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RES 342 Research and Evaluation II Final Exam MCQs Complete Answer

RES 342 Research and Evaluation II Final Exam MCQs Complete Answer

RES 342 Research and Evaluation II Final Exam MCQs Complete Answer

RES 342 Research and Evaluation II Final Exam MCQs Complete Answer

RES 342 Research and Evaluation II Final Exam MCQs Complete Answer

 

1) What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?

A. ± 1.96
B. ± 2.33
C. ± 2.58
D. ± 1.65

2) In classical hypothesis testing, the test statistic is to the critical value what the __________.

A. ‘p-value’ is to alpha
B. critical value is to alpha
C. test statistic is to the ‘p-value’
D. level of significance is to the test statistic

3) For a hypothesis test of a single population mean at 95% confidence level, a calculated Z score of 1.7 supports the conclusion that

A. the population mean is greater than the hypothesized value
B. the null hypothesis cannot be rejected
C. the sample is biased
D. the population mean is less than expected

4) If the paired differences are normal in a test of mean differences, then the distribution used for testing is the

A. normal distribution
B. chi-square
C. student distribution
D. F distribution

5) One hundred women were polled and 60 reported successfully communicating an automobile problem to an auto repairman. A sample of 150 men had 95 reporting the same success. The value of the test statistic for a test of the equality of proportions is

A. -0.5319
B. 0.7293
C. -0.419
D. 0.2702

6) Weekly sales of iPods® at 20 Best Buy® stores are compared before and after installing a new eye-catching display. To determine if the display is effective in increasing sales, what type of statistical test would you perform?

A. Comparison of means using independent samples using a t-test
B. Comparison of proportions using independent samples using a z-test
C. Comparison of means using a paired z-test
D. Comparison of means using a paired t-test

7) When is it appropriate to use the paired difference t-test?

A. Four samples are compared at once.
B. Any two samples are compared.
C. Two independent samples are compared.
D. Two dependent samples are compared.

8) A survey of hotels found that the average hotel room rate in New Orleans is $88.42 and the average room rate in Phoenix is $80.61. The survey sampled 50 hotels in each city. The standard deviations were $5.62 and $4.83, respectively. At alpha=.05, it can be concluded that there is a significant different in the rates?

A. 7.45
B. -1.96
C. 1.96
D. -7.45

9) If the paired differences are normal in a test of mean differences, the distribution used for testing is the

A. normal distribution
B. chi-square
C. student t distribution
D. F distribution

10) The accountant for Thomas’s Furniture Store is concerned regarding the outstanding receivable owed the company. There has been a cash flow problem and it is believed that the slow collection of accounts receivable is partially the blame. The accountant believes that 40% of the present accounts are more than 4 months behind in making payments. To be able to make a decision regarding this belief, a random sample of 100 accounts was taken. It was found that 37 accounts were more than 4 months late. Did the sample data confirm the accountant’s belief? Use the .05 significant level for the statistical test.

A. There is not enough evidence to confirm or deny the belief.
B. The accountant’s belief is not confirmed.
C. The accountant’s belief is confirmed.
D. The accountant needed to take a larger sample.

11) New college business graduates are finding it difficult to get a job. A business journal has reported that only one in five graduates is able to find a job within 6 months of their graduation. A report by University of Phoenix indicated that out of a survey of 300 recent business graduates, 75 had jobs. You are a business major at University of Phoenix and have a concern about getting a job. Based on this data, will a graduate of University of Phoenix have a better chance of getting a job in the first 6 months after graduation? Use the .05 significant level for the test.

A. No, there is not a significant difference.
B. It cannot be predicted based on this data.
C. Yes, there is a significant difference.
D. The business journal information is incorrect.

12) Analysis of variance (ANOVA) is used to

A. compare nominal data
B. compute t- test
C. compare population proportion
D. simultaneously compare several population means

13) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be

A. a paired t- test
B. two different t tests
C. an ANOVA test
D. a two sample test

14) Sound engineers studied factors that might affect the output, in decibels, of a rock concert’s speaker system. The desired level of significance was a = .05. The results of their ANOVA tests are shown:

Source of Variation SS df MS F P-value
Amplifier 99.02344 99.02344 0.005718
Position 93.98698 31.32899 3.215807 0.051003
Interaction 10.15365 3 3.384549 0.347412 0.791505
Error 155.875 16 9.742188

Total 359.0391 23

The interaction between the Position and Amplifier treatments was

A. very significant
B. slightly significant
C. insignificant
D. highly correlated

15) Totto, an automobile manufacturer, has designed a radically new engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, below regular, premium, and super premium. The test car made three trial runs on the test track using each of the grades and the miles per gallon were recorded. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?

A. 1.96
B. 4.07
C. 2.33
D. 12.00

16) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?

A. Too many degrees of freedom
B. A difference between at least one pair of population means
C. No difference between the population means
D. The variances are the same

17) Nonparametric statistics are used when

A. you have qualitative data, with your variables being measured at the nominal or interval level
B. you have qualitative data, with your variables being measured at the ordinal or ratio level
C. you have qualitative data, with your variables being measured at the nominal or ordinal level
D. you have qualitative data, with your variables being measured at the ordinal or interval level

18) The nonparametric test most commonly used for testing the statistical independence between two variables is

A. the Kruskal- Wallis test
B. the Chi- Square test
C. the Mann Whitney test
D. the Sign test

19) What nonparametric test is used when the assumptions for the parametric ANOVA cannot be met? Its purpose is to test whether three or more populations are equal. The data must be at least ordinal scaled.

A. Students’ t
B. Kruskal- Wallis
C. Mann-Whitney
D. ANOVA

20) Rachael Smith is the personnel manager at Johnson and Johnston, an accounting firm. She is concerned about absenteeism, which seems to be an increasing problem, especially after days off work. She decided to sample the records to determine if absenteeism was distributed evenly throughout the 6-day work week. The null hypothesis to be tested was: Absenteeism is distributed evenly throughout the week. The sample results were:

Day of Week Number Absent
Monday 12
Tuesday 9
Wednesday 11
Thursday 10
Friday 9
Saturday 9

What is the critical value of chi-square with a significant level of = 0.05?

A. 11.070
B. 12.592
C. 13.388
D. 15.033

21) A public opinion poll surveyed a simple random sample of voters. Respondents were classified by gender and by voting preference-Republican, Democrat, or Independent. The results follow.

Voting Preferences Republican Democrat Independent Row total
Male 200 150 50 400
Female 250 300 50 600
Column total 450 450 100 1000

If you conduct a chi-square test of independence, what is the expected frequency count of male Independents?

A. 50
B. 60
C. 40
D. 30

22) What parametric test is equivalent to the nonparametric Spearman’s rank test?

A. T-test of correlation coefficient
B. T-test of two sample means
C. T-test of one sample mean.
D. T-test of two sample proportions

23) What is the variable used to predict another variable called?

A. Independent variable
B. Dependent variable
C. Moderating variable
D. Intervening variable

24) Michelle used a sample of 50 U.S. cities to estimate the relationship between crime, or annual property crimes per 100,000 persons, and income, or median income per capita. Her estimated regression equation was crime = 428 – .01 income. Assuming her model is statistically significant, if income decreases by $1,000, we would predict that crime will

A. decrease by 1
B. increase by 10
C. decrease by 10
D. increase by 100

25) In the least squares equation, Y’ = 12 + 25X the value of 25 indicates

A. the y- intercept
B. for each unit increase in ‘x’, y’ increases by 25
C. for each unit increase in ‘y’, ‘x’ increases by 25
D. the residual of ‘x’ factor

26) A test is conducted in eight cities to see if giving away free transit system maps will increase bus ridership. In a regression analysis, the dependent variable is the increase in bus ridership in thousands of persons from the start of the test until its conclusion. The independent variables are X1 = the number in thousands of free maps distributed and X2 = a binary equal to 1, if the city has free downtown parking and 0 otherwise. The estimated regression equation is Y = 1.32+.0345X1-1.45X2. If the Y value for city 3 is 7.3, X1 = 140, and X2 = 0 the residual for city 3 in thousands is:

A. 6.34
B. 1.15
C. .57
D. 2.01

27) The following linear trend equation was developed for the annual sales of the Tractor Manufacturing Company. Y’ = 355 + 50t in thousands of dollars. How much are sales increasing by?

A. $50,000 per year
B. $5,00 per month
C. $500,000 per year
D. $6,000 per year

28) The time series component that reflects variability over short, repetitive time periods that last less than one year is called

A. long-term trend
B. cyclical variation
C. seasonal variation
D. irregular variation

29) A research company has been hired by a realty company to do an analysis of heating cost of homes in the region. The realty company wanted to be able to predict the heating cost of a typical single-family home. The realty company was constantly being asked questions regarding heating costs by potential home buyers. It was believed that these variables would impact heating costs (Y’): mean daily outdoor temperature (X1), the number of inches of insulation (X2), and the age in years of the furnace (X3). The multiple regression analysis produced the following regression equation: Y’ = 427.2 – 4.58X1 – 14.83X2 + 6.10X3. Which statement is correct based on this analysis?

A. The age of the furnace has an indirect relationship with heating costs.
B. There is an inverse relationship between outdoor temperature and heating costs.
C. There is no real clear relationship between these variables.
D. There exists a direct relationship between inches of insulation and heating costs.

30) If we fit a linear trend to data that are growing exponentially,

A. the fitted trend will be too high at the end
B. the forecasts, if extrapolated, will be too low
C. the forecasts, if extrapolated, will be too high
D. the fitted trend will be too low in the middle

 

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Busn 278 Budgeting and Forecasting Final Exam_Answer

Busn 278 Budgeting and Forecasting Final Exam_Answer

Busn 278 Budgeting and Forecasting Final Exam_Answer

Busn 278 Budgeting and Forecasting Final Exam_Answer

Busn 278 Budgeting and Forecasting Final Exam.

1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5)

It facilitates the coordination of activities.
It provides definite objectives for evaluating performance.
It provides assurance that the company will achieve its objectives.
It provides early warning signs of potential threats.

2. (TCO 2) Which of the following is not a qualitative forecasting method? (Points : 5)

Executive opinions
Sales force polling
Delphi method
Classical decomposition

3. (TCO 3) Which of the following statements regarding the t-statistic is true? (Points : 5)

The t-statistic cannot be negative.
The t-statistic measures how many standard errors the coefficient is away from the independent variable.
The higher the t-value, the more confidence we have in the coefficient.
Low t-values indicate high reliability.

4. (TCO 4) Which of the following statements regarding the risk associated with R&D activities is incorrect? (Points : 5)

The amount of time between the R&D activity and the cash flows from the project does not affect risk.
Greater risk is associated with creating new products than improving existing products.
Risk increases as the time between the R&D activity and the cash flows from the project increases.
Assessing risk is a vital part of research and development.

5. (TCO 5) Program budgeting does not include: (Points : 5)

Controlling
Programming
Budgeting
Planning

6. (TCO 6) The payback period technique ___________ (Points : 5)

should be used as a final screening tool.
can be the only basis for the capital budgeting decision.
is relatively easy to compute and understand.
considers the expected profitability of a project.

7. (TCO 6) The profitability index is computed by dividing the ___________ (Points : 5)

total cash flows by the initial investment.
present value of cash inflows by the present value of each outflow.
initial investment by the total cash flows.
initial investment by the present value of cash flows.

8. (TCO 6) A company projects annual cash inflows of $85,000 each year for the next five years if it invests $300,000 in new equipment. The equipment has a five-year life and an estimated salvage value of

$75,000. What is the accounting rate of return on this investment? (Points : 5)

28.3%
13.3%
15%
43.3%

9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____.

