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BUS 475 Final Exam

A final exam covering business concepts, strategic decision-making, and case analysis.

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    BUS 475 Final Exam 1) Which one of the following items is not generally used in preparing a statement of cash flows? A. Adjusted trial balance B. Comparative balance sheets C. Additional information D. Current income statement 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? A. $150,000 B. $60,000 C. $90,000 D. $75,000 3) Of the following companies, which one would not likely employ the specific identification method for inventory costing? A. Music sto re specializing in organ sales B. Antique shop C. Farm implem ent dealership D. Hardware store 4) Which one of the following is a product cost? A. Indirect labor B. Sales person’s salaries C. Office salaries D. Advertising costs 5) The conceptual framework developed by the Financial Accounting Standards Board __________. A. was approve d by a vote of all accountants B. is viewed as providing a constitution for setting accounting standards for financial reporting C. are rules th at all accountants must follow D. is legally binding on all accountants

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    6) What is the preparation of reports for each level of responsibility in the company’s organization chart called? A. Static reporting B. Exception reporting C. Responsibility reporting D. Master budgeting analysis 7) The cost principle requires that when assets are acquired, they be recorded at __________. A. appraisal value B. selling price C. exchange price paid D. list price 8) If a company reports a net loss, it __________. A. will not be abl e to make capital expenditures B. will not be able to get a loan C. may still have a net increase in cash D. will not be able to pay cash dividends 9) The major reporting standard for management accounts is __________. A. generally accepted accounting principles B. relevance to decisions C. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management D. the Sarbanes - Oxley Act of 2002 10) The primary purpose of the statement of cash flows is to __________. A. fa cilitate banking relationships B. provide information about the cash receipts and cash payments during a period C. provide information about the investing and financing activities during a period D. prove that revenues exceed expenses if there is a net income 11) Managerial accounting __________. A. places emphasis on special - purpose information B. pertains to the entity as a whole and is highly aggregated C. is c oncerned with costing products D. is governed by generally accepted accounting principles 12) 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

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    C. ident ifying the activity - cost pools D. computing the activity - based overhead rate 13) Balance sheet accounts are considered to be __________. A. nominal accoun ts B. capital accounts C. temporary stockholders’ accounts D. permanent accounts 14) 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. Cost of la ndscaping the corporate office B. The western divi sion’s vice president’s salary C. General corporate liability insurance D. Factory janitor 15) 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. perfect competition and monopolistic co mpetition B. duo poly and imperfect competition C. duopoly and triopoly D. monopolistic competition and oligopoly 16) Lekeisha's income exceeds her expenditures. Lekeisha is a __________. A. borrower who demands money from the financial s ystem B. borrower who supplies money to the financial system C. saver who supplies money to the financial system D. saver who demands money from the financial system 17) A tax on an imported good is called a __________. A. supply tax B . trade tax C. tariff D. quota 18) Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her income. Lucy is a __________. A. borrower who demands money from the financial system B. borrower who supplies money to the financial system

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    C. saver who supplies money to the financial system D. saver who demands money from the financial system 19) One characteristic of an oligopoly market structure is: A. firms in the industry have some degree of market power. B. firms in the industry are typically characterized by very diverse product lines. C. the actions of one seller have no impact on the profitability of other sellers. D. products typically sell at a price that reflects their marginal cost of production. 20) 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. less than quantity supplied B. greater than quantity supplied C. double the quantity supplied D. equal to quantity supplied 21) When a firm sells a good or a service, the sale contributes to the nation’s income __________. A. only if the buyer of the good or service is a household or another firm B. only if the buyer of the good or service is a household C. We have to know whether the item being sold is a good or a service in order to answer the question D. whether the buyer of the good or a service is a household, another firm, or the government 22) The open - economy macroeconomic model includes __________. A. only the market for foreign - currency exchange B. only the market for loanable funds C. neither the market for loanable funds or the market for foreign - currency exchange D. both the market for loanable funds and the market for foreign - currency exchange 23) Most economists use the aggregate demand and aggregate supply model primarily to analyze __________. A. the effects of macroeconomic policy on the prices of individual goods B. short - run fluctuations in the economy C. pr oductivity and economic growth D. the long - run effects of international trade policies 24) In the market for foreign - currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.

