BUS/475 Final Exam Study Guide

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1) Because the United States has had a long time agreement with
__blank__ after the passage of NAFTA, ___blank__ became the USs 2nd
biggest trading partner.
Canada, Mexico
Explanation: NAFTA has allowed Mexico to have a much greater trade relationship
with the United States.
2) The term generally accepted contained in the saying generally
accepted accounting principles means what about the principles?
They have substantial authoritative support
Explanation: Known as GAAP in the accounting world, these principle are
accepted by virtually all businesses that conduct operations in the United States.
3) Which function of management is defined by building a dynamic
organization?
Organizing
Explanation: The ability to organize is considered essential when building a
dynamic business.
4) Billy Bob's Used Car Sales uses the specific identification method for
costing inventory. In the month of June, Billy Bob bought 3 cars for
$6,000, $7,500, and $9,750. During June, two cars are sold for $9,000 a
pop. Billy Bob determines that at June 31, the $9,750 car on the lot.
What is the gross profit in June?

$4,500
Explanation: The solution is found by summing up the cost of all cars, then
summing up total sales, then subtracting the car still on hand to get $4,500 gross
profit.
5) Hostess, Inc. sells one product with a contribution margin of $12 per
unit and fixed costs of $74,400. Sales for the current year have reached
a total of $100,000. What is the breakeven point for Hostess?
6,200 units
Explanation: The solution is found by using the formula 12x = 74,000. Ignore the
100,000, that number is just there to trick you!
6) As Plant Controller, your manager asks you to reduce your overhead
costs. What would be called manufacturing overhead?
Factory janitor
Explanation: The manufacturing process creates a mess and this requires the
services of a janitor, thus being considered an overhead expense.
7) Each level of responsibility within a companys organization chart
would be called what?
Responsibility reporting
8) Knots Berry Farms variable costs are 30% of sales. The firm is
thinking about an advertising project that will cost $22,000. Assuming
sales are anticipated to increase by $40,000, by how much will the firms
net income increase?
$6,000
Explanation: Find the solution by multiplying 40,000 by 30%. Then add the total
to 22,000 to get 46,000. Simply subtract 46,000 from 40,000 to get the answer.
9) What is true about the cost of an asset and the fair market value?
The same on the date of acquisition
Explanation: Book value will be the same in the future, but fair market value can
fluctuate with trends in the marketplace.
10) What is considered a product cost?
Indirect labor

Explanation: Indirect labor is often required to bring a product to necessary sales

standards.
11) Lets say budgeted costs exceed actual results on a project, what
can you expect?
A favorable difference
Explanation: This means you saved some money on the project, nice work!
12) The income statement and balance sheet columns of Douglas Fur
Company's worksheet is showing these totals:
Income Statement
Balance Sheet
Totals

$58,000

$48,000

$34,000

$44,000

What will closing entries be necessary for?

Temporary accounts only
Explanation: The differences in debits and credits are equal in both worksheets,
therefor it should only need closing entries for the closing accounts.
13) Which statement is true about managerial accounting?
Places emphasis on special-purpose information
Explanation: Managerial accounting is designed to provide companies with
information that can be used to improve internal performance.
14) J32 is a company that sells beer and wine. Beer has a 10 percent
profit margin, while wine has a 12 percent profit margin. Beer shows a
27 percent contribution margin, while wine shows a 25 percent
contribution margin. What is the better product to push on customers?
Wine
Explanation: In this scenario, wine is shown to have higher profit margin, which is
a higher consideration when compared to contribution margins.
15) Tamika has an income that exceeds expenditures. What is Tamika?
Saver who supplies money to the financial system
Explanation: Tamika saves money, yet also supplies it through her expenditures.
16) Mitch gets $100 as a Hanukkah gift, but needs to determine where
to spend the cash. He finally settles on four different potential options.