(Points : 5)

5 years
6 years
7 years
8 years

10. (TCO 6) Hyde Inc. is comparing several alternative capital budgeting projects as shown below:

Projects A B C

Initial Investment $110,000 $90,000 $50,000

Present value of cash inflows $100,000 $100,000 $60,000

Using the profitability index, rank the projects, starting with the most attractive. (Points : 5)

A, C, B.
A, B, C.
C, A, B.
C, B, A.

11. (TCO 6) Cleaners, Inc. is considering purchasing equipment costing $30,000 with a six-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its

useful life with no salvage value. Cleaners requires a 10% rate of return. What is the approximate net present value of this investment? (Points : 5)

$13,800
$1,794
$886
$2,748

12. (TCO 7) Which of the following would not appear as a fixed expense on a selling and administrative expense budget? (Points : 5)

Freight-out
Office salaries
Property taxes
Depreciation

13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each

month equal to 30% of next month’s budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company

to meet its goals? (Points : 5)

107,400 units
102,000 units
96,600 units
138,000 units

14. (TCO 8) Standards that are based on efficient activity with allowances for unavoidable losses are called _______ (Points : 5)

basic standards.
maximum efficiency standards.
currently attainable standards.
expected standards.

15. (TCO 9) A static budget is appropriate for __________ (Points : 5)

variable overhead costs.
direct materials costs.
fixed overhead costs.
none of these.

16. (TCO 9) If the activity level increases 10%, total variable costs will ___________. (Points : 5)

remain the same
increase by more than 10%
decrease by less than 10%
increase 10%

17. (TCO 9) At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted

to $6,000. Using the high-low method, what is the estimated fixed cost element of power costs? (Points : 5)

$12,000
$6,000
$3,600
$8,400

18. (TCO 10) Which of the following statements regarding budget reports is incorrect? (Points : 5)

The cost of budget reports should not outweigh the benefits.
Budget reports are used for planning, control, and information.
Reports prepared for upper management typically have fewer details than reports prepared for lower-level managers.
Reports are prepared more frequently for upper management than for lower-level managers.

Page 2

1. (TCO 7) The first step in creating the master budget is the sales budget. Describe this budget and the information it includes. Why is the accuracy of the sales budget important? (Points : 20)

2. (TCO 9) Understanding how costs behave can help managers plan operations and choose between various courses of action.

Part (a) Identify and describe the three types of cost behavior, including examples of each Part.

Part (b) As a manager, which cost behavior would you prefer and why? (Points : 20)

3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.

Part (a) Compute each of the following:
1: Payback period.
2: Net present value.
3: Profitability index.
4: Internal rate of return.
5: Accounting rate of return.

(b) Indicate whether the investment should be accepted or rejected. (Points : 30)

4. (TCO 7) Roswell Company has budgeted sales revenue as follows for the next 4 months as follows:

February

$150,000

March

$120,000

April

$105,000

May

$165,000

Past experience indicates that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 35% in the month following the sale, and 3% in the second month following the sale. The other 2% is uncollectible.

Prepare a schedule which shows expected cash receipts from sales for the month of May.

5. (TCO 8) Eastern Company’s budgeted and actual sales for 2009 were:

Product

Budgeted Sales

Actual Sales

A

35,300 units at $2.00 per unit

32,700 units at $2.60 per unit

B

27,900 units at $5.00 per unit

29,200 units at $4.70 per unit

Part (a) Calculate the sales volume variance.
Part (b) Calculate the sales price variance.
Part (c) Calculate the total sales variance.

6. (TCO 9) The Mays Clinic has the following monthly telephone records and costs:
Calls

Costs

2,000

$2,400

1,500

2,000

2,200

2,600

2,500

2,900

2,300

2,700

1,700

2,200

Identify the fixed and variable cost elements using the high-low method.

2. (TCO 9) Understanding how costs behave can help managers plan operations and choose between various courses of action.

Part (a) Identify and describe the three types of cost behavior, including examples of each.
Part (b) As a manager, which cost behavior would you prefer and why? (Points : 20)

3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is

computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new

investments.

Part (a) Compute each of the following:
1: Payback period.
2: Net present value.
3: Profitability index.
4: Internal rate of return.
5: Accounting rate of return.
(b) Indicate whether the investment should be accepted or rejected. (Points : 30)

4. (TCO 7) Roswell Company has budgeted sales revenue as follows for the next 4 months as follows:

February

$150,000

March

$120,000

April

$105,000

May

$165,000

Past experience indicates that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 35% in the month following the sale, and 3% in the second

month following the sale. The other 2% is uncollectible.

Prepare a schedule which shows expected cash receipts from sales for the month of May.

5. (TCO 8) Eastern Company’s budgeted and actual sales for 2009 were:

Product

Budgeted Sales

Actual Sales

A 35,300 units at $2.00 per unit

32,700 units at $2.60 per unit

B 27,900 units at $5.00 per unit

29,200 units at $4.70 per unit

Part (a) Calculate the sales volume variance.
Part (b) Calculate the sales price variance.
Part (c) Calculate the total sales variance.

6. (TCO 9) The Mays Clinic has the following monthly telephone records and costs:

Calls Costs

2,000 $2,400

1,500 2,000

2,200 2,600

2,500 2,900

2,300 2,700

1,700 2,200

Identify the fixed and variable cost elements using the high-low method.

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ACC 455 Final Exam Complete A+ Answer

ACC 455 Final Exam Complete A+ Answer

ACC 455 Final Exam Complete A+ Answer

ACC 455 Final Exam Complete A+ Answer

ACC 455 Final Exam Complete A+ Answer

1) Which of the following statements regarding proposed regulations is not correct?

A. Proposed and temporary regulations are generally issued simultaneously.

B. Proposed regulations do not provide any insight into the IRS’s interpretation of the tax law.

C. Proposed regulations expire after 3 years.

D. Practitioners and other interested parties may comment on proposed regulations.

2) Regulations are

A. presumed to be valid and to have almost the same weight as the IRC

B. equal in authority to legislation if interpretative

C. equal in authority to legislation

D. equal in authority to legislation if statutory

3) Which of the following courts is not a trial court for tax cases?

A. U.S. Tax Court

B. U.S. Court of Federal Claims
C. U.S. Bankruptcy Court

D. U.S. District Court

4) Which of the following statements is incorrect?

A. Limited partners’ liability for partnership debt is limited to their amount of investment.
B. In a general partnership, all partners have unlimited liability for partnership debts.

C. In a limited partnership, all partners participate in managerial decision-making.

D. All of the statements are correct.

5) Which of the following is an advantage of a sole proprietorship over other business forms?

A. Low tax rates on dividends

B. Ease of formation

C. Tax-exempt treatment of fringe benefits

D. The deduction for compensation paid to the owner

6) Which of the following statements is correct?

A. S shareholders are taxed on their proportionate share of earnings that are distributed.

B. S shareholders are taxed on their proportionate share of earnings whether or not distributed.
C. An owner of a C corporation is taxed on his or her proportionate share of earnings.

D. S shareholders are only taxed on distributions.

7) Three members form an LLC in the current year. Which of the following statements is incorrect?

A. The LLC can elect to be taxed as a C corporation with no special tax consequences.

B. If the LLC elects to use its default classification, it can elect to change its status to being taxed as a C corporation beginning with the third tax year after the initial classification.
C. The LLC’s default classification under the check-the-box rules is as a partnership.

D. The LLC can elect to have its default classification ignored.

8) Identify which of the following statements is true.

A. Under the check-the-box regulations, an LLC that has one member (owner) may be disregarded as an entity separate from its owner.
B. An unincorporated business may not be taxed as a corporation.

C. A new LLC that is owned by four members elects to be taxed under its default classification (as a partnership) in its first year of operations. The entity is prohibited from changing its tax classification at any time in the future.
D. All are false.

9) Identify which of the following statements is true.

A. The check-the-box regulations permit an LLC to be taxed as a C corporation.

B. Under the check-the-box regulations, an LLC that has only two members (owners) default classification is as a partnership.
C. Once an election is made to change its classification, an entity cannot change again for 60 months.
D. All of the statements are true.

10) Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is

A. Rose and Wayne are not required to recognize their realized gains.

B. Wayne must report the FMV of the stock received as capital gain.

C. Rose and Wayne must recognize their realized gains, if any.

D. Wayne must report the FMV of the stock received as ordinary income.

11) Matt and Sheila form Krupp Corporation. Matt contributes property with a FMV of $55,000 and a basis of $35,000. Sheila contributes property with a FMV of $75,000 and a basis of $40,000. Matt sells his stock to Paul shortly after the exchange. The transaction will

A. qualify with respect to Sheila under Sec. 351 whether Matt qualifies or not

B. qualify under Sec. 351 if Matt can show the sale to Paul was not part of a prearranged plan

C. not qualify under Sec. 351

D. qualify under Sec. 351 only if an advance ruling has been obtained

12) For Sec. 351 purposes the term property does not include

A. inventory

B. accounts receivable
C. cash

D. services rendered

13) Identify which of the following statements is true.

A. In computing an NOL for the current year, a deduction is allowed for NOLs from previous years.

B. An election to forgo an NOL carryback must be made on or before the return due date (including extensions) for the year in which the NOL is incurred.
C. A corporate NOL can be carried back 2 years and forward 15 years.

D. All are false.

14) A new corporation may generally select one of the following accounting methods with the exception of

A. retail method

B. accrual method

C. cash method

D. hybrid method

15) Identify which of the following statements is false.

A. A new corporation can elect a fiscal year that runs from February 16 to February 15 of the following year.
B. A fiscal year may not end on December 31.

C. A corporation’s fiscal year generally must end on the last day of the month.

D. A corporation’s first tax year may not cover a full 12-month period.

16) Edison Corporation is organized on July 31. The corporation starts business on August 10. The corporation adopts a November 30 fiscal year end. The following expenses are incurred during the year:
Date Type Amount
6-30 Attorneys fees associated with obtaining charter $10,000
7-10 Underwriter fees for stock sale 25,000
7-15 Transfer cost for property contributed to the corporation for stock 3,000
6-30 Costs of organizational meetings 2,000
12-6 Legal fees to modify charter 4,000

What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending November 30?

A. $5,156

B. $12,000

C. $16,000

D. $800

17) Maxwell Corporation reports the following results:

Gross income from operations $ 90,000
Dividends received from 18%-owned domestic corporation 70,000
Expenses 100,000

Maxwell’s dividends-received deduction is

A. $56,000

B. $49,000

C. $42,000

D. $70,000

18) Island Corporation has the following income and expense items for the year.

Gross receipts from sales $60,000
Dividends received from 15%-owned domestic corporation 40,000
Expenses connected with sales 30,000

The taxable income of Island Corporation is

A. $47,000

B. $70,000

C. $100,000

D. $42,000

19) Which of the following is not an adjustment in calculating AMTI?

A. Production activities deduction

B. The regular tax NOL deduction

C. Gain on installment sales of noninventory property

D. The difference between the gains for AMTI and regular tax purposes

20) Tax-exempt interest income on state and local municipal bonds which are not a private activity is

A. a negative adjustment in calculating alternative minimum taxable income (AMTI)

B. a positive adjustment in calculating alternative minimum taxable income (AMTI)

C. a tax preference item

D. included in calculating ACE (adjusted current earnings)

21) Which of the following statements about the alternative minimum tax depreciation rules is correct?