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    A. supplied for the purpose of buying assets abroad B. supplied for the purpose of s elling assets domestically C. demanded for the purpose of import ing foreign goods and services D. demanded for the purpose of buying U.S. net exports of goods and services 25) Which of the following is not correct? A. A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth. B. The U.S. debt per - person is large compared with average lifetime income. C. Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so. D. In 2005, the U.S. government had a deficit. 26) The Federal Reserve will tend to tighten monetary policy when __________. A. interes t rates are rising too rapidly B. the growth rate of real GDP is quite sluggish C. it thinks the unemployment rate is too high D. it thinks inflation is too high today, or will become too high in the future 27) Which of the following statements about GDP is correct? A. Nominal GDP values production at current prices, whereas real GDP values production at constant prices. B. Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. C. Nominal GDP values production at constant prices, whereas real GDP values production at current prices. D. Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production. 28) The most dominant areas in the global economy include: A. North America, Western Europe and Asia B. North America, Asia and Africa C. North America, Mexico and Asia D. W estern Europe, Asia and Africa E. North America, South America and We stern Europe 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: A. Diversity B. Recruiting C. Employment D. Managerial ethics

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    E. Selection 30) A leader is: A. Some one with authority over others B. Someone who influences others to attain goals C. The top level manager in a firm or business D. So meone well - respected by others E. A strategic level manager 31) Teams that operate separately from the regular work structure and exist temporarily are known as: A. Management teams B. Self - managed teams C. Parallel teams D. Transnational teams E. Self - designing teams 32) __________ is the process of working with people and resources to accomplish organizational goals. A. Supervising B. Decision making C. Management D. Controlling E. Planning 33) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n): A. Online Business B. Entrepreneurship venture C. Large corporation D. Small business E. Multinational corporation 34) A manager's ability to stimulate people to be high performers is referred to as: A. Supervising B. Controlling C. Organizing D. Leading E. Planning 35) 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:

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    A . Customer - based integration B. Computer - integrated manufacturing (CIM) C . Just - in - time control (JIT) D. ISO 9000 E. Total quality management 36) Having individuals actually do the job they are applying for as a test to see if they can do it is __________. A. a formal means of screening candidates B. an approach with high reliability C. an approach with high face validity D. an informal means of screening candidates E. an approach with low reliability 37) The basic components of an effective sexual harassment policy include the following EXCEPT: A. To act immediately when employees complain of sexual harassment B. To develop an organization wi de policy on sexual harassment C. To establis h a means for ongoing training D. To establish a performance appraisal system E. To establish a formal complaint procedure 38) The best way for an employer to find out if a potential employee can do a job is by __________. A. administering an IQ test B. using the interview process C. using a performance simulation test D. using a written test E. having them spend a day in the office 39) As related to managing of human resources, diversity refers to: A. Differences in pay methods (such as hourly, salaried, overtime, hazard - pay, commissioned, etc.) B. Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.) C. Differences in retention strategies (such as trai ning, hiring, incentives, etc) D. Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.) E. Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)

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    40) 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: A. Mechanistic B. Six Sigma Quality C. Organic D. Total quality integration E. ISO 9000 41) 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. Successful entrepreneurs take very careful, calculated risks B. Anyone can start a business C. All entrepreneurs need venture c apital in order to get started D. Entrepreneurs are their own bosses and completely independent E. Money should not be considered a start - up ingredient 42) 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? A. 1,692 B. 609 C. 2,401 D. 1,604 43) In a right - tail test, a statistician came up with a z test statistic of 1.469. What is the p - value? A. .0708 B. .0301 C. .4292 D. .0874 44) 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 _____. A. 3.5 B. 3 C. 2.5

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    D. 2 45) 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 _____. A. 3.75 B. 4.55 C. 4.75 D. 3.03 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. 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)? A. Autocorrelation. B. High R2 (due to city size). C. No correlation. D. Positive slope (due to city size). 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 cannot be de termined without specifying . D. The p - value is greater than .05. 48) In an activity - on - node [AON] network, the nodes represent ____________, whereas the arcs represent ____________. A. precedence relationships; time B. events; activities C. activities; time D. activities; precedence relationships 49) Theoretically, service capacity must exceed demand, lest queues become infinitely long. If capacity does not exceed demand, what is likely to happen?

