Burn After Reading        

Who’s Who
What’s What

In the World of CIA Fronts, Partners, Proprietaries & Contractors




NEW BOOK:

The Almost Classified Guide to CIA Front Companies, Proprietaries & Contractors
By WAYNE MADSEN
ISBN: 978-1-365-11196-9


Cool Justice Editor's Note: Following are excerpts from author Madsen's introduction and the body of the work. Additional suggested reading: News story about Madsen's book via the Washington, D.C. based Justice Integrity Project [link at the bottom of this post].

EXCERPTS:

From the Introduction


One of the most pervasive uses of companies as intelligence partners was under the CIA’s Operation MOCKINGBIRD. During the Cold War, the CIA, often with the approval of corporate executives, infiltrated their agents to work as journalists in newspapers, radio and television networks, wire services, and magazines. The following pages in this book are rife with examples of this penetration of the Fourth Estate – all too many in the opinion of this journalist. The CIA admitted to at least 400 journalists on the agency’s payroll at the height of MOCKINGBIRD. The CIA traditionally understates its capabilities, especially when its covert activities become publicly known. Moreover, the end of the Cold War did not stop the practice of the CIA in infiltrating the media and slant news reports to its wishes.

*

An insightful look behind the veils of secrecy into the CIA’s use of fronts, proprietaries, and partners calls into question the purpose of the CIA. Created by President Harry S Truman to serve as a central collector and repository of intelligence, the CIA became much more than that. A few weeks after the United States witnessed the assassination of President Kennedy in the middle of downtown Dallas, Truman penned an op-ed piece that appeared in several newspapers around the country. In it, Truman shared his regret for having created the CIA in 1947:

“I think it has become necessary to take another look at the purpose and operations of our Central Intelligence Agency—CIA . . . For some time I have been disturbed by the way CIA has been diverted from its original assignment. It has become an operational and at times a policy-making arm of the Government. This has led to trouble and may have compounded our difficulties in several explosive areas.

"I never had any thought that when I set up the CIA that it would be injected into peacetime cloak and dagger operations. Some of the complications and embarrassment I think we have experienced are in part attributable to the fact that this quiet intelligence arm of the President has been so removed from its intended role that it is being interpreted as a symbol of sinister and mysterious foreign intrigue.”

*

The 21st century’s CIA’s partners are more likely to be found among high-tech companies marketing the latest and greatest mobile applications and data mining programs than among banks, law offices, and advertising agencies. However, in the post-World War II era, the CIA’s top and middle echelons were normally found operating through cover as typewriter-pecking journalists, traveling Madison Avenue admen, corporate lawyers, and chain-smoking oilmen. In the 1970s and 80s, CIA contractors and partners began showing up in the high-tech field, with database, local area networking, and on-line information retrieval systems attracting the most interest by Langley.

*

As this book went to press, the smart phone game application Pokémon Go fad was sweeping the planet. Unbeknownst to many of the on-line game’s avid fan’s was the connection of the game’s developers to the CIA’s venture capital firm IN-Q-TEL. All users saw their geo-location and other smart phone data being swept up by a CIA partner firm.

SELECTED ENTRIES

Amazon, Inc. [CIA contractor]. Company provides cloud computing services for the CIA. Amazon’s CEO Jeff Bezos also owns The Washington Post.

American Historical Society. [CIA partner]. Many society officials were OSS/CIA officers.

American Press Institute. [CIA front]. Operating out of Columbia University, the institute’s director in the 1950s was a CIA officer.

AmeriCares. [CIA partner]. A non-profit organization that is often the “first in” at refugee situations. Founded by tycoon J. Peter Grace, a board chairman of the CIA front, the American Institute for Free Labor Development (AIFLD) and a trustee of another CIA front, the American Committee for Liberation from Bolshevism, AmeriCares was involved in funding the Nicaraguan contras. The group has also provided the CIA with recruiting opportunities at mass refugee sites, particularly in Latin America and Asia.

Bechtel Corporation. [CIA contractor]. Bechtel is a large construction company that has included former CIA director Richard Helms, CIA pseudonym “Fletcher M. Knight,” among its executive ranks. Bechtel was active in providing corporate cover for the OSS in the Middle East during World War II. Bechtel has been a consummate service company for various CIA operations, including support for the CIA-inspired coup against the Syrian government in 1949, the Iranian government of Prime Minister Mohamed Mossadeq in 1953, and President Sukarno of Indonesia in 1965. From the 1960s to the 1970s, Bechtel provided cover for CIA agents in Libya under both the regime of King Idris and his successor, Muammar Qaddafi. Sometimes called a “secret arm” of the CIA, Bechtel’s executives included those who would join President Reagan’s Cabinet, including Secretary of State George Schultz and Secretary of Defense Caspar Weinberger.

Before World War II, Steve Bechtel formed a military-industrial complex partnership with John McCone. McCone later became the chairman of the Atomic Energy Commission and later, director of the CIA. The CIA has used Bechtel to provide cover for non-official cover CIA operatives abroad.

Blackstone Investment Group. [CIA front]. With offices in Washington, DC and Moscow, arranged for the purchase of KGB documents following the collapse of the Soviet Union. Among the documents sought by the front company were any related to illegal CIA activities during the Cold War, including the 1963 assassination of President John F. Kennedy.

Bourbon and Beefsteak Bar and Restaurant. [CIA front]. Opened in 1967 in King’s Cross in Sydney, Australia. Served as a rendezvous point for CIA, Australian Security Intelligence Organization (ASIO), and organized crime figures. Its proprietor was Bernie Houghton, a CIA operative with links to Nugan Hand Bank, CIA weapons smuggler Edwin Wilson, and CIA clandestine services officers Theodore Shackley, Rafael Quintero, and Thomas Clines.