Option A, Option B, Option C, and Option D. Each option costs $100. At

last, he chooses Option B. What is his opportunity cost?
The value to Mitch of the option he would have chosen had Option B not
been available

17) The production possibilities frontier will have a straight line when
which conditions are met?
Increasing the production of one good by x units entails a constant
opportunity cost in terms of the other good
Explanation: The production possibilities frontier is a way to visualize the potential
manufacturing choices of a firm.
18) In the context of economics, what is the cost of something?
What you must give up to get it
Explanation: A basic rule of economics states that the we must give something
up, usually money, to obtain goods.
19) What do we call a tax on imported goods?
Tariff
Explanation: The government uses Tariffs to impose trade restrictions and
barriers.
20) Choose the correct statement about GDP?
Money continuously flows from households to government and then back
to households, and GDP measures this flow of money.
Explanation: GDP is a common economic measure to show the value of goods
produced by a nation or geographic region.
21) In order to calculate GDP, market prices are often used to value final
goods and services. Why?
Market prices reflect the values of goods and services
Explanation: GDP is a common economic measure to show the value of goods
produced by a nation or geographic region.
22) Choose the correct statement about GDP:

Nominal GDP values production at current prices, whereas real GDP

values production at constant prices.
Explanation: GDP is a common economic measure to show the value of goods
produced by a nation or geographic region.
23) Choose the statement that is not correct:
The U.S. debt per-person is large compared with average lifetime
income.
Explanation: Debt levels in the USA are actually consistent with the lifetime
income amounts.
24) The section of the balance of payments account which shows all
long-term flows of payments is referred to as:
Financial and capital account.
25) Edward Prescott and Finn Kydland are Nobel prize winners. Their
main finding was that when a central bank could tell people to expect
zero inflation, then the Fed would be tempted to raise output by
increasing inflation. What is this possibility called?
The time inconsistency of policy
Explanation: This policy shows many of the weaknesses in the current central
bank system.
26) What is the longest lag for:
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
27) Consider the items that could be used in GDP:
1. Est. rental values of owner-occupied homes
2. Purchases of brand new houses
How do we account for these items when determining GDP?
Item 1 is included in the consumption component. Item 2 is included in
the investment component.
Explanation: GDP uses distinct components to produce a more accurate version of
a countries output, which ensures duplicate items are not measured.
28) What skills will managers use with more frequency as they climb the
corporate ladder?

Conceptual and decision

Explanation: Managers will need to focus on bigger picture projects as they rise
within the organization.
29) Which of the following are essential skills for managers?
Technical, interpersonal & communication and conceptual & decision
making
Explanation: These are essential skills that will help managers make sound
decisions in the current capitalist system.

30) What do we call the standards and rules for accounting procedures?
Generally accepted accounting principles
Explanation: Also know as GAAP.
31) You have a friend who wants to launch a startup business. You have
been brushing up about entrepreneurship and new ventures, what would
you say is true about entrepreneurship?
Successful entrepreneurs take very careful, calculated risks
Explanation: Too little risk will product slow results, too much risk will produce
poor results.
32) What do will call differences in religious affiliation, age, disability
status, economic class and lifestyle in addition to gender, race, ethnicity
and nationality?
Diversity
Explanation: Diversity can be used to create strong team dynamics.
33) As a manager, how can you stimulate workers to be high performers?
Leading
Explanation: Providing leadership is an essential skill for most managerial
positions.
34) An arrangement of value models improved by a council working
under the International Organization for Standardization to enhance add
up to quality in all organizations for the profit of both makers and
customers is:

