ETS MBA Sample Questions and
Answers (Graded A)
Which of the following organizations is most likely to use project financing? - Correct
Answers -A large public utility involved in
infrastructure development
After an extensive recruitment process to select well-qualified individuals, a large
percent ofa company's new hires resigned within the first month of the job. Which of the
following is the most likely explanation for this situation? - Correct Answers -The training
process to prepare the new hires for their assigned tasks was inadequate.
Prosco Ltd. employs a process cost system. Inspection of units occurs at the 50 percent
mark. Defective units are then removed from the process, and their cost ($4.50) is
absorbed by the good units. Prosco has recently been approached by a firm wishing to
buy the defective units for a special use. The firm would require Prosco to modify the
defective units at a unit cost of $2.00. If Prosco sells the defective units to the firm for
$5.00 each, how would Prosco's reported income be affected? - Correct Answers -It
would increase by $3.00 per unit sold.
Bertha's agency regularly employs four people: two travel agents, one travel specialist,
and Bertha, who functions as a business manager. Given the configuration of the office,
which information network would be most effective? - Correct Answers -all-channel
network
Given the potential for negative publicity in serving the student market, which of the
following would NOT be an appropriate marketing communication tool for Bertha to use
to minimize this potential? - Correct Answers -A reorganization of Sunny Fun
Destinations' staff in which specific employees are charged with overseeing the student
tour market
The average collection period for all sales is 30 days. If all markets realize 40 percent of
their total sales during November and December and otherwise accrue sales at an even
rate during the year, which of the following will be the accounts receivable balance for
the company on June 30 of the next fiscal year? - Correct Answers -$16,680
The company is looking for a replacement for one of its markets. It has discovered that
growth is expected in the African market. The projected direct fixed costs for Africa are
$2,000, and the expected sales volume is $67,500, with a contribution margin of
$27,000. Which of the following should ZAPPY do? - Correct Answers -Enter the new
African market and exit the European market.
, Some companies have little, if any, net income or earnings, yet they seem to have all
the money they need for capital expenditures. Which of the following best explains how
such companies operate? - Correct Answers -They have good cash flows
The Sintar Corporation has just announced that it will pay $1.10 per share in dividends
to its stockholders in the current quarter. The prior quarter's dividend was $1.00 per
share. The announcement indicates which of the following? - Correct Answers -
Management is sending a signal that the company has good projected future earnings
Wave Inc. is a telecommunications company that wants to become involved in e-
commerce. It has to decide whether to develop a business-to-business or business-to-
consumer strategy. As Wave's strategic planner, you have been asked to develop a
business plan for each opportunity and present these to senior management. The
answer to which of the following questions is most important to know before starting
your plan? - Correct Answers -What are the company's core competencies?
If you were the holder of a call option (having cost you $2) on some stock with an
exercise price of $20, it would be best for you to exercise your option when the market
price is at - Correct Answers -$24
Increased globalization and technological change, particularly in telecommunications,
enable more organizations to adopt which of the following organizational structures? -
Correct Answers -Network
A new local Super Store publicly announced that when more than three people are
standing in line at cash registers, additional checkout-lines will be opened. After the
announcement, customers quickly noticed that the additional lines were not opened until
six or seven people were standing in line. This indicates a gap between - Correct
Answers -actual service delivery and how service quality
was communicated
All of the following can be considered in the evaluation of a business unit EXCEPT -
Correct Answers -projected annual revenues of competitors
The sales division of a corporation is considering an internal product transfer because of
excess demand. What is the lowest acceptable transfer price for the product? - Correct
Answers -The difference between the market price and the costs recaptured by
transferring internally
Which security makes the most prudent investment? - Correct Answers -Y
The building rents arise from long-term leases that cannot be cancelled. If The Mart
closed down this division, what would be the increase in company profits? - Correct
Answers -1,200,000
Answers (Graded A)
Which of the following organizations is most likely to use project financing? - Correct
Answers -A large public utility involved in
infrastructure development
After an extensive recruitment process to select well-qualified individuals, a large
percent ofa company's new hires resigned within the first month of the job. Which of the
following is the most likely explanation for this situation? - Correct Answers -The training
process to prepare the new hires for their assigned tasks was inadequate.
Prosco Ltd. employs a process cost system. Inspection of units occurs at the 50 percent
mark. Defective units are then removed from the process, and their cost ($4.50) is
absorbed by the good units. Prosco has recently been approached by a firm wishing to
buy the defective units for a special use. The firm would require Prosco to modify the
defective units at a unit cost of $2.00. If Prosco sells the defective units to the firm for
$5.00 each, how would Prosco's reported income be affected? - Correct Answers -It
would increase by $3.00 per unit sold.
Bertha's agency regularly employs four people: two travel agents, one travel specialist,
and Bertha, who functions as a business manager. Given the configuration of the office,
which information network would be most effective? - Correct Answers -all-channel
network
Given the potential for negative publicity in serving the student market, which of the
following would NOT be an appropriate marketing communication tool for Bertha to use
to minimize this potential? - Correct Answers -A reorganization of Sunny Fun
Destinations' staff in which specific employees are charged with overseeing the student
tour market
The average collection period for all sales is 30 days. If all markets realize 40 percent of
their total sales during November and December and otherwise accrue sales at an even
rate during the year, which of the following will be the accounts receivable balance for
the company on June 30 of the next fiscal year? - Correct Answers -$16,680
The company is looking for a replacement for one of its markets. It has discovered that
growth is expected in the African market. The projected direct fixed costs for Africa are
$2,000, and the expected sales volume is $67,500, with a contribution margin of
$27,000. Which of the following should ZAPPY do? - Correct Answers -Enter the new
African market and exit the European market.
, Some companies have little, if any, net income or earnings, yet they seem to have all
the money they need for capital expenditures. Which of the following best explains how
such companies operate? - Correct Answers -They have good cash flows
The Sintar Corporation has just announced that it will pay $1.10 per share in dividends
to its stockholders in the current quarter. The prior quarter's dividend was $1.00 per
share. The announcement indicates which of the following? - Correct Answers -
Management is sending a signal that the company has good projected future earnings
Wave Inc. is a telecommunications company that wants to become involved in e-
commerce. It has to decide whether to develop a business-to-business or business-to-
consumer strategy. As Wave's strategic planner, you have been asked to develop a
business plan for each opportunity and present these to senior management. The
answer to which of the following questions is most important to know before starting
your plan? - Correct Answers -What are the company's core competencies?
If you were the holder of a call option (having cost you $2) on some stock with an
exercise price of $20, it would be best for you to exercise your option when the market
price is at - Correct Answers -$24
Increased globalization and technological change, particularly in telecommunications,
enable more organizations to adopt which of the following organizational structures? -
Correct Answers -Network
A new local Super Store publicly announced that when more than three people are
standing in line at cash registers, additional checkout-lines will be opened. After the
announcement, customers quickly noticed that the additional lines were not opened until
six or seven people were standing in line. This indicates a gap between - Correct
Answers -actual service delivery and how service quality
was communicated
All of the following can be considered in the evaluation of a business unit EXCEPT -
Correct Answers -projected annual revenues of competitors
The sales division of a corporation is considering an internal product transfer because of
excess demand. What is the lowest acceptable transfer price for the product? - Correct
Answers -The difference between the market price and the costs recaptured by
transferring internally
Which security makes the most prudent investment? - Correct Answers -Y
The building rents arise from long-term leases that cannot be cancelled. If The Mart
closed down this division, what would be the increase in company profits? - Correct
Answers -1,200,000