Center for Democracy. [CIA front]. Administered under the aegis of Boston University, the center maintained offices in Boston, Washington, DC, Guatemala City, and Strasbourg, France. Involved in CIA operations in eastern Europe, Central America, and Africa.

Colt Patent Firearms Company. [CIA partner]. Based in Hartford, Connecticut, provided corporate cover for CIA officers operating abroad.

Daddario & Burns. [CIA partner]. Headed by former OSS officer Emilio Daddario, a Democratic Representative from Connecticut, the Hartford-based law firm provided services to the CIA.

DC Comics. [CIA partner]. Worked with the International Military Information Group (IMIG), a joint CIA/Pentagon unit at the State Department, to disseminate propaganda comic books, featuring Superman, Batman, and Wonder Woman, in Serbo-Croatian and Albanian, to youth in the Balkans during the military conflicts in that region.

Disney Corporation. [CIA partner]. CIA agents who were adept at creating front companies and shell corporations in Florida, worked closely with Disney in preparation for the construction of Disney World near Orlando, Florida. OSS veteran “Wild Bill” Donovan and CIA shell company expert Paul Helliwell helped create two fake Florida cities, Bay Lake and Lake Buena Vista, as well as a number of shell corporations, to keep secret the plans for Disney World. This kept land prices low because real estate speculators were unaware of the prospective value of the land in a desolate area of central Florida.

Emory School of Medicine. [CIA partner]. Located in Atlanta, Georgia. Involved in the CIA’s MK-ULTRA behavioral modification project.

Enron Corporation [CIA partner]. Houston-based firm that was used by the CIA to provide commercial cover for its agents around the world. There were at least 20 CIA employees on Enron’s payroll. Andre Le Gallo, a former official of the CIA’s Operations Directorate, went to work as a corporate intelligence officer for Enron.

Fair Play for Cuba Committee (FPCC). [CIA front]. Officially established by American Trotskyists, the group was penetrated by CIA operatives. The FPCC New Orleans office was a CIA front that provided cover for the anti-Fidel Castro activities of Lee Harvey Oswald, Clay Shaw, and David Ferrie, among others. The New Orleans FPCC office was located at 544 Camp Street and shared the same building entrance with Guy Banister Associates, Inc., a private detective agency, the address for which was 531 Lafayette Street and around the corner from 544 Camp Street.

In December 1963, after the assassination of President John F. Kennedy, the FPCC ceased all U.S. operations.

General Electric Company. [CIA partner]. Based in Fairfield, Connecticut, provided corporate cover for CIA officers operating abroad.

General Foods Corporation. [CIA partner]. Advertising account at CIA’s Robert Mullen Company handled by an active CIA employee.

Google, Inc. [CIA partner]. Developed as a result of a research grant by the CIA and Pentagon to Stanford University’s Department of Computer Science. The CIA referred to the research as the “google project.”

Greenberg Traurig. [CIA partner]. Washington, DC “connected” law firm.

Guy Banister Associates, Inc. [CIA partner]. New Orleans private detective agency headed by former FBI agent Guy Banister. The detective agency coordinated the activities of various anti-Castro Cuban groups in New Orleans, including Banister’s own Anti-Communist League of the Caribbean, as well as the Cuban Revolutionary Council, the Cuban Democratic Revolutionary Front, Friends of Democratic Cuba, and the Crusade to Free Cuba Committee.

Banister and Associates shared office space with the CIA’s New Orleans front, the Fair Play for Cuba Committee, headed by Lee Harvey Oswald.

Hale and Dorr. [CIA partner]. Boston-based law firm that provided cover for CIA’s Independence and Brown Foundations.

Halliburton. [CIA contractor]. Based in Houston, it is the world’s largest oil service company. Recipient of a number of CIA sole-source contracts for services worldwide.

Harper and Row, Inc. [CIA partner]. Manuscripts submitted to the New York publisher that dealt with intelligence matters, particularly CIA operations, were turned over to the CIA for censoring edits before publication.

Hewlett Packard Corporation. [CIA partner]. Sold computers to Iraq for Saddam Hussein’s missile program with the knowledge and approval of the CIA.

Hill & Knowlton. [CIA partner]. Public relations firm that teamed with the CIA on a number of operations. Hill & Knowlton’s numerous offices abroad provided cover for CIA agents. One known Hill & Knowlton office that was a CIA front operation was in Kuala Lumpur.

Kerr-McGee. [CIA partner]. Provided corporate cover for CIA officers operating overseas.

Kissinger Associates, Inc. [CIA partner]. New York-based international consulting firm founded by former Secretary of State and National Security Adviser Henry Kissinger. Former National Security Adviser Brent Scowcroft is a co-owner. The firm provided support to the CIA-linked American Ditchley Foundation and the Bilderberg Group. Much of the 1982 seed money for Kissinger Associates was provided by Goldman Sachs.

Knight Foundation. [CIA partner]. Also known as the John S. and James L. Knight Foundation. Based in Miami, the foundation provides funding for various CIA-connected media operations in the United States and around the world.

Kroll Inc. [CIA partner]. Founded in 1972 by Jules Kroll, who had links to both U.S. and Israeli intelligence. Based in Manhattan. French domestic law enforcement believed Kroll’s Paris office was a CIA front. Kroll handled the security for the World Trade Center after the 1993 terrorist bombing and continued to be responsible for security up to, during, and after the September 11, 2001 terrorist attack. Kroll employed former FBI assistant director for counter-terrorism John O’Neill, who died in the collapse of the World Trade Center.

Lincoln Savings and Loan. [CIA partner]. Based in Irvine, California and headed by notorious swindler Charles Keating, Jr., involved in laundering funds for the Iran-contra scandal.

Lone Star Cement Corporation. [CIA partner]. Based in Stamford, Connecticut and linked to the Bush family, provided corporate cover for CIA officers operating abroad. Involved in the Iran-contra scandal.

