Pattison Products, Inc., began operations in October and manufactured 40,000 units

Exercise 18.3

Absorption Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs:

Total fixed factory overhead is $280,000 per month. During October, 38,400 units were sold at a price of $24, and fixed marketing and administrative expenses were $130,500.

1. Calculate the cost of each unit using absorption costing.

2. How many units remain in the ending inventory?

What is the cost of ending inventory using absorption costing?

3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.
4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of the ending inventory?

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Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments

Exercise 18.1

Markup on Cost, Job Pricing

Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventana’s income statement for last year is as follows:

Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year.


1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? Round your answer to the nearest whole percentage value. For example, 15.6% rounds to 16% and should be entered as “16″ in the answer box.

2. A customer orders draperies and shades for a remodeling job. The job will have the following costs:

What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.)

3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? Round your answer to the nearest whole percentage value. For example, 15.6% rounds to 16% and should be entered as “16″ in the answer box.
% of direct materials cost
What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)

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San Mateo Optics, Inc., specializes in manufacturing lenses

Problem 18.30
Absorption- and Variable-Costing Income Statements

San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in space exploration. As the specifications for the lenses are determined by the customer and vary considerably, the company uses a job-order costing system.

Manufacturing overhead is applied to jobs on the basis of direct labor hours, utilizing the absorption- or full-costing method. San Mateo�s predetermined overhead rates for 2015 and 2016 were based on the following estimates.


Jim Cimino, San Mateo�s controller, would like to use variable (direct) costing for internal reporting purposes as he believes statements prepared using variable costing are more appropriate for making product decisions. In order to explain the benefits of variable costing to the other members of San Mateo�s management team, Cimino plans to convert the company�s income statement from absorption costing to variable costing. He has gathered the following information for this purpose, along with a copy of San Mateo�s 2015 and 2016 comparative income statement.


For both years, all administrative expenses were fixed, while a portion of the selling expenses resulting from an 8 percent commission on net sales was variable. San Mateo reports any over or underapplied overhead as an adjustment to the cost of goods sold.


For the year ended December 31, 2016, prepare the revised income statement for San Mateo Optics, Inc., utilizing the variable-costing method. Be sure to include the contribution margin on the revised income statement. Enter all answers as positive amounts.

2. Which of the listed items is not an advantage of using variable costing rather than absorption costing?

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Question 1. (TCO 1) When developing information systems, an organization could use:

an information technology services firm.
open-source software.
cloud computing.
in-house development.
all of the above.

Question 2. (TCO 1) The practice of turning over responsibility of some or all of an organization’s information systems applications and operations to an outside firm is referred to as:

time sharing.
system reassignment and deployment.

Question 3. (TCO 2) Identifying, assessing, and managing the risks and day-to-day changes that occur during a project best defines which of the following project manager activities?

Conflict management
Risk and change management
Team management
Customer relations
Technical problem solving

Question 4. (TCO 2) Which of the following is NOT a project management phase?

Closing down the project
Planning the project
Executing the project
Initiating a project
Implementing the project

Question 5. (TCO 2) Which of the following would be classified as an intangible cost?

Hardware costs
Labor costs
Employee morale
Operational costs
Internet service setup fee

Question 6.(TCO 2) The primary deliverable from the project identification and selection phase is:

a context data flow diagram.
at least three substantively different system design strategies for building the replacement information system.
the development of a new version of the software and new versions of all design documents.
an entity relationship diagram.
a schedule of specific IS development projects.

Question 7.(TCO 3) The term that refers to systems development projects bogged down in an abundance of analysis work is:

information overload.
analysis paralysis.
analysis overload.
information abundance.
disruptive analysis.

Question 8.(TCO 3) Good interview guidelines consist of:

phrasing the question to illicit the correct response.
typing your notes within two weeks of the interview.
establishing expectation levels about the new system.
seeking a variety of perspectives from the interviews.
using as much time as you need.

Question 9. (TCO 3) The search for, and implementation of, radical change in business processes to achieve breakthrough improvements in products and services best defines:

joint application design.
rapid application development.
structured programming.
business process reengineering.
disruptive design.