A. A 31.5-year recovery period is used when calculating the commercial real property depreciation deduction for alternative minimum taxable income purposes.
B. The excess of the gain reported on the disposition of tangible personal property for income tax purposes over the gain reported for alternative minimum tax purposes is a positive adjustment to taxable income in arriving at alternative minimum taxable income.
C. The MACRS depreciation rules are used to calculate the depreciation deduction when calculating alternative minimum taxable income regardless of the date the property was placed in service.
D. No depreciation adjustment is made when computing AMT for real property acquired after 1998.

22) Maxwell Corporation reports the following results:
Year Current E&P Distributions
2005 $6,000 $4,000
2006 5,000 1,000
2007 1,000 -0-

Maxwell’s dividends-received deduction is

A. $5,000

B. $7,000

C. $0

D. $12,000

23) Grant Corporation sells land (a noninventory item) with a basis of $57,000 for $100,000. Nichole will be paid on an installment basis in five equal annual payments starting in the current year. The E&P for the year of sale will be increased as a result of the sale (excluding federal income taxes) by

A. $43,000

B. $0

C. $8,600

D. $100,000

24) Identify which of the following statements is false.

A. At formation, a corporation’s E&P depends on the amount of capital contributed by the shareholders.
B. For E&P dividend distribution purposes, property as defined in Sec. 317(a) includes money.

C. The function of E&P is to provide a measure of a corporation’s economic ability to pay dividends.
D. Adjustments to taxable income when computing E&P do not include tax exempt interest.

25) Identify which of the following statements is true.

A. Section 179 property must be expensed ratably over a 5-year period when computing E&P.

B. Losses on property sales to related parties are not deductible when computing E&P.

C. Distributions made out of accumulated E&P are allocated ratably between multiple distributions made during the tax year.
D. All are false.

26) Identify which of the following statements is true.

A. If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.
B. The shareholder’s basis in property received in a nonliquidating distribution is the property’s FMV reduced by liabilities assumed by the shareholder.
C. A corporation recognizes gain when distributing money as a dividend to its shareholders.

D. All are false.

27) For purposes of determining current E&P, which of the following items cannot be deducted in the year incurred?

A. Life insurance premiums (in excess of the increase in cash surrender value for the policy) paid on the lives of key employees
B. Charitable contribution in excess of the 10% limitation

C. Capital losses in excess of capital gains

D. Dividends-received deduction

28) A corporation distributes land and the related liability to Meg, its sole shareholder. The land has a FMV of $60,000 and is subject to a liability of $70,000. The corporation has current and accumulated E&P of $80,000. The corporation’s adjusted basis for the property is $70,000. What effect does the transaction have on the corporation?

A. No recognized gain or loss and its E&P is reduced by $60,000.

B. A recognized loss of $10,000 and its E&P is reduced by $70,000.

C. A recognized loss of $10,000 and its E&P is unchanged.

D. No recognized gain or loss and its E&P is unchanged by the distribution.

29) Hogg Corporation distributes $30,000 to its sole shareholder, Ima. At the time of the distribution, Hoggs’ E&P is $14,000 and Ima’s basis in her stock is $10,000. Ima’s gain from this transaction is

A. $20,000 capital gain

B. $6,000 capital gain

C. $14,000 capital gain

D. $30,000 capital gain

30) One consequence of a property distribution by a corporation to a shareholder is

A. the shareholder’s basis in the distributed property is the same as the distributing corporation’s basis
B. the amount of the distribution is increased by any liability assumed by the shareholder

C. the holding period of the distributed property includes the holding period of the distributing corporation
D. any liabilities assumed by the shareholder do not reduce the shareholder’s basis

31) Which of the following is not a reason for a stock redemption?

A. Redemption of shares is a good corporate investment.

B. desire by remaining shareholders to retain control

C. desire by shareholders to reduce the corporate tax liability

D. No outside market exists for the stock.

32) Elijah owns 20% of Park Corporation’s single class of stock. Elijah’s basis in the stock is $8,000. Park’s E&P is $28,000. If Park redeems all of Elijah’s stock for $48,000, Elijah must report dividend income of

A. $40,000

B. $0

C. $28,000

D. $48,000

33) Which of the following is not a condition that permits a stock redemption to be treated as a sale?

A. The redemption is substantially disproportionate.

B. It provides funds for payment of income taxes.

C. It is not essentially equivalent to a dividend.

D. The redemption completely terminates the shareholder’s interest.

34) Identify which of the following statements is true.

A. Formation of a partnership requires legal documentation.

B. An individual engaged in the active conduct of a business must elect not to be taxed as a partnership.
C. If two people (or business entities) work together to carry on any business or financial operation with the intention of making a profit and sharing that profit as co-owners, a partnership exists for federal income tax purposes.
D. All are false.

35) Identify which of the following statements is true.

A. A partnership can be an S corporation shareholder.

B. A nonresident alien can be an S corporation shareholder.

C. An S corporation can have more than 100 shareholders since families are treated as a single shareholder.
D. All are false.

36) The definition of a partnership does not include

A. a syndicate

B. a group

C. a pool

D. All are included

37) Which of the following items is not separately stated for an S corporation?

A. Section 1245 income

B. Short-term capital gain
C. Dividend income

D. Charitable contribution

38) Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2008. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2008, but had $200,000 of ordinary income. In 2009, ordinary income was $100,000 and distributions were $100,000. What is Tex’s ordinary income for 2008?

A. $100,000

B. $0

C. $50,000

D. $200,000

39) Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2008. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2008, but had $200,000 of ordinary income. In 2009, ordinary income was $100,000 and distributions were $100,000. What is Tex’s ordinary income for 2009?

A. $100,000

B. $0

C. $50,000

D. $200,000

40) On January 1, Helmut pays $2,000 for a 10% capital, profits and loss interest in a partnership, which has recourse liabilities of $20,000. The partners share economic risk of loss from recourse liabilities in the same way they share partnership losses. In the same year, the partnership incurs losses of $6,000 and the recourse liabilities increase by $5,000. Helmut and the partnership use a calendar tax year-end. Helmut’s basis at year-end is

A. $2,000

B. $3,900

C. $1,500

D. $3,500

41) On January 2 of the current year, Calloway and Taylor contribute cash equally to form the CT Partnership. Calloway and Taylor share profits and losses in a ratio of 75% and 25%, respectively. The partnership’s ordinary income for the year was $40,000. Calloway received a distribution of $5,000 during the year. What is Calloway’s share of taxable income for the year?

A. $10,000

B. $30,000

C. $5,000

D. $20,000

42) On the first day of the partnership’s tax year, Karen purchases a 50% interest in a general partnership for $30,000 cash and she materially participates in the operation of the partnership for the entire year. The partnership has $40,000 in recourse liabilities when Karen enters the partnership. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. There is no minimum gain related to the nonrecourse liability. During the year the partnership incurs a $120,000 loss and a $20,000 increase in liabilities. How much of the loss can Karen report on her tax return for the current year?

A. $40,000

B. $60,000

C. $30,000

D. $50,000

43) The total bases of all distributed property in the partner’s hands following a nonliquidating distribution is limited to

A. the FMV of the property distributed

B. the predistribution FMV of the partner’s partnership interest

C. the partner’s predistribution basis in his partnership interest

D. the partnership’s bases in the distributed property

44) The Internal Revenue Code includes which of the following assets in the definition of Sec. 751 properties?

A. Cash

B. Sec. 1231 assets

C. Inventory, which is substantially appreciated

D. Capital assets

45) Identify which of the following statements is true.

A. If a partner sells property received in a partnership distribution for a gain and the property was inventory in the hands of the distributing partnership, the partner will always recognize ordinary income.
B. The primary purpose of Sec. 751 is to prevent partnerships from converting capital gains into ordinary income.
C. Unrealized receivables include rights to payments on the sale of a capital asset.

D. All are false.

46) Which of the following conditions will not cause an S election to be terminated?

A. Creating a second class of stock having a dividend preference
B. Failing to file a timely tax return

C. Exceeding the 100 shareholder limit

D. Selecting an improper tax year

47) Identify which of the following statements is true.

A. All of the shareholders of an S corporation must consent to a revocation of the S election.

B. A revocation of an S corporation election can be retrospective to any date.

C. An S election will not be terminated due to excess passive income if the corporation does not have Subchapter C E&P.
D. All are true.

48) Identify which of the following statements is false.

A. If the termination of an S election is considered to be inadvertent, then the election is permitted to continue in place as if the termination had never occurred.
B. A corporation can obtain relief for a late S election if the IRS consents.

C. A C corporation short year income tax liability must be determined on an annualized basis.

D. If an S election is terminated and the termination is not considered to be inadvertent, a 10-tax-year waiting period is required before making a new election.

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ACC 455

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ACCT 505 Week 8 Final Exam All Correct and Complete Answer

ACCT 505 Week 8 Final Exam All Correct and Complete Answer

ACCT 505 Week 8 Final Exam All Correct and Complete Answer

ACCT 505 Week 8 Final Exam All Correct and Complete Answer

1. (TCO F) : Wahr Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor hours for

the upcoming year at 32,000. The estimated variable manufacturing overhead was $7.17 per labor hour and the estimated total fixed manufacturing overhead was $584,320. The actual labor hours for the year turned out to

be 33,300.
Required:
Compute the company’s predetermined overhead rate for the recently completed year. (Points : 25)

2. (TCO C) Enciso Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $31,000. Budgeted cash receipts total $135,000 and budgeted cash disbursements total $141,000. The

desired ending cash balance is $50,000. The company can borrow up to $100,000 at any time from a local bank, with interest not due until the following month.

Required: Prepare the company’s cash budget for November in good form.

TCO B Questions

Question 1. 1. (TCO C) The following overhead data are for a department of a large company.
Actual costs Static
incurred budget
Activity level (in units) 500 450
Variable costs:
Indirect materials $5,950 $5,382
Electricity $1,112 $1,008
Fixed costs:
Administration $2,770 $2,800
Rent $5,120 $5,100
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.

2. TCO D) Hanson, Inc. makes 1,000 units per year of a part called a “prositron” for use in one of its products. Data concerning the unit production costs of the prositron follow:
Direct materials $342
Direct labor 80
Variable manufacturing OH 48
Fixed manufacturing OH 520
Total $990
An outside supplier has offered to sell Hanson, Inc. all of the prositrons it requires. If Hanson, Inc. decided to discontinue making the prositrons, 10% of the above fixed manufacturing overhead costs could be avoided.

Required: Assume Hanson, Inc. has no alternative use for the facilities presently devoted to production of the prositrons. If the outside supplier offers to sell the prositrons for $850 each, should Hanson, Inc. accept the

offer? Fully support your answer with appropriate calculations.

3. (TCO E) Duif Company’s absorption costing income statement for the last year of operations is presented below.
Sales…………………………………………………$70,000
Less cost of goods sold:
Beginning inventory………………………………………. 0
Add cost of goods manufactured………………48,000
Goods available for sale………………………….48,000
Less ending inventory………………………………6,000
Cost of goods sold………………………………..42,000
Gross margin……………………………………….28,000
Less selling and admin. expenses……………..25,000
Net operating income…………………………..$ 3,000
Data on units produced and sold for the year are given below.
Units in beginning inventory……………………………..0
Units produced……………………………………….8,000
Units sold………………………………………………7,000

Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.

4. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.
Sales ……………………………………………………….$950
Raw materials inventory, beginning ………………….$10
Raw materials inventory, ending ……………………..$30
Purchases of raw materials ………………………….$120
Direct labor ………………………………………………$180
Manufacturing overhead ……………………………..$230
Administrative expenses ……………………………..$100
Selling expenses ………………………………………..$140
Work-in-process inventory, beginning ………………$70
Work-in-process inventory, ending ………………….$40
Finished goods inventory, beginning ………………$100
Finished goods inventory, ending ……………………$80

Use these data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, elaborate on the relationship between these schedules as they

relate to the flow of product costs in a manufacturing company.