Mary Carter Paint Company. [CIA front]. A money-laundering operation for the CIA. Involved in casinos in the Bahamas.

Monsanto. [CIA partner]. The firm contracted with former CIA official Cofer Black’s Total Intelligence Solutions (TIS), a subsidiary of the CIA-connected Blackwater USA, later Xe Services, to monitor animal rights groups, anti-genetically modified (GM) food activists, and other groups opposed to Monsanto’s agri-business operations worldwide.

National Enquirer. [CIA partner]. The tabloid’s founder, Generoso (Gene) Pope, Jr., worked for the CIA’s psychological warfare unit and the agency’s Italy branch in 1950. In 1952, Pope acquired The New York Enquirer broadsheet and transformed it into a tabloid, renaming it The National Enquirer. This transformation bore the imprimatur of the CIA’s Operation MOCKINGBIRD media influence program.

Newsweek. [CIA partner]. Magazine reporters and stringers fed information to the CIA. Newsweek’s stringers in southeastern Europe and the Far East were CIA agents. When Newsweek was bought by The Washington Post Company in 1961, cooperation between the magazine and the CIA increased. It was a participant in the CIA’s Operation MOCKINGBIRD media influence program. Much of the staff of Newsweek was absorbed into a new online publication, The Daily Beast, which continues to disseminate CIA-influenced articles. See Washington Post.

Nieman Foundation. [CIA partner]. Located at Harvard University, the foundation awarded Nieman Fellowships, some on behalf of the CIA, for foreign journalists to study at Harvard. The journalists were subjected to CIA recruitment efforts prior to their returning to their home countries.

Pamela Martin & Associates. [CIA partner], Escort firm run by Deborah Jeane Palfrey, the so-called “DC Madam.” During her 2008 trial for mail fraud, Palfrey attempted to invoke the Classified Information Procedures Act in order to discuss her relationship with the CIA. The U.S. Court refused Palfrey’s request and she was convicted and later said to have committed suicide before her sentencing hearing in Washington, DC. One of her clients was Randall Tobias, the head of the CIA-connected USAID. Another was Louisiana Republican senator David Vitter.

Paris Review. [CIA front]. Literary magazine edited by George Plimpton. Published works by Jack Kerouac and Samuel Beckett. The magazine’s co-founder, Peter Matthiessen, relied on his affiliation with the magazine as his CIA cover.

Quaker Oats Company. [CIA partner]. Worked with the CIA and Atomic Energy Commission to place trace amounts of radiation in breakfast cereal served to boys at the Fernald School for the mentally retarded in Waltham, Massachusetts.

Radio Corporation of America. [CIA partner]. Provided corporate cover for CIA officers operating abroad, particularly in Iran, Philippines, Japan, and West Germany. Provided technical assistance to CIA-financed clandestine and propaganda radio stations worldwide, including Radio Free Europe. RCA founder David Sarnoff was a major supporter of CIA operations, including propaganda dissemination around the world. RCA chairman and chief executive officer Thornton F. Bradshaw was active in the operations of the CIA-linked American Ditchley Foundation.

Reily Coffee Company. [CIA partner]. Also known as William B. Reily Coffee Company and based in New Orleans, this company employed Lee Harvey Oswald and a number of other U.S. government employees, many of whom were suspected CIA officers.

Robert M. Mullen Company. [CIA proprietary]. A Washington, DC public relations firm, it was used as a front for CIA activities. E. Howard Hunt, the CIA agent, worked for Robert Mullen when he was arrested in the break-in of the Democratic National Committee headquarters at the Watergate Hotel in Washington in 1972. The Senate Watergate Committee reported that “the Mullen and Company has maintained a relationship with the Central Intelligence Agency since its incorporation in 1959. It provided covers for agents in Europe (Stockholm), Latin America (Mexico City), and the Far East (Singapore) at the time of the Watergate break-in.”

Rockefeller Foundation. [CIA partner]. Used by the CIA to direct scholarships and grants to the Third World and Eastern Europe. Rockefeller Foundation money was funneled to the American Committee for a United Europe (ACUE), created in 1948. The chairman of ACUE was OSS chief William J. Donovan and the vice chairman was Allen Dulles. One of ACUE’s board members was Walter Bedell Smith, the first CIA director.

Summa Corporation. [CIA partner]. Owned by Howard Hughes, Summa is believed to have skimmed gambling profits from the Sands, Desert Inn, Frontier, Silver Slipper, Castaways, and Landmark casinos in Las Vegas and Harold’s Club in Reno for the CIA and the Mafia. Provided financial cover for the CIA’s Glomar Explorer project.

Teneo Intelligence. [CIA partner]. Branch of Teneo Holdings, which is headquartered in New York. Teneo Holdings’s intelligence branch includes former CIA officials. Teneo is closely linked to former President Bill Clinton and Hillary Clinton. Teneo Intelligence has offices in New York, London, Rome, Brussels, Dubai, Bogota, New Delhi, and Tokyo.

Texas Commerce Bank (TCB). [CIA partner]. Houston-based bank founded by the family of James Baker III. Texas Commerce Bank was used to provide commercial cover for CIA agents. After serving as vice president for Texas Commerce Bank in Caracas from 1977 to 1979, Jeb Bush joined his father’s presidential campaign in 1980. Serving with Bush on the campaign was Robert Gambino, the CIA deputy director of security who gave Bush his orientation brief at Langley in 1977.

Kenneth Lay, the chairman of Enron, which had its own links to the CIA, served on the board of Texas Commerce Bank. Texas Commerce Bank was acquired by Chemical Bank in 1987.

The bank provided major loans to Howard Hughes’s Summa Corporation. See Summa Corporation.