Question 10.(TCO 3) The purpose of requirements structuring is to:

enable the analysts to gather information on what the system should do from as many sources as possible.
enable the analysts to develop a baseline project plan quickly.
enable the large amount of information gathered during requirements determination to be organized.
enable the analysts to identify several feasible alternatives.

Question 11.(TCO 4) The diagram that shows the scope of the system, indicating what elements are inside and outside the system, is called a:

context diagram.
level-2 diagram.
referencing diagram.
representative diagram.
decomposition diagram.

Question 12.(TCO 5) The number of instances of entity B that can (or must) be associated with each instance of entity A refers to:

ternary occurrence.
participation level.
join level.

Question 13. (TCO 6) Shaping alternative system design strategies involves:

enumerating different potential implementation environments.
proposing different ways to source or acquire the various sets of capabilities for the different implementation environments.
dividing requirements into different sets of capabilities.
all of the above.
none of the above.

Question 14. (TCO 7) Which of the following are general guidelines for displaying tables and lists?

All columns and rows should have meaningful labels.
Place a blank line between every five rows in long columns.
Use the same family of typefaces within and across displays and reports.
Allow white space on printed reports for the user to write notes.
All of the above are guidelines for displaying tables and lists.

Question 15. Question : (TCO 7) Which of the following is a guideline for displaying text?

Use double spacing if space permits.
Do not hyphenate words between lines.
Left-justify text and leave a ragged right margin.
Display text in mixed upper and lowercase and use conventional punctuation.
All of the above are guidelines for displaying text.

Question 16. Question : (TCO 7) Reversing the sequence of one or more characters in a field is called:


Question 17.(TCO 8) A notation that allows the modeler to specify, visualize, and construct the artifacts of software systems, as well as business models, best defines:

Unified Modeling Language.
Structured English.
logic modeling.
structured design.

Question 18.(TCO 8) Benefits of the object-oriented modeling approach include:

the ability to tackle more challenging problem domains.
improved communication among users, analysts, designers, and programmers.
reusability of analysis, design, and programming results.
increased consistency among the models developed during object-oriented analysis, design, and programming.
all of the above.

Question 19.(TCO 9) System documentation that is part of the program source code or is generated at compile time best defines:

system documentation.
user documentation.
internal documentation.
external documentation.
embedded documentation.

Question 20 (TCO 9) User testing of a completed information system using simulated data refers to:

acceptance testing.
alpha testing.
beta testing.
system testing.
stub testing.

Question 1. (TCO 1) Describe the role of a systems analyst.

Question 2. (TCO 2) Discuss the six major categories of feasibility.

Question 3. (TCO 3) Identify and describe the traditional methods for determining requirements.

Question 4. (TCO 4) What is gap analysis? Why is gap analysis useful?

Question 5. (TCO 5) Contrast data modeling to process modeling and logic modeling.

Question 6. (TCO 6) Suppose that an analysis team did not generate alternative design strategies for consideration by a project steering committee or client. What might the consequences be of having only one design strategy? What might happen during the oral presentation of project progress if only one design strategy is offered?

Question 7. (TCO 7) Describe the three-step process for designing dialogues.

Question 8. (TCO 8) What is meant by Agile Methodologies? Identify the three key principles that the Agile Methodologies share.

Question 9. (TCO 9) Describe four types of installation.

Question 10. (TCO 9) Describe four types of maintenance.

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Cansela Corporation uses a periodic inventory system and the LIFO

LIFO liquidation

Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2011 with inventory of 4,500 units of its only product. The beginning inventory balance of $64,000 consisted of the following layers:

2,000 units at $12 per unit

. $24,000

2,500 units at $16 per unit



During the three years 2011’2013 the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows:













1. Calculate cost of goods sold for 2011, 2012, and 2013.

2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.

3. Prepare the company’s LIFO liquidation disclosure note that would be included in the 2013 financial statements to report the effects of any liquidation on cost of goods sold and net income. Assume any liquidation effects are material and that Cansela’s effective income tax rate is 40%. Cansela’s 2013 financial statements include income statements for two prior years for comparative purposes.