ISO 9000
Explanation: ISO 9000 is a major consideration for manufacturers in virtually all
developed nations in the world.
35) Consider the Japanese manufacturers' kaizen programs. This helps
them maintain what?
A Learning advantage over their competition
Explanation: In todays world of technology, it is a major advantage to have a
learned ability that cannot be matched by competing firms.
36) Listening to worker inferences, picking up backing for organizational
goals and encouraging an air of cooperation are considered what?
Interpersonal/communication skills
37) What is NOT part of an effective sexual harassment policy?
To establish a performance appraisal system
Explanation: Sexual harassment has nothing to do with performance appraisals.
38) What do we call teams to operate temporarily an work outside the
normal workspace?
Parallel teams
Explanation: Parallel teams are usually established to help with certain goals and
that are not part of the long-term organizational mission.
39) The Aquatic Center intermittently surveys the objectives of the
organization. Throughout the procedure, The Aquatic Center
administrators investigate their present methods as contrasted with
their rivals, confirm objectives that they will seek after and settle on
particular movements for every range of the organization to take in hunt
for these objectives. The Aquatic Center chiefs have been occupied with
the administration capacity of what?
Planning
40) When it comes to human resources, diversity is considered what?
Differences in demographics (such as age, race, gender, and more!)
41) What do we call the process of working together with other people
and resources to accomplish company goals.

Management
42) 12 people were asked how many times they had failed a drug test
during a the semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.
What is the median in this sample?
2.5
Explanation: The median is the result that appears in the middle of all other
numbers. In this case, the middle numbers of 2 and 3 must be divided to get a
result of 2.5.
43) Check out the following table to get the answe: P(S | W)
.30
44) Check out the following table to get the answer:
P(M A)
.625
45) Battery Co Manufacturing claims that its antacid electric storage
devices most recent forty hours on normal in a certain sort of convenient
Blue-Ray player. Tests on an arbitrary specimen of 18 electric cells
demonstrated a mean electric storage device life of 37.8 hours with a
standard deviation of 5.4 hours.
In figuring out the p-value for reporting the study's discoveries, which
of the accompanying is correct?
The p-value is greater than .05.
46) John utilized an example of 68 USA urban communities to gauge the
relationship between Crime (yearly property criminal acts for every
100,000 persons) and Income (average wage for every capita). His
assessed relapse comparison was Crime = 428 + .050 Income. Which
conclusions might be likely in a bivariate regression on 45 arbitrarily
picked USA urban areas in 2005 with
Y = number of burglaries in each city
X = size of law enforcement force in each city
Positive slope
Explanation: A positive slope will gradually increases as the x and y values
increase. This problem illustrates how robberies and the size of the police force
are related.

47) 12 people were asked how many times they had failed a drug test
during a the semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.
What measure of central tendency least represents the typical
person?
Midrange
Explanation: The majority of people and students are at the bottom end of the
spectrum and it is rare to be at the midrange.
48) The most possible reason for inaccurate control limits is due to
what?
Insufficient preliminary sampling.
Explanation: Preliminary sampling can identify certain type of data within a
sample that will help decrease the chance of skewed data.
49) Consider the following linear programming objective function:
Max P = $20X + $30Y
and constraints of:
3X + 4Y = 24 (Constraint A)
5X Y = 18 (Constraint B)
The shadow price for Constraint A is determined to be 7.5 and the
shadow price for Constraint B is 0. Choose the statement that is TRUE?
You can change quantities of X and Y at no cost for Constraint B.
50) Lets imagine a project that has three paths. ABC has a length of
25 days. ADC has a length of 15 days. AEC has a length of 20 days.
Choose the statement that is TRUE?
The expected duration of this project is 25 days.
51) Choose the statement concerning production and staffing plans that
is the best?
Aggregation can be performed along three dimensions: product families,
labor, and time.
52) You looked at a sensitivity report and 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,
what can we assume?
You would be willing pay up to $60 for someone to work another 6 hours.