United Fruit Company [CIA partner]. Involved in 1954 CIA overthrow of Jacobo Arbenz government in Guatemala. Published the Latin America Report, a publication that was a CIA front used for clandestine activities. The CIA transferred weapons to United Fruit employees in Guatemala who were involved in undermining the Arbenz government. The joint CIA-United Fruit plan was code named OPERATION FORTUNE. Company provided an airfield in Guatemala for the CIA’s training of Cuban exiles for the Bay of Pigs invasion of Cuba.

U.S. Rubber Company. [CIA partner]. Headquartered in Naugatuck, Connecticut and later called Uniroyal, provided corporate cover to CIA officers operating abroad. Included those operating under the cover of the Dominion Rubber Company of Canada, a subsidiary of U.S. Rubber Company.

U.S. Youth Council (USYC). [CIA front]. Founded in 1945 and based in New York. Some 90 percent of its funds came from the CIA. USYC received funding from the Foundation for Youth and Student Affairs (FYSA), a CIA front. The USYC was composed of American Youth Hostels, Camp Fire Girls, 4-H, American Unitarian Youth, National Catholic Welfare Conference, National Students Assembly, YMCA and YWCA.

Wackenhut. [CIA contractor]. Wackenhut, a Palm Beach Gardens, Florida-based security firm, stood accused of providing the CIA with specialized services around the world, including Chile, Greece, and El Salvador. Its Venezuelan branch, Wackenhut Venezolana, C.A., was accused in 2002 of involvement in the CIA’s coup against President Hugo Chavez. William Casey served as Wackenhut’s outside counsel before becoming CIA director in 1981.

Wackenhut eventually merged into the global security firm G4S.

Washington Post. [CIA partner]. The Washington Post was part of the CIA’s Operation MOCKINGBIRD, the agency’s media influence project. Post publisher Phil Graham was a close friend and associate of MOCKINGBIRD chief Frank Wisner, Sr. and CIA director Allen Dulles. Wisner assisted Graham in acquiring The Washington Times-Herald and WTOP radio, creating a sizable CIA-influenced media operation in the nation’s capital.

W. R. Grace. [CIA partner]. Provided corporate cover to CIA officers operating abroad, particularly in Latin America. Provided donations to CIA front foundations.

  • News story about Madsen's book via The Justice Integrity Project



  •           Dow Dogs May Be Barking Up The Right Tree        
    An investment strategy that has been derided by some money managers and academics as overly simplistic, once again, proved to be best in show last year. The Dogs of the Dow strategy produced a capital gain of 26.59% in 2006 plus a dividend kick of 4.77%, handsomely beating the Dow Jones Industrials gain of 16.3% and yield of around 2.2%. The strategy, popularized by Michael O’Higgins in his 1991 book “Beating the Dow,” consists of simply buying the 10 highest-yielding dividend payers in the Dow Jones Industrials, holding them for a year, and then buying the new crop of dogs. Proponents call it an easy way to handsomely outperform the average fund manager most years with an easy, do-it-yourself strategy. Critics call it an overly simplistic approach with hidden costs and risks that has outperformed only because of “data mining” - searching for statistical anomalies and then assuming they will work in the future. “The starched shirt and suspender crowd in New York are pretty savvy, and it’ll take a bit more to beat them than this,” said finance Professor Grant McQueen of Brigham Young University’s Marriott School of Management. “It’s a competitive world, and to think you’ll get rewards without doing homework is naive.” Source: Scottrade News, Jan 3, 2007
              [news] A Special Report on Business Intelligence        
    Thursday, July 8, 2004
    Dateline: China
     
    One of my favorite industry trades, Computerworld, recently published a special report on business intelligence (BI).  (See http://tinyurl.com/2w8j2 .)  As regular readers of this blog know, I'm hot, hot and hotter on BI.  Not only are BI apps booming in their own right, but BI also provides an open door into other structured data apps (e.g., ERP and SCM).  Also, there is a burgeoning number of apps requiring both BI and knowledge management (KM) solutions, providing a host of new opportunities.  (For now, think of BI for structured data and KM for unstructured data.  But the lines between KM and BI are blurring.)
     
    The Computerworld report includes an introduction to BI titled, "BI for the Masses," an introduction to Web harvesting, and a superb article on text mining; there are several online exclusives as well.  In this post, I'm going to focus on an article titled, "Predictions for BI's Future," by providing excerpts with commentary.  As usual, items in bold are MY emphasis; items in red are MY commentary.
     
    Embedded BI.  "Over the next four to six years, BI systems will become embedded in small, mobile devices, such as manufacturing sensors and PDAs in the field, which in turn will be linked to more centralized systems." -- Erik Thomsen, distinguished scientist, Hyperion Solutions Corp., Sunnyvale, Calif.
     
    PB DM (petabyte data mining).  "Within three years, companies and governmental agencies will be able to successfully run analytics within a centralized data warehouse containing 1 petabyte or more of data -- without performance limitations." -- Dave Schrader, technology futurist, Teradata, a division of NCR Corp., El Segundo, Calif.
     
    HPC to the rescue!  "Within the next two to three years, high-performance computing technology used by scientific and engineering communities and national R&D labs will make its way into mainstream business for high-performance business analytics. This transition will be driven by the growing volume of complex data and the pressing need for companies to use forecasting and predictive analytics to minimize risk and maximize profit-generating opportunities." -- Phil Fraher, chief operating officer, Visual Numerics Inc., San Ramon, Calif.
     