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Devry PSYC 110 Midterm Exam (A+)

Devry PSYC 110 Midterm Exam

Question 1.1. (TCOs 1, 2) Participants in research early in psychology’s history might have been asked to view a chair and describe its color, shape, texture, and other aspects of their conscious experience. These individuals would have been using a method called (Points : 2)

objective introspection.

Question 2.2. (TCO 4)  As part of a psychology experiment, Brett decides to measure a person’s “anxiety” by noting the number of blinks a person makes in a 20-minute social interaction with a stranger. Brett appears to have offered a(n) _____ of anxiety. (Points : 2)

operational definition

Question 3.3. (TCOs 2, 3)  Marta was in an automobile accident and suffered an injury to her brain, resulting in the paralysis of her left arm. What part of Marta’s brain was injured?(Points : 2)

Auditory association area
Motor cortex
Association areas
Somatosensory cortex

Question 4.4. (TCOs 2, 3)  A group of axons bundled together coated in myelin that travels together through the body is called a (Points : 2)

synaptic vesicle
myelinated pathway.

Question 5.5. (TCOs 2, 3)  _____ synapses make it more likely that a neuron will send its message to other neurons, whereas _____ synapses make it less likely that a neuron will send its message. (Points : 2)

Excitatory; inhibitory
Inhibitory; excitatory
Augmentation; depletion
Depletion; augmentation

Question 6.6. (TCO 4)  Which of the following phenomena is a function of the distribution of the rods and cones in the retina? (Points : 2)

The moon looks much larger near the horizon than it looks when it is higher in the sky.
The light from distant stars moving rapidly away from us is shifted toward the red end of the spectrum.
Stars can be seen only with difficulty during the daytime
A dim star viewed at night may disappear when you look directly at it, but reappear when you look to one side of it.

Question 7.7. ( TCO 4)  What are the five primary tastes? (Points : 2)

Hot, sour, spicy, sweet, origami
Salty, sour, spicy, sweet, tart
Bitter, salty, sour, sweet, umami
Peppery, salty, sour, sweet, acidic

Question 8.8. (TCO 4) Dizziness, nausea, and disorientation may result if the information from the eyes conflicts a little too much with that from the vestibular organs, according to the _____ of motion sickness. (Points : 2)

sensory conflict theory
motor conflict theory
vestibular conflict theory
semicircular canal conflict theory

Question 9.9. (TCO 5) Judith is startled when her 6-year-old daughter, Laura, sleepwalks into the family room. It is most likely that Laura is experiencing the _____ stage of the sleep cycle. (Points : 2)


Question 10.10. (TCO 5) A client tells his therapist about a dream of riding on a train with his boss. At the end of the journey, the boss gets off the train at a terminal. The content of this dream, as related by the client to the therapist, is what Freud called its _____. (Points : 2)

primary content
manifest content
secondary content
latent content

Question 11.11. (TCO 5) A student nurse looks at a patient’s chart and does not understand the meaning of serious sleep apnea, so she asks the head nurse for assistance. How might the head nurse describe this condition? (Points : 2)

The patient is mentally ill and tends to try to suffocate himself at times.
The patient cannot sleep unless he uses several pillows to deaden sounds that might awaken him.
The patient appears to awaken throughout the night and start walking, but he will not respond to commands.
The patient has a potentially life-threatening condition in which air does not flow into or out of his nose or mouth for periods of time while he is asleep.

Question 12.12. (TCOs 7, 8)  A child learns that whenever he eats all of his dinner, he gets a cookie for dessert. This type of learning is BEST explained by (Points : 2)

classical conditioning.
operant conditioning.
biofeedback theory.
social learning theory.

Question 13.13. (TCOs 7, 8)  Bill hates to clean up after dinner. One night, he volunteers to bathe the dog before cleaning up. When he finishes with the dog and returns to the kitchen, his wife has cleaned everything up for him. Which of the following statements is most likely true? (Points : 2)

Bill will start cleaning up the kitchen before he bathes the dog.
Bill’s wife has positively reinforced him for bathing the dog.
Bill’s wife has negatively reinforced him for bathing the dog.
Bill will never bathe the dog again.