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    A. All of these B. Servers will eliminate time - consuming portions of their jobs, thereby increasing capacity. C. Customers will renege or balk, thereby reducing demand. D. Servers will decrease time spent per custome r, thereby increasing capacity. 50) Queuing models use an A/B/C notation. What do these variables represent? A. minimum time between arrivals/minimum allowable service time/minimum number of parallel servers B. maximum time between arrivals/maximum allowable service time/maximum number of parallel servers C. distribution of time between arrivals/distribution of service times/number of parallel servers D. average time between arrivals/average service time/number of parallel servers 51) In a network diagram, an activity: A. must always have a single, precise e stimate for the time duration. B. should always be something the co mpany has had experience with. C. is the largest unit of work effort consuming both time and resources that a project manager can schedule and control. D. is the smallest unit of work effort consuming both time and resources that a project manager can schedule and control. 52) 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 turnin g point would be in period 10. C. The trend was high er in year 10 than in year 20. D. Latest year sales are no better than in year zero. 53) Which of the following statements is correct? A. Advances in information technologies have n ot affected individual privacy B. An individual’ s right to privacy is absolute C. It is difficult to determine and enforce privacy regulations D. An individual’s right to privacy sup ersedes the needs of society E. The Internet has increased individuals’ privacy 54) The Global, Web - Based Platform enables individuals to do which of the following? A. produ ce and sell goods and services B. connect, compute, communicate, collaborate, and comp ete everywhere and all the time

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    C. access informatio n, services, and entertainment D. exchange knowledge E. all of these are true 55) It is very difficult to manage data for which of the following reasons? A. data securi ty is easy to maintain B. amount of data stays about the same over time C. data are scattered throughout organizations D. decreasing amount of extern al data needs to be considered E. data are stored in the same format throughout organizations 56) Success in the _____ phase of the decision making process results in resolving the original problem, and failure leads to a return to previous phases. A. implementation B. choice C. design D. intelligence E. consideration 57) When customers access a Web site and make purchases, they generate __________. A. Web data B. Tracking cookies C. Information D. Clickstream data E. Hyperlink data 58) _____ is the efficient and effective execution of specific tasks. A. Expertise B. Operational control C. Management control D. Strategic planning E. Wisdom 59) Geocoding is __________. A. integrating organizational transactions wit h spatially oriented databases B. integrating maps with spatially oriented databases and other databases C. encrypting spatial information D. acce ssing geographical information E. programmin g spatially oriented databases 60) Information - based industries are most susceptible to which one of Porter’s five forces?

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    A. threat of substitute products B. bargaining power of suppliers C. bargaining power of customers D. rivalry among existing firms in an industry 61) International Game Technology’s new ERP system produced all of the following benefits except: A. The company gained flexibi lity in manufacturing products B. Integrated th e company’s business functions C. Company was able to maintain its original business processes D. ERP system connected t he company’s global operations E. Operations employees were able to access manufacturing process details at their workstations 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) 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.) A. $570 B. $900 C. - $150 D. $490 64) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after - tax cost of the firm’s capital (required rate of return) for each source of financing is as follows: Cost of debt 8% Cost of preferred stock 12% Cost of common stock 16% Long - term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?

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    A. $871 B. $1,241 C. $1,568 D. $463 65) 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 inve stor’s required rate of return. D. the percentage of profits retained 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? A. $15.00 B. $16.67 C. $6.00 D. $37.50 67) 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. 68) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years? A. 5% B. 7% C. 8% D. 6% 69) 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. elimi nate different business risks. 70) According to the hedging principle, permanent assets should be financed with _____ liabilities.

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    A. spontaneous B. current C. fixed D. permanent 71) Bondholders have a priority claim on assets ahead of: A. shareholders. B. investors C. creditors. D. common and preferred stockholders. 72) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period? A. Balance sheet B. Income statement C. Quarterly statement D. Cash flow statement 73) 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 A. 48% B. 32% C. 28% D. 40% 74) 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? A. 20.62% B. 14.37% C. 15.62% D. 9.37% 75) You hold a portfolio with the following securities: Security Percent of Portfolio Beta Return X Corporation 20% 1.35 14% Y Corporation 35% .95 10% Z Corporation 45% .75 8%

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    Compute the expected return and beta for the portfolio. A. 10.67%, 1.02 B. 34.4%, .94 C. 9.9%, .94 D. 9.9%, 1.02 76) 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. str ategic (management) planning. C. market planning. D. marketing strategy planning. E. management by objective. 77) Analysis of demographic dimensions: A. consider s income and sex, but not age. B. can be used along with analysis of other dimensions to identify attractive target markets. C. only considers age. D. is the most effective way to identify unmet consumer needs. E. is the most important step to successful segmentation. 78) 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 each individual firm's role in the marketing system. C. one must consider the society’s role in the marketing system. D. one must determine how efficiently the society's resources are used. E. the evaluation is necessarily subjective. 79) "Marketing strategy planning" means: A. finding attractive opportunities and selecting a target market. B. selectin g an attractive marketing mix. C. selecting a target market and de veloping a marketing strategy. D. selectin g an attractive target market. E. finding attractive opportunities and developing profitable marketing strategies. 80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market. A. Customer relationship management (CRM) B. Market segmentation

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