    BI meets AI.  "In the near future, business leaders will manage by exception, and automated systems will handle significant loads of routine tasks." -- Mike Covert, chief operating officer, Infinis Inc., Columbus, Ohio
     
    Visualization.  "Over the next two to three years, BI systems will automatically suggest appropriate visualizations, which in turn will dramatically increase the use of visualization and our understanding of complex relationships." -- Erik Thomsen, distinguished scientist, Hyperion Solutions
     
    BI + BPM + BAM.  "Businesses need more than a rearview mirror to drive their business forward into the next era. A new category of intelligence tools will emerge over the next two to three years that combines business process management, business activity monitoring (BAM) and business intelligence to enable the "actively managed enterprise." This will combine the scorecards and rearview-analysis capabilities of BI with the real-time, event-driven analysis of BAM and feed that information into automated business processes for on-the-fly steering of the business towards scorecard goals. This will exponentially elevate the speed at which businesses are able to operate, adapt and make critical decisions." -- Tim Wolters, chief architect of business activity monitoring solutions, webMethods Inc., Fairfax, Va.
     
    Bottom line:  Go to a BI-related ACM or IEEE CS conference and you'll hear a lot of presentations on all of the apps described above.  It's where the rubber meets the road:  This stuff is real!!  However, it's important to differentiate "real" BI with much more simplistic reporting software (like a good "chunk" of the so-called BI solutions provided by Business Objects, Cognos and even Microsoft -- via their recent acquisition of ActiveViews).
     
    A BI Site to Review
     
    Last week I came across a paper published in the current issue of the Journal of Intelligent and Fuzzy Systems.  In this paper the project called "Data Mining and Decision Support for Business Competitiveness: A European Virtual Enterprise" (SolEuNet) is used as a case study and "the source of lessons learned."  The paper provides a link to the SolEuNet Web site (see http://tinyurl.com/3x5vo ); at the SolEuNet site I found a wealth of case studies with supporting technical documents on leading-edge BI apps (see, for example, Workpackage 7 on "Combining Data Mining and Decision Support with Information Systems" at http://tinyurl.com/yqkqm ).  Remember, strategy consulting isn't merely about comparing product specs (regardless what the IT advisory services may say).
     
    The Gartner Conference on BI
     
    I got my hands on three i-banking analyst reviews of the Gartner BI conference.  The Morgan Stanley report (dated 27 April) noted that customer activity levels appeared to be strong and "many seem to be taking a more strategic approach to BI, resulting in the emergence of larger transactions."  (My emphasis.)  Corporate performance management (CPM) is driving some of the larger deals, with Cognos and Hyperion taking the lead.  Evidently, systems integrators (SIs) are getting religion and developing collaterals around CPM messaging.  RBC Dominion Securities produced a more in-depth report (dated 29 April) and noted the following:
    • Gartner expects the market to accelerate in 2004.
    • The ETL (extraction, transformation, and load) market will flatten (finally).
    • CPM is hot.  "Hyperion, Cognos, and SAS appeared to be the best positioned non-ERP vendors to capitalize on the CPM market opportunity."  However, "(they) believe that SAP is the best-positioned large enterprise software vendor to execute in both the BI and CPM market ..."
    • Finally, the Gartner BI conference itself was hot, with 973 attendees, an increase in attendance of 70% over last year.
    UBS chimed in with their own report (dated 30 April), which in some ways was a bit more technical than the other two reports cited above.  UBS noted that heterogeneous environments require independent tools (e.g., it is very difficult to get heterogeneous data into an ERP data warehouse <DW>).  Gartner's rule of thumb is that an ERP-derived BI/DW solution should be on the short-list only if more than 60% of an organization's BI data resides within that single app vendorUBS also noted that the importance of BI is leading to the formation of BI competency centers.  They also believe that SAP and Microsoft remain significant long-term threats to the independent software vendors such as Cognos and Business Objects.  BTW, all three reports seemed a bit down on Business Objects.
     
    Another Computerworld feature on BI
     
    Sometimes advertorials can be a good thing.  A case in point is the 26 April issue of Computerworld which provides a link to a new, six page Computerworld White Paper on BI.  The paper is titled, "Charting the Course: A Guide to Evaluating Business Intelligence Products"; it's a good, practical read.  Tactical, product spec advice and guidelines, but still a good read.  The PDF can be found at http://tinyurl.com/2gt3d .
     
    Recent Tidbits on BI
     
    The New Straits Times (Malaysia) via Asia Africa Intelligence Wire reported on 24 June that SAS "expects the BI market in Asia to register double-digit growth for the next five years.  (Don Cooper Williams, director of marketing and alliances for SAS Asia-Pacific) cites a recent report from research house International Data Corp, which predicts that BI software market in the region (excluding Japan) to grow by 12 per cent this year, up from 7.5 per cent in 2003."  Note to SIs in China:  BI isn't just hot in the States; leverage your skills for serving the U.S. market and the domestic market.
     
    From the channel, India Business Insight (also via Asia Africa Intelligence Wire) on 31 May announced that "Business Objects has entered into a long-standing systems integrator agreement with Wipro Infotech (WI) to provide business intelligence (BI) solutions to customers."  Note to SIs in China:  Don't be left without a dance partner.
     
    Additional Articles for Review
     
    I did a quick scan of trade lit and found a few articles worth reading.  First, the March-April issue of Financial Executive talks about CPM -- Corporate Performance Management -- as it relates to BI.  The May issue of Insurance & Technology takes a vertical look at BI (rather basic apps), as does the April issue of Business Credit.  Always think verticals.
     
    A Final Wrap (or Should I Say, "Rap"?)
     
    Back to Computerworld.  More specifically, see the 29 March issue of Computerworld.  According to a survey conducted by IBM Business Consulting Services, BI is a high priority on the plate of C-level execs.  In a Computerworld poll, 39% of IT executives listed business intelligence projects as their most critical IT projects.  By 2005, market research firm IDC projects that the worldwide market for business intelligence software will total about $6 billion -- up from $2.5 billion in 2003 -- signaling a major increase in business intelligence projects.  IT executives say the skills they need on business intelligence projects include systems integration, data modeling, database administration, data standardization and project management.
     
