ETS MFT BUSINESS EXAM ACTUAL
TEST WITH VERIFIED SOLUTIONS
◉ In organizational decision making, managers are able to exercise
the greatest degree of discretion in the
a) enforcement of internal policies
b) settlement of legal disputes
c) restructuring of outstanding loans
d) compliance with federal regulations. Answer: a) enforcement of
internal policies
◉ The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold. Answer:
(C) current assets less short-term liabilities
,◉ Dreamland Pillow Company sells the "Old Softy" model for $20
each. One pillow requires two pounds of raw material and one hour
of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid
$4 per hour. Fixed supervisory costs are $2,000 per month and
Dreamland rents its factory on a five-year lease for $4,000 per
month. All costs are considered costs of production.
How many pillows must Dreamland produce and sell each month to
earn a monthly gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700. Answer: (D) 700
VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
,◉ Dreamland Pillow Company sells the "Old Softy" model for $20
each. One pillow requires two pounds of raw material and one hour
of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid
$4 per hour. Fixed supervisory costs are $2,000 per month and
Dreamland rents its factory on a five-year lease for $4,000 per
month. All costs are considered costs of production.
Another firm has offered to produce "Old Softy" pillows and sell
them to Dreamland for $12 each. Dreamland cannot avoid the
factory lease payments, but can avoid all labor costs if it does not
produce these pillows. Under these conditions, how many "Old
Softy" pillows must Dreamland sell to earn monthly gross profits of
$1,000?
(A) 417
(B) 500
(C) 625
(D) 875. Answer: (C) 625
Dreamland VC per unit = $12
FC = $4,000
, CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
◉ Which of the following statements about a systems flowchart is
true?
(A) It is used in systems design to define and describe each piece of
data.
(B) It is a method of writing programs using only three basic
constructs: sequence, selection, and repetition.
(C) It documents the sequence of processing steps that take place in
an information system.
(D) It documents the logical design of an information system..
Answer: (D) It documents the logical design of an information
system.
◉ Which of the following statements about the tort of negligence is
true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
(C) It requires proof of some intentional conduct.
TEST WITH VERIFIED SOLUTIONS
◉ In organizational decision making, managers are able to exercise
the greatest degree of discretion in the
a) enforcement of internal policies
b) settlement of legal disputes
c) restructuring of outstanding loans
d) compliance with federal regulations. Answer: a) enforcement of
internal policies
◉ The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold. Answer:
(C) current assets less short-term liabilities
,◉ Dreamland Pillow Company sells the "Old Softy" model for $20
each. One pillow requires two pounds of raw material and one hour
of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid
$4 per hour. Fixed supervisory costs are $2,000 per month and
Dreamland rents its factory on a five-year lease for $4,000 per
month. All costs are considered costs of production.
How many pillows must Dreamland produce and sell each month to
earn a monthly gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700. Answer: (D) 700
VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
,◉ Dreamland Pillow Company sells the "Old Softy" model for $20
each. One pillow requires two pounds of raw material and one hour
of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid
$4 per hour. Fixed supervisory costs are $2,000 per month and
Dreamland rents its factory on a five-year lease for $4,000 per
month. All costs are considered costs of production.
Another firm has offered to produce "Old Softy" pillows and sell
them to Dreamland for $12 each. Dreamland cannot avoid the
factory lease payments, but can avoid all labor costs if it does not
produce these pillows. Under these conditions, how many "Old
Softy" pillows must Dreamland sell to earn monthly gross profits of
$1,000?
(A) 417
(B) 500
(C) 625
(D) 875. Answer: (C) 625
Dreamland VC per unit = $12
FC = $4,000
, CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
◉ Which of the following statements about a systems flowchart is
true?
(A) It is used in systems design to define and describe each piece of
data.
(B) It is a method of writing programs using only three basic
constructs: sequence, selection, and repetition.
(C) It documents the sequence of processing steps that take place in
an information system.
(D) It documents the logical design of an information system..
Answer: (D) It documents the logical design of an information
system.
◉ Which of the following statements about the tort of negligence is
true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
(C) It requires proof of some intentional conduct.