Question 1.1. (TCOs 7, 8)  Dad is watching a home improvement show about how to install a new sink. He really wants to do it and watches the show intently. He knows that his wife will reward him when he is done. However, when he tests the new sink, water spurts everywhere. Taking the new sink apart, he finds that he has left out the crucial washers in the faucet assembly even though this was emphasized in the TV show. What part of Bandura’s theory of the necessary components of observational learning is most likely the reason for this disaster? (Points : 2)


Question 2.2. (TCO 7) Suzy looks up from her lunch, realizing that Jacques has just said something to her. What was it? Oh, yes, he has just asked her if she wants to go to the movies. Suzy’s ability to retrieve what Jacques said is due to her (Points : 2)

iconic sensory memory.
echoic sensory memory.
short-term memory.
tactile sensory memory.

Question 3.3. (TCO 7) Rochelle remembered getting “B’s” in her English literature classes in college. But years later, when she applied for a job and took out her transcript, she was shocked to find that she had actually gotten “C–” grades. She then started telling everyone she remembers being a pretty poor student. Her erratic memory of her mediocre performance is most likely due to (Points : 2)

her poor memory.
hindsight bias.
eidetic imagery.

Question 4.4. (TCO 7) Moishe can remember only the first two items and the last two items on the grocery list that his wife just read to him over the phone. The other five items in between are gone. This is an example of the (Points : 2)

encoding specificity effect.
serial position effect.
TOT effect.
reintegrative effect.

Question 5.5. (TCO 8)  Sally is enrolled in a high school geometry course, which she describes as “drawing figures and figuring drawings.” In a typical class, students draw geometric figures and use a formula to calculate an aspect of the figure, such as its area. Each time Sally uses a formula, she is making use of what psychologists call (Points : 2)


Question 6.6. (TCO 8)  Which of the following statements about gifted people is true? (Points :)

They are more likely to suffer from mental illnesses.
They are physically weaker than nongifted persons.
They are often skilled leaders.
They are socially unskilled.

Question 7.7. (TCO 9) Sam is known to be the fastest worker in the mail room. He has worked in the mail room for only a short time, but prides himself on being competent and a quick learner. He often gets positive comments from coworkers and his boss, which helps to motivate him and has a positive effect as he continues to challenge himself at work. As a result of his efficient style, he is also given more freedom than other workers, because his boss is impressed by his ability to sort and organize mail. Sam is likely to be _____ motivated as he continues to challenge and push himself to perform even better each day. (Points : 2)


Question 8.8. (TCO 9)  Jack said, “I want to rule the world.” What type of need is this? (Points : 2)

Need for achievement
Need for affiliation
Need for power
Need for sex

Question 9.9. (TCO 9)  Although Kim just ate a huge meal and feels “stuffed,” the idea of a chocolate sundae is too good to pass up. Which motivational term explains the appeal of the sundae? (Points : 2)

Drive reduction
Cognitive dissonance

Question 10.10. (TCO 11)  Carolyn took home some printer paper from the office. Later, she felt guilty for stealing it, so she brought some paper to work to replace what she took. Freud would suggest that Carolyn’s _____ was influencing her motives and behavior. (Points : 2)

unconscious mind

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Devry ACCT434 Week 5 Quiz

Devry ACCT434 Week 5 Quiz

Question 1.1.(TCO 7) When companies do not want to use market prices or find it too costly, they typically use __________ prices, even though suboptimal decisions may occur.(Points : 3)

long-run cost
short-run average cost

Question 2.2.(TCO 7) The price of movie tickets for opening day and the few days following compared to the price six months later is an example of(Points : 3)

price gouging.
peak-load pricing.
demand elasticity.

Question 3.3.(TCO 7) The amount of markup percentage is usually higher if (Points : 3)

demand is elastic.
competition is intense.
there is idle capacity.
demand is strong.

Question 4.4.(TCO 7) An understanding of life-cycle costs can lead to(Points :3)

additional costs during the manufacturing cycle
less need for evaluation of the competition
cost-effective product designs that are easier to service
mutually beneficial relationships between buyers and sellers.

