BUS 475 final exam



1) A well-designed
activity-based costing system starts with __________.

A. identifying
the activity-cost pools

B. assigning
manufacturing overhead costs for each activity cost pool to products

C. computing
the activity-based overhead rate

D. analyzing
the activities performed to manufacture a product

2) In what
situations will a static budget be most effective in evaluating a manager’s

A. The
company has substantial fixed costs.

B. The
planned activity levels match actual activity levels.

C. The
company has substantial variable costs.

D. The
company has no fixed costs.

3) The conceptual
framework developed by the Financial Accounting Standards Board __________.

A. was
approved by a vote of all accountants

B. is
viewed as providing a constitution for setting accounting standards for
financial reporting

C. are
rules that all accountants must follow

D. is
legally binding on all accountants

4) 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. $18,000

B. $12,000

C. $28,000

D. $6,000

5) Of the following
companies, which one would not likely employ the specific identification
method for inventory costing?

A. Music
store specializing in organ sales

B. Antique

C. Farm
implement dealership

D. Hardware

6) These are selected account balances on
December 31, 2008.

(location of the corporation’s office building)


(held for future use)


Office Building










What is the net amount of property, plant, and equipment that will appear on
the balance sheet?

A. $1,300,000

B. $1,600,000

C. $1,100,000

D. $950,000

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

A. Adjusted
trial balance

B. Current
income statement

C. Comparative
balance sheets

D. Additional

8) The income statement and balance sheet
columns of Pine Company’s worksheet reflects the following totals:












The net income (or loss) for the period is __________.

A. $48,000

B. $10,000

C. $10,000

D. not

9) What effect do
current technology changes have on managerial accounting?

A. Creation
of the middleman

B. Reduction
of emphasis on the value chain

C. Increase
in product costs

D. Reduction
of reporting costs of managerial accounting information

10) 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. Factory

B. Cost
of landscaping the corporate office

C. General
corporate liability insurance

D. The
western division’s vice president’s salary

11) The major
reporting standard for management accounts is __________.

A. the
Standards of Ethical Conduct for Practitioners of Management Accounting
and Financial Management

B. relevance
to decisions

C. the
Sarbanes-Oxley Act of 2002

D. generally
accepted accounting principles

12) Which list below
best describes the major services performed by public accountants?

A. Cost
accounting, production scheduling, recruiting

B. Auditing,
taxation, management consulting

C. Employee
training, auditing, bookkeeping

D. Bookkeeping,
mergers, budgets

13) 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

B. 6,200

C. $25,600

D. 4,600

14) Managerial
accounting __________.

A. places
emphasis on special-purpose information

B. pertains
to the entity as a whole and is highly aggregated

C. is
governed by generally accepted accounting principles

D. is
concerned with costing products

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. $300

B. $100

C. the
value to Maurice of Options A, C and D combined

D. the
value to Maurice of the option he would have chosen had Option B not been

A tax on an imported good is called a __________.

A. trade

B. supply

C. tariff

D. quota

Lekeisha’s income exceeds her expenditures. Lekeisha is a __________.

A. borrower
who supplies money to the financial system

B. borrower
who demands money from the financial system

C. saver
who supplies money to the financial system

D. saver
who demands money from the financial system

Lucy starts her own psychiatric practice, but her expenditures to open the
practice exceed her income. Lucy is a __________.

A. borrower
who supplies money to the financial system

B. borrower
who demands money from the financial system

C. saver
who supplies money to the financial system

D. saver
who demands money from the financial system

A rational decision maker __________.

A. takes
an action only if the combined benefits of that action and previous
actions exceed the combined costs of that action and previous actions

B. takes
an action only if the marginal benefit of that action exceeds the marginal
cost of that action

C. ignores
the likely effects of government policies when he or she makes choices

D. ignores
marginal changes and focuses instead on “the big picture”

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

A. We
have to know whether the item being sold is a good or a service in order
to answer the question

B. whether
the buyer of the good or a service is a household, another firm, or the

C. only
if the buyer of the good or service is a household or another firm

D. only
if the buyer of the good or service is a household

Without trade, __________.