53) The expenses of using products in the __blank___ channel are quite a
bit higher than delivering products in the __blank___ channel.
Physical; digital
Explanation: The physical channel has much higher costs, such as building
expenses, property taxes, security guards, and electricity bills.
54) When people visit a web site and make purchases they are
generating?
Clickstream data
Explanation: Each click on a website following a path that can be tracked to
determine visitor behavior and preferences on a website.
55) What do we call the integration of economic, social, cultural, and
ecological parts of life, made possible by information.
Globalization
Explanation: Information and industrial technologies have made it possible to
connect cultures and industries throughout the world.
56) Companies that promote fair and responsible use of information
systems may use what tool?
Code of ethics
57) What is __blank___ is not necessarily __blank___.
Unethical; illegal
58) __blank___ gives users with a view of what is happening, while
__blank___ addresses the reason it is happening.
Multidimensional data analysis, data mining
Explanation: These two areas of analysis are closely related, but their core
objectives are focused at different ends of the spectrum.
59) Computer support is most effective for solving what problem?
Structured and operational control
Explanation: A company can maintain a better level of operational control and
structure by using the computer support programs.
60) A management cockpit is an example of what system?

Digital dashboard
Explanation: This is a computer driven tool that allows managers to control
projects and organize the employees on their team.
61) What would be described as the efficient and effective execution of
specific tasks?
Operational control
Explanation: Operational controls are used to ensure that a company is
conducting its core area of business in the most efficient and effective manner.
62) What is Geocoding?
Integrating maps with spatially oriented databases and other databases
Explanation: Geocoding is the marriage of digital logic with graphical maps. This
is exactly how Google Maps functions on most levels.
63) If 8% is compounded annually, when will $750 double in value?
9 years
64) Which statement attempts to show the earnings of the firms
operations over a specific time period?
Income statement
Explanation: The income statement will generally show how much a company has
earned on a quarterly or annual basis.
65) Lets say a machine costs $1,000, has a three-year life, and has an
expected salvage value of $100. It will produce after-expense twelvemonth cash flows (ACF) of $600 per year, beginning one year from now.
Provided that your needed rate of return for the task is 10%, what is the
NPV (Net Present Value) of this investment product?
$570
66) What are some of the disadvantages of using current liabilities
versus long-term debt?
Greater risk of illiquidity, and uncertainty of interest costs
Explanation: Short-term debt often carries a larger interest rate and will make
your company appear risker to investors and creditors.

67) Channel Islands Skin Care Inc. pays for an annual perpetual dividend
of $1.70 per share. If the stock is selling for $21.25 per share in todays
money, what is the anticipated rate of return on this stock?
8.0%
Explanation: Assuming the stock remains at the current value, simply divide 1.70
over 21.25.
68) Choose the tactic that is consistent with the hedging principle in
working capital management?
Accounts receivable should be financed with short-term lines of credit.
Explanation: This strategy will allow companies have an opposing force that will
cover accounts receivable if the creditor does not pay the balance.
69) Increases in future value can often be the result of an increase in
what?
Annual interest rate and number of compounding periods
70 Lets imagine a quote for a forward exchange contract is higher than
its computed price, the forward contract would be considered?
Overvalued
Explanation: It would be overvalued because the market is only willing to pay a
lower amount for this particular contract.
71) Lets take a look at the following investment project:
Initial outlay = $300,000
Expected cash flows in Years 1 through 5 of $87,385 per year.
Cost of capital:
Cost of debt
8%
Cost of preferred stock
12%
Cost of common stock
16%
Long-term debt consists of 20% of the capital structure, preferred stock
10%, and common stock 70%. Calculate the NPV of this project:
$463
Explanation: Use the NPV formula: Rt / (1 + i)^t
72) Lets pretend the NPV of a project is $1,525,855. Why is this
important?
The project would add value to the firm.

Explanation: The NPV is greater than zero and thus provides a future value to the
firm.
73) What is the main concern for common stockholders in a company?
The percentage of profits retained.
Explanation: Since common stock holders are often the last to be paid, they want
to see a high level of profits being retained.
74) Coca-Cola calculates unlevered betas for each peer group for what
purpose?
Eliminate different financial risks.
Explanation: Betas are used to compare the risk level of various financial projects.
75) Choose the statement that describes operating income?
Earnings before interest and taxes
Explanation: This is the income that is generated purely from operations and
would be found on the profit/loss statement of a company.
76) When compared to buying final consumers, the purchasing of
organizational buyers is said to be?
Leans basically toward economy, quality, and dependability.