Question 5.5.(TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon’s monthly sales are $500,000.
The markup percentage on full cost to arrive at the target (existing) selling price is (Points : 3)


Question 6.6.(TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as(Points : 3)

an interdepartmental product.
an intermediate product.
a subunit product.
a transfer product.

Question 7.7.(TCO 8) Transfer prices should be judged by whether they promote(Points : 3)

goal congruence.
the balanced scorecard method
a high level of subunit autonomy in decision making
Both 1 and 3 are correct

Question 8.8.(TCO 8) A benefit of using a market-based transfer price is the(Points : 3)

profits of the transferring division are sacrificed for the overall good of the corporation
profits of the division receiving the products are sacrificed for the overall good of the corporation
economic viability and profitability of each division can be evaluated individually
None of the above

Question 9.9.(TCO 8) The range over which two divisions will negotiate a transfer price is(Points : 3)

between the supplying division’s variable cost and the market price of the product
between the supplying division’s variable cost and its full cost of the product
anywhere above the supplying division’s full cost of the product
between the supplying division’s full cost and 180% above its full cost

Question 10.10.(TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company’s operating income per pound?(Points : 3)

$5.00 – ($1.25 + $2.50) = $1.25
$5.00 – ($0.75 + $2.50) = $1.75
$5.00 – ($0.75 + $3.75) = $0.50
$5.00 – ($0.25 + $1.25 + $3.50) = 0

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FIN 534 Final Exam – Which of the following is NOT normally regarded as being a barrier to hostile takeovers


Question 1
Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

Targeted share repurchases.
Shareholder rights provisions.
Restricted voting rights.
Poison pills.
Abnormally high executive compensation.

Question 2
Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

To enable the firm to borrow at a below-market interest rate.
To make it easier to grant stock options to employees.
To help prevent a hostile takeover.
To help retain valued employees.
To increase worker productivity.

Question 3
Rohter Galeano Inc. is considering how to set its dividend policy. It has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. The company forecasts that its net income this year will be $3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?


Question 4
If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that

the dividend payout ratio is increasing.
no dividends were paid during the year.
the dividend payout ratio is decreasing.
the dollar amount of investments has decreased.
the dividend payout ratio has remained constant.

Question 5
Which of the following statements is correct?

Capital gains earned in a share repurchase are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
Very often, a company’s stock price will rise when it announces that it plans to commence a share repurchase program. Such an announcement could lead to a stock price decline, but this does not normally happen.
Stock repurchases increase the number of outstanding shares.
The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter.
If a company has a 2-for-1 stock split, its stock price should roughly double.

Question 6
Which of the following actions will best enable a company to raise additional equity capital?

Declare a stock split.
Begin an open-market purchase dividend reinvestment plan.
Initiate a stock repurchase program.
Begin a new-stock dividend reinvestment plan.
Refund long-term debt with lower cost short-term debt.

Question 7
Which of the following statements is correct?

One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.
Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend, and as a result share prices fall when dividend increases are announced. The reason is that investors interpret the increase as a signal that the firm has relatively few good investment opportunities.
If a company wants to raise new equity capital rather steadily over time, a new stock dividend reinvestment plan would make sense. However, if the firm does not want or need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.
Dividend reinvestment plans have not caught on in most industries, and today about 99% of all companies with DRIPs are utilities.
Under the tax laws as they existed in 2008, a dollar received for repurchased stock must be taxed at the same rate as a dollar received as dividends.

Question 8
Poff Industries’ stock currently sells for $120 a share. You own 100 shares of the stock. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

You will have 200 shares of stock, and the stock will trade at or near $60 a share.
You will have 100 shares of stock, and the stock will trade at or near $60 a share.
You will have 50 shares of stock, and the stock will trade at or near $120 a share.
You will have 50 shares of stock, and the stock will trade at or near $60 a share.
You will have 200 shares of stock, and the stock will trade at or near $120 a share.

Question 9
Which of the following statements is NOT correct?

After a 3-for-1 stock split, a company’s price per share should fall, but the number of shares outstanding will rise.
Investors can interpret a stock repurchase program as a signal that the firm’s managers believe the stock is undervalued.
Companies can repurchase shares to distribute large inflows of cash, say from the sale of a division, to stockholders without paying cash dividends.
Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.
Stock repurchases can be used by a firm as part of a plan to change its capital structure.