TCO C

Question 1. 1. (TCO F) Maverick Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.
Work in process, beginning:
Units in beginning work-in-process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,600
Materials costs added during the month $112,500
Conversion costs added during the month $210,300

Ending work in process:
Units in ending work-in-process inventory 800
Percentage complete for materials 70%
Percentage complete for conversion 30%

Required: Calculate the equivalent units for materials for the month in the first processing department.

2. (TCO B) Madlem, Inc., produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $86.40 per unit. The company’s fixed expense is $720,384 per month.

Required: Determine the monthly break-even in either unit or total dollar sales. Show your work!

3. (TCO G) (Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 to invest and is considering a franchise for a fast food outlet. He would have to purchase equipment costing $500,000 to

equip the outlet and invest an additional $150,000 for inventories and other working capital needs. Other outlets in the fast food chain have an annual net cash inflow of about $160,000. Mr. Anders would close the outlet in

8 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Anders’ required rate of return is 16%.
Required:
Part A: What is the investment’s net present value when the discount rate is 16%?
Part B: Refer to your calculations. Is this an acceptable investment? Why or why not?

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ACCT 505 Final Exam Set 5

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ACCT 504 Week 8 Final Exam All four sets 1_2_3 and 4 A+ Correct Answer

ACCT 504 Week 8 Final Exam All four sets 1_2_3 and 4 A+ Correct Answer

ACCT 504 Week 8 Final Exam All four sets 1_2_3 and 4 A+ Correct Answer

ACCT 504 Week 8 Final Exam All four sets 1_2_3 and 4 A+ Correct Answer

Set 1

Question 1. 1. (TCOs A, B, and C) Which type of corporate information is not available to investors? (Points : 3)
Dividend history
Forecast of cash needs for the upcoming year
Cash provided by investing activities
Beginning cash balance
Question 2. 2. (TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called (Points : 3)
accounts payable.
notes receivable.
taxes payable.
bonds payable.
Question 3. 3. (TCO C) Buying and selling products are examples of (Points : 3)
operating activities.
investing activities.
financing activities.
delivering activities.
Question 4. 4. (TCO A) The cost of assets consumed or services used is also known as (Points : 3)
a revenue.
an expense.
a liability.
an asset.
Question 5. 5. (TCO C) Finley Company recorded the following cash transactions for the year.
Paid $90,000 for salaries
Paid $40,000 to purchase office equipment
Paid $10,000 for utilities
Paid $4,000 in dividends
Collected $150,000 from customers

What was Finley’s net cash provided by operating activities? (Points : 3)
$50,000
$10,000
$60,000
$46,000

Question 6. 6. (TCO A) On a classified balance sheet, prepaid insurance is classified as (Points : 3)
an intangible asset.
property, plant, and equipment.
a current asset.
a long-term investment.
Question 7. 7. (TCO A) An intangible asset (Points : 3)
may have the capacity to earn revenue for its owner.
is worthless because it has no physical substance.
is converted into a tangible asset during the operating cycle.
cannot be reported on the balance sheet because it lacks physical substance.

Question 8. 8. (TCO A) The following are selected account balances on December 31, 2010.

-Land (location of the corporation’s office building): $100,000
-Land (held for future use): 150,000
-Corporate Office Building: 600,000
-Inventory: 200,000
-Equipment: 450,000
-Office Furniture: 100,000
-Accumulated Depreciation: 300,000
What is the total NET amount of property, plant, and equipment that will appear on the balance sheet? (Points : 3)
$1,300,000
$1,100,000
$1,600,000
$950,000
Question 9. 9. (TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share? (Points : 3)
$4.66
$0.20
$66.67
$5.00
Question 10. 10. (TCO B) At December 31, 2010, Shorts Company had retained earnings of $2,184,000. During 2010 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2010 was $402,000. The retained earnings balance at the beginning of 2010 was: (Points : 3)
$2,552,000
$1,816,000
$1,914,000
$2,454,000
Question 11. 11. (TCO D) Money collected from customers before the work is done is treated as (Points : 3)
prepaid expenses.
accrued revenues.
unearned revenues.
accrued expenses.
Question 12. 12. (TCO D) An account is a part of the financial information system and is described by all except which one of the following? (Points : 3)
An account has a debit and credit side.
An account has to be in paper form.
An account has a zero or nonzero balance.
An account has a title.
Question 13. 13. (TCO D) Which of the following describes the classification and normal balance of the retained earnings account? (Points : 3)
Asset, debit
Stockholders’ equity, credit
Revenues, credit
Expense, debit
Question 14. 14. (TCO D) In recording an accounting transaction in a double-entry system (Points : 3)
the number of debit accounts must equal the number of credit accounts.
there must always be entries made on both sides of the accounting equation.
the amount of the debits must equal the amount of the credits.
there must only be two accounts affected by any transaction.
Question 15. 15. (TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner? (Points : 3)
Prepaid insurance and dividends
Dividends and medical fees earned
Interest payable and common stock
Advertising expense and land
Question 16. 16. (TCO E) An accounting time period that is 1 year in length is called (Points : 3)
a fiscal year.
an interim period.
the time period assumption.
a reporting period.
Question 17. 17. (TCO E) In a service-type business, revenue is considered earned (Points : 3)
at the end of the month.
at the end of the year.
when the service is performed.
when cash is received.
Question 18. 18. (TCO E) Why do generally accepted accounting principles require the application of the revenue recognition principle? (Points : 3)
Failure to apply the revenue recognition principle could lead to an overstatement of revenue.
It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve.
Recording revenue when cash is received is an objective application of the revenue recognition principle.
Accounting software has made the revenue recognition easy to apply.

Question 19. 19. (TCO E) The following is selected information from G Corporation for the fiscal year ending October 31, 2010.

-Cash received from customers: $150,000
-Revenue earned: 175,000
-Cash paid for expenses: 85,000
-Expenses incurred: 100,000
Based on the accrual basis of accounting, what is G Corporation’s net income for the year ending October 31, 2010? (Points : 3)
$57,000
$75,000
$41,000
$85,000

Question 20. 20. (TCO E) Accounts often need to be adjusted because (Points : 3)
there are never enough accounts to record all the transactions.
many transactions affect more than one time period.
there are always errors made in recording transactions.
management can’t decide what they want to report.

Question 21. 21. (TCOs A and B) Which of the following expressions is incorrect? (Points : 3)
Gross profit – operating expenses = net income
Sales – cost of goods sold – operating expenses = net income
Net income + operating expenses = gross profit
Operating expenses – cost of goods sold = gross profit

Question 22. 22. (TCO B) Hunter Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period? (Points : 3)
$11,040
$10,800
$11,760
$12,000
Question 23. 23. (TCOs A and B) Jake’s Market recorded the following events involving a recent purchase of merchandise.

-Received goods for $20,000, terms 2/10, n/30.
-Returned $400 of the shipment for credit.
-Paid $100 freight on the shipment.
-Paid the invoice within the discount period.

As a result of these events, the company’s merchandise inventory (Points : 3)
increased by $19,208.
increased by $19,700.
increased by $19,306.
increased by $19,308.

Question 24. 24. (TCO A) If goods in transit are shipped FOB destination (Points : 3)
the seller has legal title to the goods until they are delivered.
the buyer has legal title to the goods until they are delivered.
the transportation company has legal title to the goods while the goods are in transit.
no one has legal title to the goods until they are delivered.

Question 25. 25. (TCO A) Which statement is false? (Points : 3)
Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand.
No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period.
An inventory count is generally more accurate when goods are not being sold or received during the counting.
Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance-sheet date and to determine cost of goods sold for the accounting period.

Question 26. 26. (TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing? (Points : 3)
Music store specializing in piano sales
Custom jewelry store
Antique shop
Hardware store
Question 27. 27. (TCO A) Which of the following statements is correct with respect to inventories? (Points : 3)
The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
It is generally good business management to sell the most recently acquired goods first.
Under FIFO, the ending inventory is based on the latest units purchased.
FIFO seldom coincides with the actual physical flow of inventory.
Question 28. 28. (TCO A) In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the (Points : 3)
FIFO method.
LIFO method.
average cost method.
tax method.
Question 29. 29. (TCO B) In a perpetual inventory system, cost of goods sold is recorded (Points : 3)
on a daily basis.
on a monthly basis.
on an annual basis.
each time a sale occurs.
Question 30. 30. (TCO B) The primary source of revenue for a retailer is (Points : 3)
investment income.
service revenue.
the sale of merchandise.
the sale of plant assets the company owns.

Question 31. 31. (TCO D) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts. (Points : 25)

Question 32. 32. (TCOs B and E) The adjusted trial balance of Gertz Company included the following selected accounts.

Debit Credit
Sales $575,000
Sales returns and allowances $ 50,000
Sales discounts 9,500
Cost of goods sold 347,000
Freight-out 2,000
Advertising expense 15,000
Interest expense 19,000
Store salaries expense 74,000
Utilities expense 18,000
Depreciation expense 3,500
Interest revenue 25,000

Instructions:

1.Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010.
2.Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.
(Points : 35)

Set 2

1. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?
Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

2. Dividends _____.
represent an expense and are an operating activity
represent an obligation and are an operating activity
represent a distribution of earnings and are a financing activity
represent an asset and are an investing activity

3. Below is a partial list of account balances for LBJ Company:
Cash $15,000
Prepaid insurance 5,000
Accounts receivable 2,500
Accounts payable 3,000
Notes payable 6,000
Common stock 10,000
Dividends 500
Revenues 15,000
Expenses 13,000

What did LBJ Company show as total debits?
$34,000
$36,000
$70,000
$31,000

4. Under the accrual basis of accounting, revenues are recorded and reported _____.

when companies receive payments for jobs performed or products provided
when companies have provided products or performed services
when companies receive payments prior to providing products or performing services
when companies receive payments after providing products or performing services

5. In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income?

LIFO
The average cost method
FIFO
Income tax expense for the period will be the same under all assumptions.

6. Equipment was purchased for $55,000 on January 1, 2011. Freight charges of $2,200 were incurred and there was a cost of $1,800 for installation. It is estimated the equipment will have a $5,500 salvage value at the end of its 5-year useful life. Depreciation expense for 2011 using the straight-line method will be _____.

$10,340
$10,700
$10,260
$9,900

7. Payne Corporation issues 100 twenty-year, 6%, $1,000 bonds dated July 1, 2010, at 94. The journal entry to record the issuance will show a _____.

debit to Cash of $100,000

credit to Bonds Payable of $94,000

credit to Premium on Bonds Payable of $4,000

debit to Discount on Bonds Payable of $6,000

8. Accounts receivable arising from sales to customers amounted to $80,000 and $120,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $2,000,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____.
$2,040,000

$2,000,000

$1,200,000

$1,960,000

9. If you are making comparisons within a company to detect changes in financial relationships and significant trends, you are performing what type of analysis?