    Cheers,
     
    David Scott Lewis
    President & Principal Analyst
    IT E-Strategies, Inc.
    Menlo Park, CA & Qingdao, China
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              51) Which one of the following statements concerning production and staffing plans is best? A. A master production schedule is a projected statement of income, costs, and profits. B. Aggregation can be performed along three dimensions: product families, labor, and time. C. Production plans are based primarily on information from the master production plan. D. A staffing plan is the intermediate link between the business plan and the master production schedule.         

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that: A. you would lose $80 if one of your workers missed an entire 8 hour shift. B. the next worker that offers to work an extra 8 hours should receive at least $80. C. you would be willing pay up to $60 for someone to work another 6 hours. D.         

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel. A. physical, digital B. e-commerce, digital C. physical, financial D. digital, e-commerce E. digital, physical        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              54) When customers access a Web site and make purchases, they generate __________. A. Tracking cookies B. Web data C. Information D. Clickstream data E. Hyperlink data        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information. A. regionalization B. globalization C. nationalization D. business environment         

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              56) Various organizations that promote fair and responsible use of information systems often develop __________. A. a code of ethics B. responsibility charters C. a strategic plan D. a mission statement E. a goals outline        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              57) What is _____ is not necessarily _____. A. Illegal, unethical B. Unethical, legal C. Ethical, illegal D. Unethical, illegal E. Ethical, legal        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              58) _____ provides users with a view of what is happening, where _____ addresses why it is happening. A. Multidimensional data analysis, structured query language B. Multidimensional data analysis, neural networks C. Data mining, multidimensional data analysis D. Data mining, expert system E. Multidimensional data analysis, data mining        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              59) Computer support is greatest for which of the following problems? A. Semistructured and strategic planning B. Semistructured and management control C. Unstructured and operational control D. Structured and operational control E. Structured and management control        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              60) The management cockpit best exemplifies which type of system? A. Decision support system B. Functional area information system C. Expert system D. Digital dashboard E. Group decision support system        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              61) _____ is the efficient and effective execution of specific tasks. A. Operational control B. Expertise C. Management control D. Strategic planning E. Wisdom        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              62) Geocoding is __________. A. accessing geographical information B. integrating maps with spatially oriented databases and other databases C. integrating organizational transactions with spatially oriented databases D. programming spatially oriented databases E. encrypting spatial information        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              63) 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        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period? A. Cash flow statement B. Balance sheet C. Income statement D. Quarterly statement        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              65) 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. $490 C. $900 D. -$150         

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
    D.   Nominal GDP values production at constant prices, whereas real GDP values production at current prices.
               
    23) Which of the following is not correct?
    A.   The U.S. debt per-person is large compared with average lifetime income.
    B.   In 2005, the U.S. government had a deficit. C.   A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
    D.   Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.
               
    24) The part of the balance of payments account that lists all long-term flows of payments is called the:
    A.   balance of trade. B.   financial and capital account.
    C.   government financial account.
    D.   current account.
    25) 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 sacrifice ratio dilemma B.   the monetary policy reaction lag
    C.   the time inconsistency of policy
    D.   inflation targeting
    26) In general, the longest lag for __________.
    A.   fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
    B.   both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
    C.   monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
    D.   both fiscal and monetary policy is the time it takes to change policy
    27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
    A.   Only item (2) is included in GDP and it is included in the investment component.
    B.   Item (1) is included in the consumption component, while item (2) is included in the investment component.
    C.   Item (1) is included in the investment component, while item (2) is included in the consumption component.
    D.   Both item (1) and item (2) are included in the consumption component of GDP.

    28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
    A.   Professional B.   Interpersonal and communication
    C.   Technical D.   Professional E.   Conceptual and decision
    29) Which of these represent skills that managers need?
    A.   Interpersonal, quantitative, and professional B.   Technical, interpersonal & communication and conceptual & decision making
    C.   Professional, technical and interpersonal & communication D.   Conceptual & decision making, professional and technical E.   Interpersonal & communication, conceptual & decision making and professional
               
    30) Building a dynamic organization is another way of describing which function of management?
    A.   Staffing B.   Organizing
    C.   Leading D.   Controlling
    E.   Planning
    31) 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.   Anyone can start a business B.   All entrepreneurs need venture capital in order to get started C.   Successful entrepreneurs take very careful, calculated risks D.   Entrepreneurs are their own bosses and completely independent
    E.   Money should not be considered a start-up ingredient
    32) 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.   Managerial ethics
    C.   Recruiting D.   Employment E.   Selection
    33) A manager's ability to stimulate people to be high performers is referred to as:
    A.   Planning B.   Supervising
    C.   Controlling
    D.   Organizing E.   Leading
    34) 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.   Total quality management B.   Customer-based integration C.   Computer-integrated manufacturing (CIM)
    D.   Just-in-time control (JIT)
    E.   ISO 9000
    35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:
    A.   A strategic alliance B.   A homogeneous workforce C.   Positive working relationships with all employees
    D.   A Learning advantage over their competition E.   Larger, faster facilities
    36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
    A.   Technical skills B.   Conceptual C.   Professional skills D.   Interpersonal/communication skills
    E.   Diagnostic skills
    37) The basic components of an effective sexual harassment policy include the following EXCEPT:
    A.   To develop an organization wide policy on sexual harassment B.   To establish a means for ongoing training C.   To act immediately when employees complain of sexual harassment
    D.   To establish a performance appraisal system E.   To establish a formal complaint procedure
    38) Teams that operate separately from the regular work structure and exist temporarily are known as:
    A.   Management teams B.   Transnational teams
    C.   Self-managed teams
    D.   Parallel teams E.   Self-designing teams
               