Question 10
Which of the following statements is CORRECT?

The capital structure that maximizes the stock price is also the capital structure that maximizes earnings per share.
The capital structure that maximizes the stock price is also the capital structure that maximizes the firm’s times interest earned (TIE) ratio.
Increasing a company’s debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this still may raise the company’s WACC.
If Congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage companies to increase their debt ratios.
The capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (WACC).

Question 11
Which of the following statements is CORRECT?

The capital structure that minimizes a firm’s weighted average cost of capital is also the capital structure that maximizes its stock price.
The capital structure that minimizes the firm’s weighted average cost of capital is also the capital structure that maximizes its earnings per share.
If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.
Other things held constant, if corporate tax rates declined, then the Modigliani-Miller tax-adjusted tradeoff theory would suggest that firms should increase their use of debt.
A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.

Question 12
Which of the following statements is CORRECT?

The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.
The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.
The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.
The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.
As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS

Question 13
Which of the following events is likely to encourage a company to raise its target debt ratio, other things held constant?

An increase in the personal tax rate.
An increase in the company’s operating leverage.
The Federal Reserve tightens interest rates in an effort to fight inflation.
The company’s stock price hits a new high.
An increase in the corporate tax rate.

Question 14
Barette Consulting currently has no debt in its capital structure, has $500 million of total assets, and its basic earning power is 15%. The CFO is contemplating a recapitalization where it will issue debt at a cost of 10% and use the proceeds to buy back shares of the company’s common stock, paying book value. If the company proceeds with the recapitalization, its operating income, total assets, and tax rate will remain unchanged. Which of the following is most likely to occur as a result of the recapitalization?

The ROA would remain unchanged.
The basic earning power ratio would decline.
The basic earning power ratio would increase.
The ROE would increase.
The ROA would increase.

Question 15
Two operationally similar companies, HD and LD, have the same total assets, operating income (EBIT), tax rate, and business risk. Company HD, however, has a much higher debt ratio than LD. Also HD’s basic earning power (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?

HD should have a higher times interest earned (TIE) ratio than LD.
HD should have a higher return on equity (ROE) than LD, but its risk, as measured by the standard deviation of ROE, should also be higher than LD’s.
Given that BEP > rd, HD’s stock price must exceed that of LD.
Given that BEP > rd, LD’s stock price must exceed that of HD.
HD should have a higher return on assets (ROA) than LD.

Question 16
Which of the following statements is CORRECT?

If a firm lowered its fixed costs while increasing its variable costs, holding total costs at the present level of sales constant, this would decrease its operating leverage.
The debt ratio that maximizes EPS generally exceeds the debt ratio that maximizes share price.
If a company were to issue debt and use the money to repurchase common stock, this action would have no impact on its basic earning power ratio. (Assume that the repurchase has no impact on the company’s operating income.)
If changes in the bankruptcy code made bankruptcy less costly to corporations, this would likely reduce the average corporation’s debt ratio.
Increasing financial leverage is one way to increase a firm’s basic earning power (BEP).

Question 17
Which of the following statements is most consistent with efficient inventory management? The firm has a

low incidence of production schedule disruptions.
below average total assets turnover ratio.
relatively high current ratio.
relatively low DSO.
below average inventory turnover ratio.

Question 18
A lockbox plan is

used to identify inventory safety stocks.
used to slow down the collection of checks our firm writes.
used to speed up the collection of checks received.
used primarily by firms where currency is used frequently in transactions, such as fast food restaurants, and less frequently by firms that receive payments as checks.
used to protect cash, i.e., to keep it from being stolen.

Question 19
A lockbox plan is most beneficial to firms that

have widely dispersed manufacturing facilities.
have a large marketable securities portfolio and cash to protect.
receive payments in the form of currency, such as fast food restaurants, rather than in the form of checks.
have customers who operate in many different parts of the country.
have suppliers who operate in many different parts of the country.

Question 20
Other things held constant, which of the following would tend to reduce the cash conversion cycle?