Industry averages analysis

Intercompany analysis

Common-size analysis

Intracompany analysis

10. The formula for performing horizontal analysis is _____.

(Current Year Amount minus Base Year Amount) divided by Current Year Amount

Base Year Amount divided by Current Year Amount

Current Year Amount minus Base Year Amount

(Current Year Amount minus Base Year Amount) divided by Base Year Amount

11.Horizontal analysis of comparative financial statements includes the _____.

development of common-size statements

calculation of liquidity ratios

calculation of dollar amount changes and percentage changes from the previous year to the current year

evaluation of financial statement data that expresses each item in a financial statement as a percentage of a base amount

12. A common measure of solvency is the _____.

asset turnover

current cash debt coverage ratio

cash debt coverage ratio

current ratio

13. Stockholders would be most interested in which of the following ratios?

Days in inventory

Free cash flow

Current ratio

Average collection period

14. To calculate the market value of a bond, we need to _____.

multiply the bond price times the interest rate

calculate the present value of the principal only

calculate the present value of the interest only

calculate the present value of both the principal and interest payments

15. (TCO A) Use the following partial financial statement information below to calculate the liquidity and profitability ratios. This information can be used to correctly solve each of the ratios below.
Average common shares $10,000 Current liabilities $100,000 Capital expenditures 20,000 Net income 21,000
Cash provided by operations 28,000 Net sales 150,000
Common stock dividends paid 5,000 Total liabilities 105,000 Current assets 150,000 Total assets 175,000 Instructions: Compute the following.
a) Current ratio
b) Working capital
c) Earnings per share
d) Debt-to-total-assets ratio
e) Free cash flow
Must show the formula you are using, show your computations, and explain the meaning of each of your ratio results.

16.) Please indicate which section of the statement of cash flows should contain each of the following items and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing.
a) Payment of dividends
b) Bought assets needed to operate the business
c) Depreciation of equipment
d) Increase in inventory
e) Sale of building

17. (TCOs D, E) Please prepare the following journal entries. Indicate which account should be debited with the abbreviation DR in front of the account name and which account should be credited with the abbreviation CR in front of the account name along with the dollar amount of the debit and credit.
a) Investors invested $600,000 in exchange for 30,000 shares of common stock.
b) Company paid rent of $3,000
c) Company billed $5,000 for services performed
d) Company purchased supplies of $3,000
e) Company received $20,000 for services not yet performed

18) (TCO D) Your friend Dean has hired you to evaluate the following internal control procedures.

a) Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which principle relates to each of the internal controls.

b) For the weaknesses, you also need to state a recommendation for improvement.

1. Bonding of the cashiers is not required because all of the cashiers have significant experience.

2. The treasurer is the only one allowed to sign checks.

3. All employees may operate cash registers.

4. Blank checks are stored in the safe.

5. Supervisors count cash receipts daily.

19) The following items are taken from the financial statements of Grove Company for 2010.

Accounts payable $ 18,500 Accounts receivable 4,000

Accumulated depreciation 4,800 Bonds payable 18,000

Cash 24,000 Common stock 25,000

Cost of coods sold 13,000 Depreciation expense 4,800

Dividends 5,300 Equipment 48,000

Interest expense 2,500 Patents 7,500

Retained earnings, January 1 16,000 Salaries expense 5,200 Sales revenue 36,500 Supplies 4,500

Instructions: Prepare an income statement and a retained earnings statement for Grove Company.

Set 3:

1. (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:

Accounts Payable

$38,080

Accounts Receivable

6,768

Cash

7,781

Common Stock

3,952

Cost of Goods Sold

352,488

Income Tax Expense

7,981

Interest Expenses

2,064

Membership Revenues

3,048

Net Sales

466,114

Operating, Selling and Administrative Expenses

88,873

Retained Earnings

72,978

Required:

Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.
(Points : 36)

3. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:
Cash flow from operating activities

In millions

In millions

For the year ended 2012

For the year ended 2011

Net (loss) earnings

$(12,650)

$7,074

Depreciation and amortization

5,095

4,984

Impairment of goodwill and purchased intangible assets

18,035

885

Stock-based compensation expense

635

685

Provision for doubtful accounts

142

81

Provision for inventory

277

217

Restructuring charges

2,266

645

Deferred taxes on earnings

(711)

166

Excess tax benefit from stock-based competition

(12)

(163)

Other, net

265

(46)

Accounts and financing receivables

1,269

(227)

Inventory

890

(1,252)

Accounts payable

(1,414)

275

Taxes on earnings

(320)

610

Restructuring

(840)

(1,002)

Other assets and liabilities

(2,356)

(293)

Net cash provided by operating activities

10,571

12,639

Cash flows from investing activities:

Investment in property, plant, and equipment

(3,706)

(4,539)

Proceeds from sale of property, plant, and equipment

617

999

Purchases of available-for-sale securities and other investments

(972)

(96)

Maturities and sales of available-for-sale securities and other investment

662

68

Payments in connection with business acquisitions, net of cash acquired

(141)

(10,480)

Proceeds from business divestiture, net

87

89

Net cash used in investing activities

(3,453)

(13,959)

Cash flow from financing activities:

(Payments) issuance of commercial paper and notes payable, net

(2,775)

(1,270)

Issuance of debt

5,154

11,942

Payment of debt

(4,333)

(2,336)

Issuance of common stock under employee stock plans

716

896

Repurchase of common stock

(1,619)

(10,117)

Excess tax benefit from stock-based compensation

12

163

Cash dividends paid

(1,015)

(844)

Net cash used in financing activities

(3,860)

(1,566)

Increase (decrease) in cash and cash equivalents

3,258

(2,886)

Cash and cash equivalents at beginning of period

8,043

10,929

Cash and cash equivalents at end of period

$11,301

$8,043

Required:
1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections.
2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
(Points : 36)

5. (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.

Ratio Name

Johnson & Johnson

Pfizer

Profit margin

16.1%

24.7%

Inventory turnover ratio

3.1

1.7

Average collection period

59.4 days

69.1 days

Cash debt coverage ratio

.27

.16

Debt to Total assets

46.6%

127.5%

Required:
1) Please explain the meaning of each of the Pfizer ratios above.
2) Please state which company performed better for each ratio.
(Points : 36)

QCM

1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)

it has limited life
its owner’s personal resources are at stake
its ownership is easily transferable via the sale of shares of stock
it is simple to establish

2. (TCO A) The Dividends account _____. (Points : 5)

is increased with a debit
is decreased with a credit
is not an expense account
All of the above

3. (TCOs A, B) Below is a partial list of account balances for Denton Company:

Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500

What did Denton Company show as total credits? (Points : 5)

$30,100
$29,400
$28,700
$30,800

4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)

sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account

5. (TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)

LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
FIFO will have the highest ending inventory
LIFO will have the lowest cost of goods sold

6. (TCO A, E) Equipment was purchased for $17,000 on January 1, 2006. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2007, if the straight-line method of depreciation is used? (Points : 5)

$6,680
$3,340
$2,860
$5,720

7. (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000

8. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)

$240,000
$250,000
$310,000
$230,000

9. (TCO F) If you are comparing the 2010 income statement numbers with the income statement numbers from 2009 and 2008, you are conducting a _____. (Points : 5)

common-size analysis
horizontal analysis
vertical analysis
ratio analysis

10. (TCO F) Vertical analysis is also known as _____. (Points : 5)

perpendicular analysis
common-size analysis
trend analysis
straight-line analysis

11. (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)

Liquidity
Profitability
Marketability of the product
Solvency

12. (TCO F) A common measure of profitability is the _____. (Points : 5)

current ratio
current cash debt coverage ratio
return on common stockholder’s equity ratio
debt to total assets

13. (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)

liquidity
marketability
profitability
solvency

14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

Set 4:

Week 8 : Final Exam – Final Exam

Page 1

Question 1. 1. (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)
Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

Question 2. 2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

Question 3. 3. (TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

What did Cerner Company show as total credits? (Points : 5)
$21,500
$21,000
$20,500
$22,000

Question 4. 4. (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred

Question 5. 5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO

Question 6. 6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
$48,000
$52,500
$49,500
$43,500

Question 7. 7. (TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a _____. (Points : 5)
debit to Cash of $1,020,000
debit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $1,020,000
credit to Cash for $1,000,000

Question 8. 8. (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
$120,000
$125,000
$155,000
$115,000

Question 9. 9. (TCO F) If you are comparing the 2010 income statement numbers with the income statement numbers from 2009 and 2008, you are conducting a _____. (Points : 5)
common-size analysis
horizontal analysis
vertical analysis
ratio analysis

Question 10. 10. (TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)
Industry averages
Intercompany
Intracompany
Interregional

Question 11. 11. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)
net sales
salary and wages expense in a previous year
gross profit
net income

Question 12. 12. (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
solvency
liquidity
marketability
profitability

Question 13. 13. (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)
profit margin and debt-to-total-assets ratio
profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow

Question 14. 14. (TCO G) The present value of a bond is a function of which factors below? (Points : 5)
The market interest rate
The length of time until the amounts are received
The dollar amounts to be received
All of the above

Page 2

Question 1. 1.
(TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report:
Income Taxes Payable $471
Short-term Investments and Marketable Securities 8,109
Cash 8,442
Other non-current Liabilities 10,449
Common Stock 1,760
Receivables 4,812
Other Current Assets 2,973
Long-term Investments 10,448
Other Non-current Assets 3,585
Property, Plant and Equipment 23,486
Trademarks 6,527
Other Intangible Assets 20,810
Allowance for Doubtful Accounts 53
Accumulated Depreciation 9,010
Accounts Payable 8,680
Short Term Notes Payable 17,874
Prepaid Expenses 2,781
Other Current Liabilities 796
Long-Term Liabilities 14,736
Paid-in-Capital in Excess of Par Value 11,379
Retained Earnings 55,038
Inventories 3,264
Treasury Stock 35,009

Other information taken from the Annual Report:

Sales Revenue for 2012 $48,017
Cost of Goods Sold for 2012 19,053
Net Income for 2012 9,019
Inventory Balance on 12/31/11 3,092
Net Accounts Receivable Balance on 12/31/11 4,920
Total Assets on 12/31/11 79,974
Equity Balance on 12/31/11 31,921

Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above, calculate the Current Ratio and Return on common stockholders’ equity ratio. (Make sure to show all your work).
(Points : 36)

Question 2. 2.
(TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:

Accounts Payable $38,080
Accounts Receivable 6,768
Cash 7,781
Common Stock 3,952
Cost of Goods Sold 352,488
Income Tax Expense 7,981
Interest Expenses 2,064
Membership Revenues 3,048
Net Sales 466,114
Operating, Selling and Administrative Expenses 88,873
Retained Earnings 72,978
Required:

Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.
(Points : 36)

Question 3. 3. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:
Cash flow from operating activities In millions In millions
For the year ended 2012 For the year ended 2011
Net (loss) earnings $(12,650) $7,074
Depreciation and amortization 5,095 4,984
Impairment of goodwill and purchased intangible assets 18,035 885
Stock-based compensation expense 635 685
Provision for doubtful accounts 142 81
Provision for inventory 277 217
Restructuring charges 2,266 645
Deferred taxes on earnings (711) 166
Excess tax benefit from stock-based competition (12) (163)
Other, net 265 (46)
Accounts and financing receivables 1,269 (227)
Inventory 890 (1,252)
Accounts payable (1,414) 275
Taxes on earnings (320) 610
Restructuring (840) (1,002)
Other assets and liabilities (2,356) (293)
Net cash provided by operating activities 10,571 12,639
Cash flows from investing activities:
Investment in property, plant, and equipment (3,706) (4,539)
Proceeds from sale of property, plant, and equipment 617 999
Purchases of available-for-sale securities and other investments (972) (96)
Maturities and sales of available-for-sale securities and other investment 662 68
Payments in connection with business acquisitions, net of cash acquired (141) (10,480)
Proceeds from business divestiture, net 87 89
Net cash used in investing activities (3,453) (13,959)
Cash flow from financing activities:
(Payments) issuance of commercial paper and notes payable, net (2,775) (1,270)
Issuance of debt 5,154 11,942
Payment of debt (4,333) (2,336)
Issuance of common stock under employee stock plans 716 896
Repurchase of common stock (1,619) (10,117)
Excess tax benefit from stock-based compensation 12 163
Cash dividends paid (1,015) (844)
Net cash used in financing activities (3,860) (1,566)
Increase (decrease) in cash and cash equivalents 3,258 (2,886)
Cash and cash equivalents at beginning of period 8,043 10,929
Cash and cash equivalents at end of period $11,301 $8,043
Required:
1) Please calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded above and explain the major reasons for the increase or decrease for each of these sections.
2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
(Points : 36)