    39) 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:
    A.   Goal Coordination
    B.   Controlling C.   Organizing D.   Staffing E.   Planning
    40) As related to managing of human resources, diversity refers to:
    A.   Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
    B.   Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.)
    C.   Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
    D.   Differences in retention strategies (such as training, hiring, incentives, etc) E.   Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
               
    41) __________ is the process of working with people and resources to accomplish organizational goals.
    A.   Controlling B.   Decision making
    C.   Planning D.   Supervising E.   Management
    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 _____.
    A.   3 B.   3.5
    C.   2.5
    D.   2
    43) Use the following table to answer question:
     P(S | W) is approximately _____.
    A.   .40
    B.   .30
    C.   .12
    D.   .58
               
    44) Use the following table to answer question:
     P(M  A) is approximately _____.
    A.   .50 B.   .625
    C.   .125
    D.   .25
    45) 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 equal to .05. B.   The p-value is greater than .05. C.   The p-value cannot be determined without specifying  . D.   The p-value is less than .05.
    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.   High R2 (due to city size). B.   Positive slope (due to city size).
    C.   No correlation. D.   Autocorrelation.
    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, which measure of central tendency is least representative of the “typical” student?
    A.   Midrange
    B.   Mean C.   Mode D.   Median
               
    48) Likely reasons for inaccurate control limits would include which of the following?
    A.   Process variation was not zero, as expected. B.   The engineering parameter for variance is unknown.
    C.   There was insufficient preliminary sampling. D.   The engineers were underpaid for their work.
    49) 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.   You can change quantities of X and Y at no cost for Constraint B. C.   For every additional unit of the objective function you create, the price of A rises by $7.50.
    D.   For every additional unit of the objective function you create, you lose 0 units of B.
               
    50) 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.   A–D–C is the critical path. C.   The expected duration of this project is 25 days. D.   A–B–C has the most slack.
    51) Which one of the following statements concerning production and staffing plans is best?
    A.   A master production schedule is a projected statement of income, costs, and profits.
    B.   Aggregation can be performed along three dimensions: product families, labor, and time.
    C.   Production plans are based primarily on information from the master production plan.
    D.   A staffing plan is the intermediate link between the business plan and the master production schedule.
               
    52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
    A.   you would lose $80 if one of your workers missed an entire 8 hour shift. B.   the next worker that offers to work an extra 8 hours should receive at least $80.
    C.   you would be willing pay up to $60 for someone to work another 6 hours.
    D.   you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.

    53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
    A.   physical, digital B.   e-commerce, digital
    C.   physical, financial D.   digital, e-commerce
    E.   digital, physical
    54) When customers access a Web site and make purchases, they generate __________.
    A.   Tracking cookies B.   Web data C.   Information D.   Clickstream data
    E.   Hyperlink data
    55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
    A.   regionalization B.   globalization C.   nationalization D.   business environment
               
    56) Various organizations that promote fair and responsible use of information systems often develop __________.
    A.   a code of ethics B.   responsibility charters
    C.   a strategic plan D.   a mission statement E.   a goals outline
    57) What is _____ is not necessarily _____.
    A.   Illegal, unethical B.   Unethical, legal C.   Ethical, illegal D.   Unethical, illegal
    E.   Ethical, legal
    58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
    A.   Multidimensional data analysis, structured query language
    B.   Multidimensional data analysis, neural networks C.   Data mining, multidimensional data analysis D.   Data mining, expert system E.   Multidimensional data analysis, data mining
    59) Computer support is greatest for which of the following problems?
    A.   Semistructured and strategic planning B.   Semistructured and management control
    C.   Unstructured and operational control D.   Structured and operational control E.   Structured and management control
    60) The management cockpit best exemplifies which type of system?
    A.   Decision support system B.   Functional area information system
    C.   Expert system D.   Digital dashboard E.   Group decision support system
    61) _____ is the efficient and effective execution of specific tasks.
    A.   Operational control
    B.   Expertise C.   Management control
    D.   Strategic planning E.   Wisdom
    62) Geocoding is __________.
    A.   accessing geographical information B.   integrating maps with spatially oriented databases and other databases
    C.   integrating organizational transactions with spatially oriented databases D.   programming spatially oriented databases E.   encrypting spatial information
    63) 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
    64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
    A.   Cash flow statement
    B.   Balance sheet C.   Income statement D.   Quarterly statement
               
    65) 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.   $490 C.   $900 D.   -$150
               
    66) Disadvantages of using current liabilities as opposed to long-term debt include:
    A.   higher cash flow exposure B.   greater risk of illiquidity, and uncertainty of interest costs
    C.   decreased risk of liquidity D.   certainty of interest costs E.   uncertainty of future liabilities
    67) 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?
    A.   12.5% B.   36.13%
    C.   8.0% D.   13.6%
    68) 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.
               
    69) An increase in future value can be caused by an increase in the __________.
    A.   original amount invested B.   annual interest rate and number of compounding periods
    C.   rate of return D.   dividends paid E.   starting value
    70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
    A.   at equilibrium.
    B.   undervalued. C.   a good buy. D.   overvalued.
    71) 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?
    A.   $1,568
    B.   $871 C.   $1,241
    D.   $463
    72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
    A.   The project’s IRR would have to be less that the firm’s discount rate. B.   The project would add value to the firm. C.   Under all conditions, the project’s payback would be less than the profitability index.
    D.   In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
               
    73) The common stockholders are most concerned with:
    A.   the spread between the return generated on new investments and the investor’s required rate of return.
    B.   the size of the firm’s beginning earnings per share. C.   the risk of the investment. D.   the percentage of profits retained.
    74) PepsiCo calculates unlevered betas for each peer group in order to:
    A.   eliminate different financial risks.
    B.   eliminate competitive factors. C.   eliminate judgment factors. D.   eliminate different business risks.
    75) Which of the following best represents operating income?
    A.   Income from discontinued operations
    B.   Earnings before interest and taxes C.   Income from capital gains D.   Income after financing activities
    76) In comparison to the buying of final consumers, the purchasing of organizational buyers:
    A.   is even less predictable. B.   leans basically toward economy, quality, and dependability.
    C.   is always emotional. D.   is strictly economic and not at all emotional. E.   is always based on competitive bids from multiple suppliers.
               