Place larger orders for raw materials to take advantage of price breaks.
Take all discounts that are offered.
Continue to take all discounts that are offered and pay on the net date.
Offer longer payment terms to customers.
Carry a constant amount of receivables as sales decline.

Question 21
Firms generally choose to finance temporary current operating assets with short-term debt because

short-term interest rates have traditionally been more stable than long-term interest rates.
a firm that borrows heavily on a long-term basis is more apt to be unable to repay the debt than a firm that borrows short term.
the yield curve is normally downward sloping.
short-term debt has a higher cost than equity capital.
matching the maturities of assets and liabilities reduces risk under some circumstances, and also because short-term debt is often less expensive than long-term capital.

Question 22
Which of the following is NOT directly reflected in the cash budget of a firm that is in the zero tax bracket?

Cumulative cash.
Repurchases of common stock.
Payment for plant construction.
Payments lags.

Question 23
Suppose that 1 British pound currently equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc?

1 British pound equals 3.2400 Swiss francs
1 British pound equals 2.6244 Swiss francs
1 British pound equals 1.8588 Swiss francs
1 British pound equals 1.0000 Swiss francs
1 British pound equals 0.3810 Swiss francs

Question 24
Suppose Yates Inc., a U.S. exporter, sold a consignment of antique American muscle-cars to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, Yates agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would Yates actually receive after it exchanged yen for U.S. dollars?


Question 25
If it takes $0.71 U.S. dollars to purchase one Swiss franc, how many Swiss francs can one U.S. dollar buy?


Question 26
A box of chocolate candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate?

1 U.S. dollar equals 0.69 Swiss francs
1 U.S. dollar equals 0.85 Swiss francs
1 U.S. dollar equals 1.21 Swiss francs
1 U.S. dollar equals 1.29 Swiss francs
1 U.S. dollar equals 1.44 Swiss francs

Question 27
Suppose a carton of hockey pucks sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what is the price of hockey pucks in the United States?


Question 28
If 1.64 Canadian dollars can purchase one U.S. dollar, how many U.S. dollars can you purchase for one Canadian dollar?


Question 29
Suppose one U.S. dollar can purchase 144 yen today in the foreign exchange market. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?

155.5 yen
144.0 yen
133.5 yen
78.0 yen
72.0 yen

Question 30
Suppose a foreign investor who holds tax-exempt Eurobonds paying 9% is considering investing in an equivalent-risk domestic bond in a country with a 28% withholding tax on interest paid to foreigners. If 9% after-tax is the investor’s required return, what before-tax rate would the domestic bond need to pay to provide the required after-tax return?


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Ashord BUS 308 Week 1 Quiz (A+ Solution)

Ashord BUS 308 Week 1 Quiz

1. Question : When using the Chebyshev’s theorem to obtain the bounds for 99.73 percent of the values in a population, the interval generally will be _______ the interval obtained for the same percentage if normal distribution is assumed (empirical rule).

narrower than
wider than
the same as

2. Question : An example of a qualitative variable is the mileage of a car.

3. Question : By taking a systematic sample, in which we select every 100th shopper arriving at a specific store, we are approximating a random sample of shoppers.


4. Question : All of the following are measures of central tendency except the


5. Question : Measurements from a population are called


6. Question : A normal population has 99.73 percent of the population measurements within ___ standard deviations of the mean.


7. Question : When a population is skewed to the left or right with a very long tail, what is the best measure to use for central tendency.

Population mean
Population mode
Population median
Population standard deviation

8. Question : All of the following are measures of central tendency except the


9. Question : Which percentile describes the first quartile Q1?


10. Question : Any characteristic of a population unit is called a


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MKT 441 Week 5 Final Exam (A+ Guaranteed)

MKT 441 Week 5 Final Exam

1. A marketing research firm is discussing the possibility of a major project for a real estate company.  The research firm has already conducted extensive exploratory research for the project and has been compensated.  For the subsequent survey, the top managers in the real estate firm cannot agree on exactly what the specific research objectives should be.  What should the marketing research firm do?

a. decline the project
b. conduct more exploratory research
c. tell the top managers what the research objectives should be and do the project
d. agree to do the subsequent project for a lower cost
e. none of the above