Question 4. 4. (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required:
a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.

b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?
(Points : 36)

Question 5. 5. (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.
Ratio Name Johnson & Johnson Pfizer

Profit margin 16.1% 24.7%
Inventory turnover ratio 3.1 1.7
Average collection period 59.4 days 69.1 days
Cash debt coverage ratio .27 .16
Debt to Total assets 46.6% 127.5%
Required:
1) Please explain the meaning of each of the Pfizer ratios above.
2) Please state which company performed better for each ratio.
(Points : 36)

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ACCT 504

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ACC 550 Final Exam Answer Set 1 and 2_All Correct A+ Answer

ACC 550 Final Exam Answer Set 1 and 2_All Correct A+ Answer

ACC 550 Final Exam Answer Set 1 and 2_All Correct A+ Answer

SET 1:

1. (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application.
(Points : 30)
Potential Matches:

1 : Earnings process completed and realized or realizable

2 : Cost of providing financial information versus the benefits derived from its use

3 : Accruals and deferrals in adjusting and closing process

4 : Business enterprise assumed to have a long life

5 : Stable dollar assumption

6 : Notes as part of necessary information to a fair presentation

7 : Valuing assets at amount originally paid for them

8 : The impact of an item on the overall financial operations of a company

9 : Presentation of error-free information with representational faithfulness

Answer

: Historical cost principle

: Going concern principle

: Matching principle

: Monetary unit

: Revenue recognition principle

: Full disclosure principle

: Reliability characteristic

: Cost-benefit relationship

: Materiality constraint

2. (TCO B) Adjusting Entries: Unearned rent at 1/1/12 was $28,300 and at 12/31/12 was $48,200. The records indicate cash receipts from rental sources during 2010 amounted to $145,200, all of which was credited to the Unearned Rent Account. You are to supply the missing adjusting entry.

3. (TCO B) Adjusting Entries: Information relating to the balances of various accounts affected by adjusting or closing entries appear below. You are asked to supply the missing journal entries which would account for the changes in the account balances. Interest receivable at 1/1/12 was $8,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $11,000. The 2010 income statement showed interest revenue in the amount of $8,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made.

4. (TCO B) Adjusting Entries: Accumulated depreciation-machinery at 1/1/10 was $150,000. At 12/31/10, the balance of the account was $300,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $100,000 and was 1/2 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

5. (TCO B) Adjusting Entries: Allowance for Doubtful accounts made on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

Second Part

1. (TCO B) Adjusting Entries: Prepaid rent at 1/1/10 was $9,000. During 2010 rent payments of $110,000 were made and charged to “rent expense.” The 2010 income statement shows as a general expense the item “rent expense” in the amount of $111,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

2. (TCO B) Adjusting Entries: Retained earnings at 1/1/10 were $100,000 and at 12/31/10 it was $300,000. During 2010, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit.

3. (TCO C) Here is information related to the DRF Corporation.
Retained earnings, December 31, 2012
$ 3,890,000
Sales
4,500,000
Selling and administrative expenses
387,000
Extraordinary Item(Loss)(Net of Tax)
178,000
Cash dividends declared on common stock
82,600
Cost of good sold
1,780,000
Other revenue
142,500
Other expenses
77,800

Instructions: Prepare a multiple step income statement.

4. (TCO D) This is a balance sheet for the ABC corporation as of 12/31/12.
Cash
$ 60,000
Accounts payable
$ 55,000
Accounts receivable (net)
42,200
Long-term liabilities
60,000
Inventories
47,000
Stockholders’ equity
208,500
Investments
66,300
Equipment (net)
86,000
Patents
22,000
Total $323500
Total $323500

The following additional information is provided:
(1) Cash includes the cash surrender value of a life insurance policy $7,400 and a bank overdraft of $1,500 has been deducted.
(2) The net accounts receivable balance includes:
(a) accounts receivable debit balances $56,000;
(b) accounts receivable credit balances $6,000; and
(c) allowance for doubtful accounts $7,800.
(3) Inventories do not include goods costing $6,000 shipped out on consignment. Receivables of $2,000 were recorded on these goods.
(4) Investments include investments in common stock, trading $14,000, available-for-sale $48,300, and franchises $4,000.
(5) Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Instructions:
Prepare a balance sheet in good form (stockholders’ equity details can be omitted).
Do not worry about balancing the statement but rather use your time to compute the account balances properly for presentation purposes.

5. (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $3,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors.

9 Periods
10 Periods
11 Periods
Future Value of 1
1.99900
2.15892
2.33164

Present Value of 1
.50025
.46319
.42888
Future Value of
12.48756
14.48656
16.64549
Ordinary Annuity of 1
Present Value of
6.24689
6.71008
7.13896
Ordinary Annuity of 1
Present Value of
6.74664
7.24689
7.71008
Annuity Due of 1
Instructions
(a) Assuming the computer has an 11-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?

6. (TCO F) Daniels Company deposits all receipts and makes all payments by check. The following information is available from the cash records.
MARCH 31
BANK RECONCILIATION
Balance per bank
$26,746
Add: Deposits in transit
2,100
Deduct: Outstanding checks
(3,800)
Balance per books
$25,046
Month of April Results
Per Bank
Per Books
Balance April 30
$27,995
$24,355
April deposits
8,864
13,889
April checks
13,100
14,080
April note collected
3,000
-0-
(not included in April deposits)

April bank service charge
35
-0-
April NSF check of a customer returned by the bank
(recorded by bank as a charge)
900
-0-
Instructions
Calculate the amount of the April 30
(1) deposits in transit; and
(2) outstanding checks.
Show all your work for potential partial credit.

7. Steve Company was formed on December 1, 2010. The following information is available from Steve’s inventory record for Product X.

Units Unit Cost

January 1, 2012 (beginning inventory) 2800 $17.00

Purchases:

05-Jan-12 3600 $25.00

25-Jan-12 2800 $27.00

16-Feb-12 2400 $32.00

15-Mar-12 3300 $34.00

A physical inventory on March 31, 2012, shows 4800 units on hand.
Instructions:
Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods.
(a) FIFO
(b) LIFO
(c) Weighted-average
Show supporting computations in good form. (Points : 40)

8. (TCO H) A machine cost $300,000 on April 1, 2012. Its estimated salvage value is $60,000 and its expected life is 8 years.
Instructions:
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used.
(a) Straight-line for 2012
(b) Double-declining balance for 2013
(c) Sum-of-the-years’-digits for 2013.

SET 2:

1. Question : (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application.

2. Question : (TCO B) Adjusting Entries: Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to the Unearned Rent Account.

You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

3. Question : (TCO B) Adjusting Entries: Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $1,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $1,000. The 2010 income statement showed interest revenue in the amount of $2,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

4. Question : (TCO B) Adjusting Entries: Accumulated depreciation-machinery at 1/1/10 was $150,000. At 12/31/10, the balance of the account was $300,000. During 2010,

one piece of equipment was sold. The equipment had an original cost of $100,000 and was 1/2 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

5. Question : (TCO B) Adjusting Entries: Allowance for doubtful accounts on 1/1/10 was $70,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $70,000 and during 2010 bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

Page: 1 2

1. Question : (TCO B) Adjusting Entries: Prepaid rent at 1/1/10 was $30,000. During 2010 rent payments of $100,000 were made and charged to “rent expense.” The 2010 income statement shows as a general expense the item “rent expense” in the amount of $130,000. You are to prepare the missing

adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

2. Question : (TCO B) Adjusting Entries: Retained earnings at 1/1/10 were $100,000 and at 12/31/10 it was $300,000. During 2010, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit.

3. Question : (TCO C) Presented below is information related to Bruce Van Company. Retained earnings, December 31, 2010 $650,000
Sales 1,400,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 290,000
Cash dividends declared on common stock 33,600
Cost of goods sold 780,000
Gain resulting from computation error on depreciation charge in 2009(pre-tax) 520,000
Other revenue 120,000

Other expenses 100,000

Instructions: Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Show EPS computations as well.

4. Question : (TCO D) The following balance sheet was prepared by the bookkeeper for Purple Company as of December 31, 2011 Purple Company Balance Sheet as of December 31, 2011 Cash $ 80,000 Accounts payable $ 75,000
Accounts receivable (net) 52,200 Long-term liabilities 100,000
Inventories 57,000 Stockholders’ equity 218,500
Investments 76,300
Equipment (net) 96,000
Patents
$393,500 $393,500
The following additional information is provided:
(1) Cash includes the cash surrender value of a life insurance policy $12,000, and a bank overdraft of $2,500 has been deducted.
(2) The net accounts receivable balance includes:
(a) accounts receivable debit balances $60,000;
(b) accounts receivable 0;
(c) allowance for doubtful accounts $3,800.
(3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.
(4) Investments include investments in common stock, trading $13,000, available-for-sale $48,300, and franchises $15,000.
(5) Equipment costing $5,000 with accumulated depreciation

$4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
(6) An unrecorded liability was not recorded on the balance sheet of $2000.
Instructions
Prepare a balance sheet in good form (stockholders’ equity details can be omitted.)

5. Question : (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors:

9 Periods 10 Periods 11 Periods
Future Value of 1 1.99900 2.15892 2.33164
Present Value of 1 .50025 .46319 .42888
Future Value of 12.48756 14.48656
Ordinary Annuity of 1
Present Value of 6.24689 6.71008 7.13896
Ordinary Annuity of 1
Present Value of 6.74664 7.24689 7.71008
Annuity Due of 1
(a) Assuming the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?

6. Question : (TCO F) Daniels Company deposits all receipts and makes all payments by check. The following information is available from the cash records:
MARCH 31
BANK RECONCILIATION

Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046
Month of April Results Per Bank Per Books
Balance April 30 $27,995 $24,355
April deposits 8,864 13,889
April checks 13,100 14,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of
a customer returned by the bank
(recorded by bank as a charge) 900 -0-
Instructions
Calculate the amount of the April 30:
(1) Deposits in transit
(2) Outstanding checks
Show all your work for potential partial credit.

7. Question : (TCO G) Rye Company was formed on December 1, 2010. The following information is available from Rye’s inventory record for Product Bread. Units Unit Cost
January 1, 2011 (beginning inventory) 1,700 $17.00
Purchases:
January 5, 2011 2,600 $20.00
January 25, 2011 2,400 $21.00
February

16, 2011 1,000 $22.00
March 15, 2011 2,100 $25.00

A physical inventory on March 31, 2011, shows 3,000 units on hand.
Instructions
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods:
(a) FIFO.
(b) LIFO.
(c) Weighted-average.
Show supporting computations in good form.