    77) The basic objective of the U.S. market-directed economic system is to:
    A.   achieve an annual growth rate of at least 10 percent. B.   provide each person with an equal share of the economic output.
    C.   make the most efficient use of the country's resources. D.   minimize inflation. E.   satisfy consumer needs as they--the consumers--see them.
    78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:
    A.   GDP measures show people's tendency to buy particular products. B.   income tends to be evenly distributed among consumers in most countries. C.   GDP estimates may not be very accurate for very different cultures and economies.
    D.   Other countries most likely don’t use the US Dollar as their primary currency.
    E.   GDP measures show the degree of competition in a market.
    79) A firm's "marketing mix" decision areas would NOT include:
    A.   Promotion.
    B.   People. C.   Price. D.   Place. E.   Product.
    80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
    A.   Brand familiarity B.   Positioning
    C.   Market scanning D.   Customer relationship management (CRM)
    E.   Market segmentation
    81) The "four Ps" of a marketing mix are:
    A.   Production, Personnel, Price, and Physical Distribution
    B.   Promotion, Production, Price, and People C.   Potential customers, Product, Price, and Personal Selling
    D.   Product, Price, Promotion, and Profit E.   Product, Place, Promotion, and Price
    82) When evaluating macro-marketing:
    A.   the evaluation is necessarily subjective. B.   the best approach is to consider the profit generated by individual firms within the overall system.
    C.   one must determine how efficiently the society's resources are used. D.   one must consider the society’s role in the marketing system. E.   one must consider each individual firm's role in the marketing system.
    83) A cluster analysis of the "toothpaste market" would probably show that:
    A.   the broad product-market can be served effectively with one marketing mix.
    B.   most consu
              66) Disadvantages of using current liabilities as opposed to long-term debt include: A. higher cash flow exposure B. greater risk of illiquidity, and uncertainty of interest costs C. decreased risk of liquidity D. certainty of interest costs E. uncertainty of future liabilities        

    BUS/475 Guide 4


    1) The cost principle requires that when assets are acquired, they be recorded at __________.
    A.   list price B.   selling price C.   exchange price paid D.   appraisal value
    2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
    A.   have been approved for use by the managements of business firms
    B.   have been approved by the Internal Revenue Service C.   have substantial authoritative support D.   are proven theories of accounting
    3) The standards and rules that are recognized as a general guide for financial reporting are called __________.
    A.   standards of financial reporting B.   operating guidelines C.   generally accepted accounting principles D.   generally accepted accounting standards
    4) 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?
    A.   $8,250
    B.   $750 C.   $4,500
    D.   $5,250
               
    5) 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
    C.   $25,600 D.   4,600 units
               
    6) 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
    7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?
    A.   Master budgeting analysis
    B.   Exception reporting C.   Responsibility reporting
    D.   Static reporting
    8) 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?
    A.   $6,000 B.   $12,000
    C.   $28,000
    D.   $18,000
               
    9) The cost of an asset and its fair market value are __________.
    A.   never the same B.   irrelevant when the asset is used by the business in its operations
    C.   the same on the date of acquisition D.   the same when the asset is sold
    10) Which one of the following is a product cost?
    A.   Indirect labor B.   Sales person’s salaries
    C.   Advertising costs D.   Office salaries
    11) What exists when budgeted costs exceed actual results?
    A.   A budgeting error B.   An unfavorable difference
    C.   An excess profit D.   A favorable difference
    12) 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
               

    Closing entries are necessary for __________.
    A.   permanent accounts only B.   both permanent and temporary accounts
    C.   permanent or real accounts only D.   temporary accounts only
    13) Managerial accounting __________.
    A.   is concerned with costing products B.   pertains to the entity as a whole and is highly aggregated
    C.   places emphasis on special-purpose information D.   is governed by generally accepted accounting principles
               
    14) 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?
    A.   Beer B.   Selling either results in the same additional income for the company
    C.   It should sell an equal quantity of both D.   Wine
    15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
    A.   saver who demands money from the financial system B.   borrower who demands money from the financial system
    C.   borrower who supplies money to the financial system D.   saver who supplies money to the financial system
    16) 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 the option he would have chosen had Option B not been available
    B.   $100 C.   $300 D.   the value to Maurice of Options A, C and D combined
    17) A production possibilities frontier will be a straight line if __________.
    A.   the economy is producing efficiently B.   the economy is engaged in trade with at least one other economy C.   increasing the production of one good by x units entails no opportunity cost in terms of the other good
    D.   increasing the production of one good by x units entails a constant opportunity cost in terms of the other good
               
    18) In economics, the cost of something is __________.
    A.   what you give up to get it B.   often impossible to quantify, even in principle C.   the dollar amount of obtaining it D.   always measured in units of time given up to get it
               
    19) A tax on an imported good is called a __________.
    A.   supply tax
    B.   trade tax C.   quota D.   tariff
    20) Which of the following statements about GDP is correct?
    A.   GDP is to a nation’s economy as household income is to a household. B.   GDP increases if the total population increases. C.   GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
    D.   Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
               
    21) In computing GDP, market prices are used to value final goods and services because __________.
    A.   if market prices are out of line with how people value goods, the government sets price ceilings and price floors
    B.   Market prices are not used in computing GDP C.   market prices reflect the values of goods and services D.   market prices do not change much over time, so it is easy to make comparisons between years

    22) Which of the following statements about GDP is correct?
    A.   Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
    B.   Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
    C.   Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
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