a good buy.
C. at equilibrium.
74) Bondholders have a priority claim on assets ahead of:
D. common and preferred stockholders.
75) The common stockholders are most concerned with:
A. the size of the firm’s beginning earnings per share.
B. the risk of the investment.
C. the spread between the return generated on new investments and the investor’s required rate of return.
D. the percentage of profits retained.
76) Regarding organizational buying, the people who have the power to select or approve the supplier–especially for larger purchases–are called:
77) “Marketing strategy planning” means:
A. finding attractive opportunities and selecting a target market.
B. selecting an attractive marketing mix.
C. finding attractive opportunities and developing profitable marketing strategies.
D. selecting an attractive target market.
E. selecting a target market and developing a marketing strategy.
78) A cluster analysis of the “toothpaste market” would probably show that:
A. most consumers are mainly concerned about brightness of teeth.
B. different market segments seek different product benefits.
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. most consumers are concerned about cost.
79) When doing “positioning,” a marketing manager should:
A. focus on specific product features of all generic competitors.
B. plan physical product changes rather than image changes.
C. avoid targeting strategies.
D. rely on how customers think about proposed and/or existing brands in a market.
E. exclusively use focus groups.
80) Economists’ economic-buyer theory assumes that __________.
A. buyers logically compare choices in order to maximize their satisfaction
B. consumers always make rational decisions
C. demographic data are very useful for predicting consumer behavior
D. consumers should purchase only low-priced products
E. consumers only want the cheapest price
81) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. marketing programming.
B. strategic (management) planning.
C. management by objective.
D. marketing strategy planning.
E. market planning.
82) When evaluating macro-marketing:
A. the best approach is to consider the profit generated by individual firms within the overall system.
B. one must consider the society’s role in the marketing system.
C. the evaluation is necessarily subjective.
D. one must determine how efficiently the society’s resources are used.
E. one must consider each individual firm’s role in the marketing system.
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.
84) Coca-Cola is taking advantage of the new willingness of Chinese leaders to engage in international trade by marketing its soft drinks in China. What type of opportunity is Coke pursuing?
B. test marketing
C. market development
D. product development
E. market penetration
85) In comparison to the buying of final consumers, the purchasing of organizational buyers:
A. is always based on competitive bids from multiple suppliers.
B. is always emotional.
C. is strictly economic and not at all emotional.
D. leans basically toward economy, quality, and dependability.
E. is even less predictable.
86) 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.
87) 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.
88) Which of the following terms need not be disclosed under Truth-in-Lending Act?
A. The cash price of the product.
B. The annual percentage rate (APR).
C. The total finance charge.
D. The terms available from competitors.
E. Amount of payments.
89) The tort of intentional interference with contractual relations requires the following except:
A. Third-party knowledge of this contract.
B. A valid, enforceable contract between the contracting parties.
C. A new contract involving the third party who induced the breach.
D. Third-party inducement to breach the contract.
90) 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.
91) Which of the following activities by an administrative agency requires public notice and participation?
A. Substantive rule making and interpretive rule making only.
B. Substantive rule making only.
C. Statements of policy only.
D. Substantive rule making and statements of policy only.
E. Substantive rule making, interpretive rule making, and statements of policy.
92) What type of commercial speech did the U.S. Supreme Court say was protected in the Greater New Orleans Broadcasting Association, Inc. v. United States case?
A. Obscene speech.
B. Information on gambling and lotteries.
C. Information on how to build a bomb.
D. Information about child pornography.
93) Which of the following lists, in descending priority, of sources considered by most courts in settling questions of international law?
A. Treaties, customs, general principles of law, judicial decisions and teachings
B. Conventions, comity, customs, general principles of law
C. Treaties, customs, conventions, comity
D. Conventions, treaties, comity, customs
E. Treaties, customs, conventions, comity
94) Information which comes to the knowledge of an agent is:
A. Is imputed to the principal.
B. Can be disclosed to the principal only with the third party’s consent.
C. Will result in termination of the agency arrangement if it is not communicated to the principal.
D. Required to be communicated to the principal in all circumstances.
95) A professional corporation is one that:
A. Has been in existence long enough to reasonably assure that it will be profitable in the near future.
B. Is typically used as a form of doing business by doctors and lawyers.
C. Does not have shareholders.
D. Is formed with the assistance of a lawyer.
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) A “closely held corporation” is a corporation that is owned by:
A. The government.
B. A few shareholders, usually family members.
C. A nonprofit organization.
D. A large number of members of the public.
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
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