8. Question : (TCO H) A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years.
Instructions
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used.
(a) Straight-line for 2010
(b) Double-declining balance for 2011
(c) Sum-of-the-years’-digits for 2011

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PROJ 595 Project Risk Management Week 8 Final Exam Complete A+ Answer

PROJ 595_Project Risk Management_Week 8 Final Exam Complete A+ Answer

PROJ 595_Project Risk Management_Week 8 Final Exam Complete A+ Answer

 

Set 1

Question 1. (TCOs A and B) An EVM analysis employs which factors to evaluate risks? (Points : 5)
Risk and impact
Probability and urgency
Impact and probability
Decision trees and reliability of data

Question 2. (TCO G) You have completed all design drawings and have a complete scope for your project. You need to hire a contractor to build the product to your designs. Which type of contract would be best in this situation? (Points : 5)
FPEPA
T&M
CPIF
FP
Question 3. (TCO D) In which risk response strategy is the responsibility for the risk moved to a third party? (Points : 5)
Transference and sharing
Exploitation and avoidance
Acceptance and enhancement
Mitigation and active acceptance

4. (TCOs A and B) You have been appointed as a project manager for a high-dollar project for a government agency, and you have been asked by your boss to identify the stakeholder groups and the individuals who make up those groups in order to start the stakeholder analysis. Identify at least six groups of stakeholders and the individuals who comprise those groups, and explain when the stakeholder identification process should take place during the planning of the project. (Points: 20)

5. (TCO B) Due to globalization within your industry, you have been appointed as the project manager for an R & D project. Your task is to create a new technologically advanced solar cell. You want to employ the PMBOK® Guide risk management process. Senior management would like you to briefly describe the process and all its steps. Please create a short briefing for senior management below. (Points : 40)

6. (TCO I) You are the project manager on a critical project for your corporation. You have decided to employ fault-tree analysis on your project. What is fault-tree analysis, and how can it be applied to your project? (Points : 25)

7. (TCO H) Senior management is concerned about risk owners on your project. What is the role of a risk owner in the risk management process? (Points: 20)

8. (TCO F) You are a project manager for a large healthcare R & D project. Senior management has asked you to utilize a sensitivity analysis and a tornado diagram to quantify risks on your project. Senior management’s major concern is the price of raw materials in the development of the new drug. Describe how to perform a sensitivity analysis and use a tornado diagram to quantify risks to your project. (Points : 25)

9. TCO G) Describe and discuss when one should use an FPEPA contract. Compare and contrast this to a typical FP contract. (Points: 20)

10. (TCO E) Senior management has just returned from a risk management workshop. One of the topics was reserve analysis. Management does not completely understand the concept and asks you what the purpose is of performing reserve analysis during the risk management process. (Points : 20)

11. (TCO D) You are the project manager for an important healthcare project. You are performing qualitative risk analysis. Below are the values of probability and impact for the top six risks that were given to you by project team. Assuming a neutral stakeholder tolerance, which risks must be addressed proactively if possible?(Points : 25)

12. TCO C) You are the project manager for a large health information technology project. You are confronted with an important decision on your project: How much scenario testing is appropriate for this project? Employ decision tree analysis to provide senior management with the best course of action for this decision.
For this decision, you have three possible choices: no scenario testing of the design, moderate scenario testing of the design, or full scenario testing of the design. No scenario testing will incur no additional costs due to testing and has a 10% chance of a successful implementation. If it is unsuccessful, rework costs are likely to be $30 million. Moderate scenario testing will cost $5 million and has a 50% chance of success. If it is unsuccessful, rework costs are likely to be $30 million. Full scenario testing will cost $10 million and has a 90% chance of success. If it is unsuccessful, rework costs are likely to be $30 million. Which solution is appropriate for this project?

Set 2

1. (TCOs A and B) Quantitative risk analysis does all of the following, except
perform a Monte Carlo analysis.
employ EVM.
utilize sensitivity analysis.
employ a risk matrix.

Question 2. 2. (TCO G) You need to ensure your project is completed by July 1 of next year. You do not have time to do all the design work yourself, so you decide to contract out that work. Which type of contract would likely be best in this situation?
Cost plus
Fixed price with economic price adjustment
Fixed price with incentives
Cost plus with incentives

Question 3. 3. (TCO D) Which risk response strategy is most appropriate for risks on the watch list?
Transference
Exploitation
Passive acceptance
Active acceptance

4. (TCOs A and B) You have been appointed as a project manager for a high-dollar project for a government agency, and you have been asked by your boss to identify the stakeholder groups and the individuals who make up those groups in order to start the stakeholder analysis. Identify at least six groups of stakeholders and the individuals who comprise those groups, and explain when the stakeholder identification process should take place during the planning of the project. (Points: 20)

Question 6. 6. (TCO C) You are the project manager for a large health information technology project. You are confronted with an important decision on your project: How much posttesting of the design is appropriate for this project? Employ decision tree analysis to provide senior management with the best course of action for this decision.
For this decision, you have three possible choices: no posttesting of the design, moderate posttesting of the design, or full posttesting of the design. No posttesting will incur no additional costs due to testing and has a 25% chance of a successful implementation. If it is unsuccessful, rework costs are likely to be $30 million dollars. Moderate testing will cost $5 million and has a 50% chance of success. If it is unsuccessful, rework costs are likely to be $30 million. Full testing will cost $10 million and has a 75% chance of success. If it is unsuccessful, rework costs are likely to be $30 million. Which solution is appropriate for this project? (Points : 40)

Question 7. 7. (TCO D) You are the project manager for an important healthcare project. You are performing qualitative risk analysis. Below are the values of probability and impact for the top six risks that were given to you by project team. Assuming a neutral stakeholder tolerance, which risks must be addressed proactively if possible?
(Points : 25)

Question 8. 8. (TCO E) Senior management is very interested in creating an effective risk monitoring and control system that is tied to a performance monitoring system for your project. Describe what a good monitoring and control and performance measurement system for your project would look like. Be sure to include an example to help illustrate your answer. (Points : 20)

Question 9. 9. (TCO F) You are a project manager for a large healthcare R & D project. Senior management has asked you to utilize a sensitivity analysis and a tornado diagram to quantify risks on your project. Senior management’s major concern is the price of raw materials in the development of the new drug. Describe how to perform a sensitivity analysis and use a tornado diagram to quantify risks to your project. (Points : 25)

Question 10. 10. (TCO G) Describe and discuss when one should use an FPEPA contract. Compare and contrast this to a typical FP contract. (Points : 20)

Question 11. 11. (TCO H) You are in a status meeting with key project stakeholders. You are discussing residual and secondary risks in your project. The stakeholders are becoming concerned about these concepts. The key stakeholders ask for an explanation and example of each. How would you describe each? Provide an example of a residual and a secondary risk.

Question 12. 12. (TCO I) You are the project manager on a complete overhaul of your corporation’s IT infrastructure. You have decided to employ fault-tree analysis on your project. What is fault-tree analysis, and how can it be applied to your project?

 

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PROJ 598 Contract and Procurement Week 8 Final Exam Complete A+ Answer

PROJ 598 Contract and Procurement Week 8 Final Exam Complete A+ Answer

PROJ 598 Contract and Procurement Week 8 Final Exam Complete A+ Answer

Set 1

DeVry PROJ 598 Week 8 Final Exam
Part 1
1. (TCO A) All the below are tools and techniques of contract procurement, except (Points : 5)
Bidder’s conferences, negotiations, and advertising.

Analytical techniques, expert judgments, and evaluation techniques.

Estimates, bidder’s conferences, and evaluation techniques.

Negotiations, make-or-buy decisions, and advertising.

Question 2. 2. (TCO B) Proper selection criteria are critical for a successful project. All of the below would be considered good selection criteria for a buyer to use to select a seller, except (Points : 5)
Managerial approach of seller, references of seller, and ability of seller to make a reasonable make-or-buy decision.

Past work done by seller, intellectual property rights, and risk associated with a given seller.

Technical capability of seller, understanding of work by seller, and business type of seller.

Financial capacity of seller, overall cost, and warranty offered by seller.

(TCO A) Why are the project scope statement and WBS inputs of plan procurement?

(TCO B) List and describe five source selection criteria typically used in procurement management. For each, explain why this criterion is important for a buyer to use to select a given seller. (Points: 12)

(TCO C) Which has more cost risk to the seller, a fixed-price contract or a cost-reimbursable contract? Why? How might that risk be mitigated?

(TCO D) Describe the typical work relationship between a project manager and a contract manager. (Points : 12)

(TCO E) You are writing procurement SOW for an RFP. What items are you likely to include in this SOW? (Points : 12)

(TCO F) You have received back the bid proposals from prospective sellers. You are ready for source selection. What is source selection, and why is it important? (Points : 12)

Part 2

TCO G) One of the inputs to contract closeout is completion of work. What does it mean? (Points : 12)

(TCO A) In industry, there are four processes one follows in the procurement area of project management. Describe and explain these four processes in the procurement management process from the buyer perspective. (Points : 20)

(TCO C) Compare and contrast a firm fixed-price contract to a time and materials contract. When would each be appropriate for a given project? (Points : 20)

(TCO D) Compare and contrast an RFP and an RFI. When would each best be used in procuring goods or services? (Points : 20)

(TCO E) Describe the buyer’s plan procurement process of the contract management process as it relates to creating a RPF. Give an example of the activity that takes place in each step. (Points : 20)

Part 3:

TCO H) Under U.S. and international law, all contracts must contain five elements or satisfy five requirements. List and explain each of these five elements. (Points : 20)

2) Describe and compare and contrast the buyer’s and seller’s actions in the control procurement phase of the contract management process. Give an example for each. List and briefly describe the three tools and techniques used for bid or no-bid decision making. (Points : 20)

set 2

PROJ 598 Contract and Procurement Week 8 Final Exam Set 2 Answer

Question 1. 1. (TCO A) All the below are outputs of plan procurement except (Points : 5)
change requests, SOW, and source selection criteria.
make-or-buy decisions, procurement management plans, and contracts.
procurement documents, SOW, and document updates.
source selection criteria, procurement management plans, and make-or-buy decisions.

Question 2. 2. (TCO B) Proper selection criteria are critical for a successful project. All of the below would be considered good selection criteria for a buyer to use to select a seller, except (Points : 5)
managerial approach of seller, references of seller, and ability of seller to make a reasonable make-or-buy decision.
past work done by seller, intellectual property rights, and risk associated with a given seller.
technical capability of seller, understanding of work by seller, and business type of seller.
financial capacity of seller, overall cost, and warranty offered by seller.

Question 3. 3. (TCO A) What is the primary purpose of procurement planning? (Points : 8)

Question 4. 4. (TCO B) A seller’s financial capacity is often one of the buyer’s selection criteria. Why is this an important consideration for a buyer? (Points : 12)

Question 5. 5. (TCO C) From the viewpoint of the buyer, why are award fees and incentive fees important in contracts? (Points : 12)

Question 6. 6. (TCO D) Compare and contrast sole source and single source approaches to procurement. (Points : 12)

Question 7. 7. (TCO E) What is the purpose of creating a procurement SOW for an RFP? (Points : 12)

Question 8. 8. (TCO F) You are preparing for contract negotiations. To achieve your desired contract negotiation results, you need not only a strategy but also tactics and countertactics. Give an example of two tactics, and state why they help you achieve the desired result. (Points : 12)

Question 9. 9. (TCO G) There are many misconceptions regarding global contract management. Describe three such misconceptions, and describe the reality of actual global contracts. (Points : 12)

Page 2
Question 1. 1. (TCO A) According to the PMBOK® Guide, there are four processes in the procurement area. Describe and explain these four processes in the procurement management process from the buyer perspective.

Question 2. 2. (TCO B) You are a project manager at a bidder’s meeting. One of the potential sellers asks you a question concerning the project in the hallway leading to the meeting room. Can you answer this question for the seller? What would be your concern if you did answer the question?

Question 3. 3. (TCO C) Given the following, answer the below questions.