2. In establishing the need for marketing research, which of the following would serve as a good decision rule for managers?

a. ensuring that competitors are using marketing research, therefore a company considering marketing research would not be at a competitive disadvantage
b. determining the value to be derived from marketing research
c. determining the cost of conducting marketing research
d. weighing the value derived from the marketing research with the cost of obtaining the marketing research information
e. ensuring that subordinates are in favor of conducting the marketing research

3. Which of the following statements is not true?

a. The Internet is rapidly replacing libraries and other printed materials once used in marketing research
b. The Internet facilitates the distribution of research proposals
c. The Internet facilitates collaboration between supplier and client
d. the publishing and distribution of research reports is facilitated by the Internet
e. none of the above

4. Which of the following represents an application of secondary data?

a. predicting broad changes in culture
b. selecting a street location for a new carwash
c. economic trends forecasting
d. corporate intelligence
e. All of the above are applications of secondary data.

5. Which type of research may begin with, say, exploratory research, and then go on to conduct a full-scale, representative survey?

qualitative research
quantitative research
pluralistic research
focus group research
representative research

6. The percentage of total variation in the dependent variable that is described by the independent variable is expressed by_________.

a. coefficient of determination
b. correlation coefficient
c. coefficient of covariation
d. regression coefficient
e. none of the above

7. The scaling that permits most sophisticated statistical analysis is

nominal scaling
ordinal scaling
interval scaling
ratio scaling

8. When a market research supplier subcontracts out data collection activities to another firm, they are using what kind of a company?

a. Data analysis
b. Field service
c. Quality control
d. Target marketing
e. None of the above

9. It would be unethical for a potential client to steal a marketing research supplier’s:

a. methodology
b. survey instrument
c. sample
d. proprietary data analysis techniques
e. all of the above

10. The Bayesian approach to decision making

assigns probabilities to each state of nature based on relative frequency probabilities
uses personal probabilities reflecting the decision maker’s confidence in the truth of a specific proposition
is based on the principle of insufficient reason
assumes complete ignorance about the true state of nature

11. The best way to improve the response rate of mail interviews is to

offer an incentive
pre-notify people of the survey
use colored questionnaires
use first class mail
none of the above

12. Which of the following is not true about the research process?

a. It is a systematic, planned approach.
b. It ensures that the stages of the research project will be independent of each other.
c. It guides the project from conception to the final analysis and presentation of results.
d. It creates a consistency between the research design and the research purpose.
e. All of these are true.

13. Which of the following is not a characteristic of secondary data?

a. observation data collected for the project at hand
b. might be relevant to the problem at hand
c. gathered previously for another purpose
d. (b) and (c)
e. all are characteristic of secondary data

14. Validity of online surveys depends on

Sample selection
Survey design
Response tendencies
Technology challenges.
All of the above

15. One of the nonprobability methods used for sampling is:

cluster sampling
systematic sampling
convenience sampling
stratified sampling
simple random sample

16. This type of chart is the simplest form of chart and is useful for presenting a measurement taken at several points over time.

a. line chart
b. bar chart
c. pie chart
d. (b) and (c) are equally useful
e. all are equally useful

17. In a beer consumption study, a researcher makes an assumption that males will consume more beer per week than females; this can be stated in a:

research objective
given level of significance

18. Target marketing most closely identifies with which of the following orientations?

a. production orientation
b. systems orientation
c. goal orientation
d. consumer orientation
e. all are part of the requirements for adopting the marketing concept

19. Which of the following is NOT a way marketing research is used by corporate marketing departments to support the marketing decision-making process?

a. To evaluate the ongoing success of operational marketing strategies.
b. To identify new target markets.
c. To measure the quality of customer service and level of satisfaction.
d. To assess changes in the internal environment.
e. All of the above are used to support the marketing decision-making process.

20. Large amounts of money, time, and effort are wasted because requests for marketing information were poorly formulated.  The preceding could have been avoided if the researcher had

found out exactly why the information was being sought
stated their objectives more clearly
recognize the opportunity
determine whether the information already exists
all of the above

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