A. interdependence
is more extensive than it would be with trade

B. a
country can still benefit from international specialization

C. a
country’s production possibilities frontier is also its consumption possibilities

D. a
country is better off because it will have to learn to be self-sufficient
without trade

The open-economy macroeconomic model includes __________.

A. neither
the market for loanable funds or the market for foreign-currency exchange

B. both
the market for loanable funds and the market for foreign-currency exchange

C. only
the market for foreign-currency exchange

D. only
the market for loanable funds

The political business cycle refers to __________.

A. changes
in output created by the monetary rule the Fed must follow

B. the
part of the business cycle caused by the reluctance of politicians to
smooth the business cycle

C. the
potential for a central bank to increase the money supply and therefore
real GDP to help the incumbent get re-elected

D. the
fact that about every four years some politician advocates greater
government control of the Fed

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

B. Item
(1) is included in the investment component, while item (2) is included in
the consumption component.

C. Item
(1) is included in the consumption component, while item (2) is included in
the investment component.

D. Both
item (1) and item (2) are included in the consumption component of GDP.

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

A. financial
and capital account.

B. current

C. balance
of trade.

D. government
financial account.

Real GDP __________.

A. evaluates
current production at the prices that prevailed in some specific year in
the past.

B. evaluates
current production at current prices.

C. is
a measure of the value of goods only; it excludes the value of services.

D. is
not a valid measure of the economy’s performance, since prices change from
year to year.

The open-economy macroeconomic model examines the determination of

A. unemployment
and the exchange rate

B. the
output growth rate and the real interest rate

C. the
trade balance and the exchange rate

D. the
output growth rate and the inflation rate

An invisible barrier that makes it difficult for certain groups, such as
minorities and women, to move beyond a certain level in the organizational
hierarchy is referred to as the:

A. Job
enrichment theory

B. Black
box theory

C. Glass

D. Glass

E. Job
enlargement concept

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

A. To
establish a formal complaint procedure

B. To
develop an organization wide policy on sexual harassment

C. To
establish a means for ongoing training

D. To
establish a performance appraisal system

E. To
act immediately when employees complain of sexual harassment

A leader is:

A. A
strategic level manager

B. Someone
with authority over others

C. Someone
well-respected by others

D. The
top level manager in a firm or business

E. Someone
who influences others to attain goals

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

A. Self-designing

B. Management

C. Transnational

D. Parallel

E. Self-managed

Which of these describes a vision, as it pertains to leadership?

A. The
method through which leaders achieve goals

B. A
long-term goal of an organization

C. A
short-term goal of an organization

D. A
mental image of a future state of an organization

E. Likely
to land you in a padded room

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

A. Larger,
faster facilities

B. A
strategic alliance

C. A
homogeneous workforce

D. A
Learning advantage over their competition

E. Positive
working relationships with all employees

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. Selection

B. Diversity

C. Managerial

D. Employment

E. Recruiting

A manager’s ability to stimulate people to be high performers is referred to

A. Leading

B. Planning

C. Staffing

D. Organizing

E. Controlling

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

A. work

B. intelligence

C. behavioral

D. integrity

E. aptitude

The best way for an employer to find out if a potential employee can do a job
is by __________.

A. using
the interview process

B. having
them spend a day in the office

C. using
a written test

D. using
a performance simulation test

E. administering
an IQ test

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


C. Just-in-time
control (JIT)

D. Customer-based

E. Computer-integrated
manufacturing (CIM)

Which of the following statements does NOT support Total Quality Management?

A. Strive
for long-term improvement rather than short-term profit

B. Build
long-term relationships instead of awarding business on price tag alone

C. Break
down barriers among departments

D. Creating
silos between departments

E. Use
numerical quotas

Building a dynamic organization is another way of describing which function
of management?

A. Planning

B. Leading

C. Organizing

D. Staffing

E. Controlling

The pursuit of lucrative opportunities by enterprising individuals is called:

A. Intrapreneurship

B. Business

C. Independence

D. Social

E. Entrepreneurship

Use the following table to answer question:
.gif” alt=”https://asap.phoenix.edu/student/images/upload/BUS475_4-8.gif”>

P(S | W) is approximately _____.

