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Test Business
In marketing research, a firm might consider using secondary data over primary data because -
ANS-secondary data usually cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the - ANS-enforcement of internal policies
The term "net working capital" refers to - ANS-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? - ANS-700
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? - ANS-625
Which of the following statements about the tort of negligence is true? - ANS-It requires proof of
breach of a statutory or common-law duty.
Which of the following statements about a systems flowchart is true? - ANS-It documents the
sequence of processing steps that take place in an information system.
On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank
statement shows a balance of $4,905. Other information is available as follows:
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge
does.
, 2. A customer's $40 insufficient funds check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May
What is the correct cash balance on May 31? - ANS-$5,080
Within the context of the capital asset pricing model (CAPM), the risk measure known as beta is
often computed by regressing the return of the company's stock against the - ANS-return on the
market portfolio
A project consists of 150 jobs. The expected completion time for each job is given in days. The
project has three critical paths with two jobs in common, J and K. In order to finish the project
one day early, the completion time should be reduced one day for - ANS-either Job J or Job K
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by 10
percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the world
petroleum market? - ANS-Price will increase, but quantity is indeterminate.
Which of the following would most likely occur as a result of the United States government's
imposing tariffs on foreign steel imports? - ANS-Employment in the United States steel industry
would increase.
In an economy the unemployment rate is 10 percent and the inflation rate is 1 percent. An
appropriate fiscal policy in this phase of the business cycle would be to - ANS-increase
government spending
Which of the following is an appropriate Federal Reserve action to stimulate the United States
economy? - ANS-Reducing the reserve requirement
If the spread between the spot and forward exchange rates of two currencies equals the interest
rate difference between the two countries, this phenomenon is referred to as - ANS-interest-rate
parity
A firm that would like to know whether it has enough cash to meet its bills would be most likely
to use which category of financial ratio? - ANS-Liquidity
In a period of rising prices, which inventory valuation method would generally yield both the
lowest ending inventory value and the lowest net income figure? - ANS-Last in, first out (LIFO)
In the statement of cash flows, the section for cash flows from operating activities will include
which of the following? - ANS-A decrease in accounts payable
Net income $100,000 Depreciation expense $10,000 Net increase in accounts receivable
$5,000 Net increase in accounts payable $3,000 On the basis of the information provided in the
Test Business
In marketing research, a firm might consider using secondary data over primary data because -
ANS-secondary data usually cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the - ANS-enforcement of internal policies
The term "net working capital" refers to - ANS-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? - ANS-700
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? - ANS-625
Which of the following statements about the tort of negligence is true? - ANS-It requires proof of
breach of a statutory or common-law duty.
Which of the following statements about a systems flowchart is true? - ANS-It documents the
sequence of processing steps that take place in an information system.
On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank
statement shows a balance of $4,905. Other information is available as follows:
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge
does.
, 2. A customer's $40 insufficient funds check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May
What is the correct cash balance on May 31? - ANS-$5,080
Within the context of the capital asset pricing model (CAPM), the risk measure known as beta is
often computed by regressing the return of the company's stock against the - ANS-return on the
market portfolio
A project consists of 150 jobs. The expected completion time for each job is given in days. The
project has three critical paths with two jobs in common, J and K. In order to finish the project
one day early, the completion time should be reduced one day for - ANS-either Job J or Job K
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by 10
percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the world
petroleum market? - ANS-Price will increase, but quantity is indeterminate.
Which of the following would most likely occur as a result of the United States government's
imposing tariffs on foreign steel imports? - ANS-Employment in the United States steel industry
would increase.
In an economy the unemployment rate is 10 percent and the inflation rate is 1 percent. An
appropriate fiscal policy in this phase of the business cycle would be to - ANS-increase
government spending
Which of the following is an appropriate Federal Reserve action to stimulate the United States
economy? - ANS-Reducing the reserve requirement
If the spread between the spot and forward exchange rates of two currencies equals the interest
rate difference between the two countries, this phenomenon is referred to as - ANS-interest-rate
parity
A firm that would like to know whether it has enough cash to meet its bills would be most likely
to use which category of financial ratio? - ANS-Liquidity
In a period of rising prices, which inventory valuation method would generally yield both the
lowest ending inventory value and the lowest net income figure? - ANS-Last in, first out (LIFO)
In the statement of cash flows, the section for cash flows from operating activities will include
which of the following? - ANS-A decrease in accounts payable
Net income $100,000 Depreciation expense $10,000 Net increase in accounts receivable
$5,000 Net increase in accounts payable $3,000 On the basis of the information provided in the