77) What is the basic objective of the U.S. market-directed economic

system?
Satisfy consumer needs as they--the consumers--see them.
Explanation: Businesses primary goal is to deliver value to consumers in a way
that can generate profits for the company.
78) When making a comparison of GDP in foreign nations, how can this
data help a marketing manager evaluate potential markets?
GDP measures show people's tendency to buy particular products.
Explanation: GDP shows the total output of all goods and can be used to find
trends that will help exploit consumer-buying preferences.
79) What is NOT included in the marketing mix?

People.
80) Name the marketing management aid that shows to how customers
think about proposed and present brands within a market.
Positioning
Explanation: Choosing the correct position for a product will greatly improve the
changes of financial success in the market.
81) Select the "Four Ps" of the marketing mix:
Product, Place, Promotion, and Price
82) In macro-marketing, a manager must:
Determine how efficiently a society's resources are utilized.
Explanation: The amount of resources in a society is directly related to buying
habits.
83) What will a cluster analysis of the toothpaste market yield?
.
Different market segments seek different product benefits.
Explanation: Some types of toothpaste are for whitening, and others are for cavity
prevention.
84) What happens when clustering techniques are applied to market
segmentation?
Most often require computers to group people based on market research
data
85) What are the three basic functions of managers?
Planning, implementation, and control.
Explanation: According to the text, these are the main functions of managers.
86) How is target marketing different than mass marketing?
Focuses on specific customers, while mass marketing aims at an entire
market.
87) Choose the correct strategy relationship. Branding is related to
packaging as:
Personal selling is to mass selling.

Explanation: When compared to the four Ps, branding seeks to identify with a
certain type of customer, while packaging is designed for mass appeal.
88) Name the Fair Labor Standards Act stipulation that is NOT true?
Children under 14 cannot work at all, except on farms.
Explanation: Even on farms in the Deep South, children are not allowed to work.
89) Probable cause is associated with what part of the criminal process?
Arrest
Explanation: Police must have probable cause that a crime has been committed in
order to make an arrest.
90) Which statement is generally NOT true about state intermediate
appellate courts?
The appellate court allows parties to introduce new evidence as long as
it was not previously introduced at the original trial.
91) What terms are not required to be disclosed under the Truth-inLending Act?
The terms available from competitors.
92) Choose the agency activity that requires public notice and
participation?
Substantive rule making only.
Explanation: Major rule changes must go through a process that ensures the
affected bodies are prepared to adapt to the new rules.
93) What is NOT part of Caux Round Table Principles for International
Business?
Promotion of Multiculturalism.
94) Choose the business social responsibility theory that states that
businesses owe its duties solely to produce the highest return for its
shareholders
.
The maximizing profits theory.
Explanation: By attempting to maximize profits, a business will make choices in
the best interests of its end users and customers.

95) Milton Friedman is famous for which social responsibility theory of

business?
.
Maximizing profits
Explanation: In his book Free to Choose, Friedman explains how profit
maximization is the ideal route to creating a utopian society with virtually no
flaws.
96) What order of sources are considered by courts in settling questions
of international law?
Treaties, customs, general principles of law, judicial decisions and
teachings
Explanation: International law issues must go through a different process to settle
the variations in domestic law at each country.
97) If the value of the collateral is less than the debt owed to the
secured party, then:
The secured party is unsecured for the excess of debt over the value of
the security.
98) A scientific study found that manufacturing labor costs about
__blank___ per hour in China, as compared to __blank___ dollars in the
United States.
Less than $1. About $25
Explanation: In order to buy cheap goods from Wal-Mart, it is essential to utilize
Chinese workers for very little pay.
99) What country has become the largest producer and consumer of
goods?
China
100) According to the cost principle, when assets are acquired that
should be recorded at?
Exchange price paid
Explanation: They will be kept at exchange price paid as opposed to fair market
value.