A. .12

B. .30

C. .40

D. .58

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 a left-tailed test at.gif” alt=”https://asap.phoenix.edu/student/images/upload/alpha.gif”>= .05 we would

A. switch
to alpha of 0.01 for a more powerful test

B. feel
uncomfortable with either decision (too close)

C. comfortably
accept the claim

D. comfortably
reject the claim

Thirty patients are selected from a filing cabinet containing 812 patient
folders by choosing every 27th patient folder. Which sampling method is this?

A. Cluster

B. Stratified

C. Systematic

D. Simple
random sample

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.

From this information, we can conclude that __________.

A. none
of these are correct

B. wealthy
individuals tend to commit more crimes

C. crime
creates additional income in a city

D. the
slope is not significantly different from zero

Which of the following statements is true?

A. If
event (A) occurs, then its complement (A‘) will also occur.

B. The
probability of A and its complement (A‘) will always sum to

C. The
sum of two mutually exclusive events is one.

D. If
A and B are independent events, the P(B) = P(A)

Independent events A and B would be consistent with which of the following

A. P
(A) = .4, P (B) = .5, P (A.gif” alt=”https://asap.phoenix.edu/student/images/upload/intersection.gif”>B) = .2

B. P
(A) = .3, P (B) = .5, P (A.gif” alt=”https://asap.phoenix.edu/student/images/upload/intersection.gif”>B) = .4

C. P
(A) = .4, P (B) = .3, P (A.gif” alt=”https://asap.phoenix.edu/student/images/upload/intersection.gif”>B) = .5

D. P
(A) = .5, P (B) = .4, P (A.gif” alt=”https://asap.phoenix.edu/student/images/upload/intersection.gif”>B) = .3

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

A. activities;

B. activities;
precedence relationships

C. events;

D. precedence
relationships; time

Assume that the arrival of airplanes at a one-runway airport is a Poisson
distribution with a mean rate of
.gif” alt=”https://asap.phoenix.edu/student/images/upload/lambda.gif”>= 8 planes per hour.
The landing time is an exponential distribution with a mean of 5 minutes per
plane. What is the mean number of planes in the system?

A. 1.67

B. 1.33

C. 1

D. 2

In statistical process control a p-chart could __________.

A. have
more than one characteristics

B. measure
the fraction of conforming parts in a sample

C. measure
the number of defects per sample unit

D. use
the student’s distribution

Which one of the following statements concerning production and staffing
plans is best?

A. When
production and staffing plans are made, aggregation can be performed only
along two dimensions: products and time.

B. Production
and staffing plans attempt to achieve several objectives, all of which must
be consistent with one another.

C. Production
and staffing plans specify production rates, workforce levels, and
inventory holdings, but do not account for capacity limitations because
they are aggregated.

D. The
impact of production and staffing plans cuts across several functional
areas of the firm.

Companies using lean systems generally have:

A. suppliers
that are willing to accept short-term contracts.

B. suppliers
that are located nearby to decrease delivery lead time.

C. many
suppliers to ensure that material shortages never occur.

D. suppliers
who are low-cost producers.

The Global, Web-Based Platform enables individuals to do which of the

A. produce
and sell goods and services

B. exchange

C. connect,
compute, communicate, collaborate, and compete everywhere and all the time

D. all
of these are true

E. access
information, services, and entertainment

Zappos built the majority of its information systems using which of the

A. Free

B. Open
source software

C. Vendor

D. Consultants

E. Proprietary

Which of the following are disadvantages of the buy option for acquiring IS

A. software
may not integrate with existing systems

B. company
will not have control over software improvements

C. software
may not exactly meet the company’s needs

D. all
of the these are disadvantages

E. software
may be impossible to modify

Fundamental points about network computing in organizations include all of
the following except:

A. Networks
have had limited impact on organizational productivity

B. Networks
can be of any size, from small to enormous

C. Computers
constantly exchange data

D. Networks
support new ways of doing business

E. Computer
data exchange provides significant advantages to organizations

The force behind globalization in _____ was the amount of muscle, horsepower,
wind power, or steam power that a country could deploy.

A. Globalization

B. Globalization

C. Globalization

D. None
of these

Which of the following is not a reason that managers need IT support?

A. Need
to access remote information sources

B. Decisions
are becoming more complex

C. Number
of alternatives are decreasing

D. Decision
makers are often in different locations

E. Decisions
must typically be made under time pressure

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

A. Enterprise
resource planning systems

B. Functional
area information systems

C. Transaction
processing systems

D. Corporate

E. Supply
chain management systems

Computer support is greatest for which of the following problems?

A. Semistructured
and management control

B. Structured
and operational control

C. Semistructured
and strategic planning

D. Structured
and management control

E. Unstructured
and operational control

Which of the following is not a function of functional area information

A. supports
the managerial tasks of planning, organizing, and controlling operations

B. provides
analysis capabilities to middle level managers and staff

C. provides
information mainly in the form of reports

D. provides
information to managers in the functional areas

E. provides
data from business events to the corporate database

_____ is the acquisition and efficient use of resources in accomplishing
organizational goals.

A. Management

B. Wisdom

C. Strategic

D. Operational

E. Expertise

Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is
12.5%, and the risk-free rate is 5%. According to CAPM, what is the required
return on this stock?

A. 20.62%

B. 15.62%

C. 9.37%

D. 14.37%

Dublin International Corporation’s marginal tax rate is 40%. It can issue
three-year bonds with a coupon rate of 8.5% and par value of $1,000. The
bonds can be sold now at a price of $938.90 each. The underwriters will
charge $23 per bond in flotation costs. Determine the approximate after-tax
cost of debt for Dublin International to use in a capital budgeting analysis.

A. 5.1%

B. 9.2%

C. 6.0%

D. 8.5%

65) 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


Cost of preferred stock


Cost of common stock


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

A. $463

B. $1,568

C. $871

D. $1,241

66) You hold a
portfolio with the following securities:


Percent of Portfolio



X Corporation




Y Corporation




Z Corporation




Compute the expected return and beta for the portfolio.

A. 10.67%,

B. 9.9%,

C. 9.9%,

D. 34.4%,

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

A. $490

B. -$150

C. $570

D. $900

The common stockholders are most concerned with:

A. the
percentage of profits retained.

B. the
spread between the return generated on new investments and the investor’s
required rate of return.

C. the
size of the firm’s beginning earnings per share.

D. the
risk of the investment.

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. 36.13%

B. 13.6%

C. 12.5%

D. 8.0%

Suppose you determine that the NPV of a project is $1,525,855. What does that

A. In
all cases, investing in this project would be better than investing in a
project that has an NPV of $850,000.

B. The
project’s IRR would have to be less that the firm’s discount rate.

C. The
project would add value to the firm.

D. Under
all conditions, the project’s payback would be less than the profitability

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.

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

A. permanent

B. fixed

C. spontaneous

D. current

What is the yield to maturity of a nine-year bond that pays a coupon rate of
20% per year, has a $1,000 par value, and is currently priced at $1,407?
Round your answer to the nearest whole percent and assume annual coupon

A. 5%

B. 11%

C. 14%

D. 12%

Tri State Pickle Company preferred stock pays a perpetual annual dividend of
2 1/2% of its par value. Par value of TSP preferred stock is $100 per share.
If investors’ required rate of return on this stock is 15%, what is the value
of per share?

A. $37.50

B. $6.00

C. $15.00

D. $16.67

Exchange rate risk:

A. doesn’t
affect trades made in US Dollars.

B. has
been phased out due to recent international legislation.

C. applies
only to certain types of domestic businesses.

D. arises
from the fact that the spot exchange rate on a future date is a random

Minimum wages, hours of employment, and child labor are regulated by the:

Which of the following receives at least some protection under the U.S.

A. Offensive

B. Obscene

C. Neither
obscene speech nor offensive speech

D. Both
obscene speech and offensive speech


There are no reviews yet.

Be the first to review “BUS 475 final exam”

Your email address will not be published. Required fields are marked *