Question 4. 4. (TCO D) Compare and contrast an RFP and an RFI. When would each best be used in procuring goods or services?

Question 6. 6. (TCO G) Describe and compare and contrast the buyer’s and seller’s actions in the control procurement phase of the contract management process. Give an example for each.

Question 7. 7. (TCO F) “The side that does the most research and planning will often come out best in any negotiation.” Do you agree with this statement? Do you disagree with this statement? Defend your position with examples and other information.

Question 8. 8. (TCO H) What does the uniform commercial code (UCC) state regarding price and warranty? What if a price is not specified in an agreement? What if a price is specified in an agreement? Does the UCC modify the price? What about a warranty? What rights does the buyer have for a guarantee under the UCC? What protection is granted to the seller?

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PROJ 595 Project Risk Management Week 8 Final Exam

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ECON 545 Business Economics Course Week 8 Final Exam All Sets Answer

ECON 545 Business Economics Course Week 8 Final Exam All Sets Answer

ECON 545 Business Economics Course Week 8 Final Exam All Sets Answer

1. Question :(TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production increase. What new decisions will you make regarding production levels and pricing for your Widget facility?
(TCO B) Here is some data on the demand for marshmallows:

Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 1300 units to 2200 units? Show all work. (Be careful here!)
3. Question : (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

4. Question : (TCO C) Answer the next questions on the basis of the following cost data for a firm in pure competition:

OUTPUT —— TFC ———- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $45 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

5. Question : (TCO D) A software producer has fixed costs of $18,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

(b.) (15 points) What should be the production level if fixed costs rose to $48,000 per month? Explain.
6. Question : (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year?
7. Question : (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.

8. Question : (TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves of $20,000 and demand deposits equal to $100,000. The reserve ratio is 20%. Households deposit $5,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (20 points) What is the discount rate in the banking system? Explain how the Fed manipulates this rate to achieve macroeconomic objectives.
9. Question : (TCO E and I) Let the exchange rate be defined as the number of dollars per British pound. Assume there is a decrease in U.S. interest rates relative to that of Britain.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the pound? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the pound?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Great Britain? Illustrate by showing the price of a U.S. cell phone in Britain before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Britain, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why?

Set 1 Additional Questions:

Question 2. (TCO B) Suppose the governor of California has proposed increasing toll rates on California’s toll roads, and has presented two possible scenarios to implement these increases. Following are projected data for the two scenarios for the California toll roads:
Scenario 1: Toll rate in 2012: $10.00. Toll rate in 2016: $22.50
For every 100 cars using the toll roads in 2012, only 81.6 cars will use the toll roads in 2016.
Scenario 2:
Toll rate in 2012: $10.00. Toll rate in 2016: $17.50
For every 100 cars using the toll roads in 2012, only 96.2 cars will use the toll roads in 2016.
a. Using the midpoint formula, calculate the price elasticity of demand for Scenario 1 and Scenario 2. (10 points)
b. Assume 10,000 cars use California toll roads every day in 2012. What would be the daily total revenue received for each scenario in 2012 and in 2016? (6 points)
c. Is demand under Scenario 1 and under Scenario 2 price elastic, inelastic, or unit elastic. Briefly explain. (4 points)
(Points : 30)

Question 3. 3. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.
(Points : 30)

Question 4. 4. (TCO C) Answer the next questions (Parts A and B) on the basis of the following cost data for a firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $500.00 0.00
1 500.00 70.00
2 500.00 130.00
3 500.00 170.00
4 500.00 200.00
5 500.00 300.00
6 500.00 510.00

(a.) (15 points) Refer to the above data. If the product price is $185 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $200 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)

Question 5. 5. (TCO D) A software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below. Complete the table (TC, MC, TR, and MR), then answer Parts A and B.

Q TVC Price
2,000 $5,000 $25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $70,000 per month? Explain.
(Points : 30)

Question 6. 6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)

Question 7. 7. (TCO G and H)

(a.) (15 points) What are the arguments for and against the use of fiscal policy to fight inflation, lower unemployment, and raise GDP (Keynesian and Monetarist)?

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 80 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $10 billion. (Points : 40)

Question 8. 8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm withdraws $42,000 on its line of credit at the Security Bank to purchase equipment for expansion. The equipment vendor deposits the amount that he receives from you at his bank, The Highland Bank.

(10 points) By how much has each bank’s excess reserves changed as a result of your withdrawal and expenditure?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of your purchase? Show all work.

(b.) (10 points) Suppose that the Security Bank discovers its reserves will temporarily fall slightly short of those legally required. How might it remedy this situation through the Federal Funds market?

(10 points) Explain how the Fed manipulates the Federal Funds Rate in order to achieve macroeconomic objectives.
(Points : 40)

Question 9. 9. (TCO E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a decrease in U.S. interest rates relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 2

1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand has recently increased and market supply has recently decreased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production decrease. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points : 30)

2. (TCO B) Here is some data on the demand for lettuce:

Price Quantity
$10 100
$ 8 120
$ 6 140
$ 4 160
$ 2 180

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.

Total Total
Workers Labor Cost Output Revenue
1 $200 50 $350
2 400 140 675
3 600 220 1120
4 800 270 1570
5 1000 300 1865
6 1200 315 2070
7 1400 320 2170

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. (Points : 30)
4. (TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $30.00 0.00
1 30.00 70.00
2 30.00 120.00
3 30.00 150.00
4 30.00 200.00
5 30.00 270.00
6 30.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $60, at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $55 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)
5. (TCO D) A software producer has fixed costs of $30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
3,000 $ 5,000 $5
13,000 25,000 4
23,000 50,000 3
33,000 80,000 2
43,000 120,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $50,000 per month? Explain.
6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)
7. (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.
(Points : 40)
8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm deposits its profits of $28,000 into the Third National Bank.

(10 points) How much excess reserve does your deposit generate for the bank?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (10 points) What is the Federal Funds Rate in the banking system?

(10 points) Explain how the Fed manipulates this rate in order to achieve macroeconomic objectives. (Points : 40)

9. (TCOs E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a relatively lower rate of inflation in the U.S. relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan, before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. inflation fell as discussed above in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 3

1. Suppose you are hired to manage a samll manufacturing facility that produces widgets
A. You know form data collected on the widget marekt that the market demand has recently increased and mareket supply has recently decreased. As manager of the facility, what decison should you make regarding production levels and pricing for you wideget facility?
Remember that supply and deman are about the makert supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market
B. Now suppose that follwing the supply and demand changes in (a) a subsitute good goes up in price, and your cost of product decrease. What decisons will you make regarding production levels and pricing for your widget facility?

2. Here is data on the demand for lettuce
Price Quantity
10$ 100
8$ 120
6$ 140
4$ 160
2$ 180
A. Is demand elastic or inelastic in the 6-8$ price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
3.A Suppose nominal GDP in 1999 was 100billion and in 2001 it was 260billion. The general price index in 199 was 100, and in 2001 it was 180. Between 1999 and 2001, the real GDP rose by what present?

4. Suppose your local congress representive suggest that the federal government intervenes in the gasonline market to stop runaway price increases. Would you say that this view bsically supports the Keynesin or Monetarist school of thought? Why? What postion would the opposting school of though tke on this issue?
b. Any change in the economys total expenditures would be expected to translate into change in GDP that was larger than the initial change in spending. This phenomenon os known as the multiplier effect. Explain the multipler effect works.

c. you are told that 90 cents our of every extra dollar pumpled into the econoomy goes toward consumption (as opposed to saving) Estimate the GDP impact of positive change in govenment spending that equals 20 billion.

5. Reserve requirment for banks is set at 5%. Your firm depositis it profits of 28,000 inot the Third National Bank.
A. How much excess reserve does your deposit generate for the bank?
What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work
B. What is the federal funds rate in the banking system?
Explain how the fed manipulates this rate in order to achieve macroeonmic objectives?
6. Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is a increase in U.S interest ratres relative to that of Japan.
A. Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?
b.) Has the dollar appreciatred or depreciated in value relative to the yen?
c.) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S goods in Japan? Illustrate by showing the price of a U.S e reader in japan before and after the change in the exchange rate.

d.) If you had a business exporting good to japan, and u.s interest rate rose as they have in this example, would you plan to expand production or cut back? Why

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)

B. What should be the production level if fixed cost rose to 70,000 per month? Explain

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)
B. What should be the production level if fixed cost rose to 70,000 per month? Explain

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MGMT 530 Managerial Decision Making Final Exam Complete A+ Answer

MGMT 530 Managerial Decision-Making Final Exam Complete Answer

MGMT 530 Managerial Decision-Making Final Exam Complete Answer

(TCOs A, B, C, D, E, F, G and H) Tidewater Services recently celebrated its 10th anniversary as a professional services firm that handles investigations for law firms offering amenities, such as background checks, surveillance, interviewing of witnesses, crash scene investigation, and other related services.
The company was founded by Lee Herbert who had extensive experience working for companies that handle investigative work. Herbert is more of a people person and is always looking for the next new client to take on. Admittedly, Herbert had no experience in running a business when he decided to go out on his own and enlisted the help of his long time friend, Bradley Simmons.
Simmons has spent his career working for larger corporations in finance and had no experience in investigative services, but was looking for a change.
Over the 10 years since the company’s founding, Tidewater Services struggled at first but slowly grew over the last five years. The more law firms the company works with, the more cases they receive. The more cases they receive, the more hours they can bill. Tidewater currently has six investigators and two clerks in addition to Herbert and Simmons. Over the years, they have expanded and contracted based on the volume of business and the local economy.
Based in Norfolk, Virginia, Herbert is really interested in expanding the business to other major cities in the region, believing that “there are only so many law firms here in Norfolk.” He feels that if they’ve survived 10 years, then they should continue to focus on growing the business. Simmons, on the other hand, feels that expansion will put the company at risk as it takes time to develop a decent client base. They had opened a second office several years back across town but eventually closed it when it didn’t generate enough revenue to cover expenses. He’s worried the expansion may bankrupt the company.
Even though the two are business partners, Herbert is the president and Simmons the vice president. Herbert asked Simmons to evaluate several options to further expand the business. From Herbert’s perspective, he has concluded that three objectives are important in this decision. First, is to find a city with a large number of Fortune 500 companies, a cost of living comparable to Norfolk, and a city that is in a reasonable distance from Norfolk as he and Simmons would be spending a lot of time in the new office at first. Because both have families with young children, Herbert feels that the distance is twice as important as the other criteria.
Here is the summary of Simmons’ research.
I. Richmond, Virginia: Number of Fortune 500 Companies: 5; Cost of Living Comparison: 0.934 (less than Norfolk); Driving Distance: 81 miles

II. Charlotte, North Carolina: Number of Fortune 500 Companies: 7; Cost of Living Comparison: 0.834 (less than Norfolk); Driving Distance: 283 miles
III. Atlanta, Georgia: Number of Fortune 500 Companies: 10; Cost of Living Comparison: 0.854 (less than Norfolk); Driving Distance: 503 miles
Question 1. Define the decision problem and the general nature of the problem. (20 Points)
Question 2. What event triggered
Question 3. Are we imposing any implied constraints on the situation
Question 4. Define the objectives
Question 5. Identify the alternatives
Question 6. Compare and contrast the consequences for all three alternatives by the fundamental objectives. Rank each alternative using proportional scoring, include weights on the objectives. Are there any dominated alternatives that can be eliminated? Are there any even swaps.
Question 7. What decision-making styles are at work here? What is their attitude towards risk?
Question 8. Are there any biases in play here that may impact the effectiveness of the decision?
Question 9. What are the uncertainties for this decision situation? What are their consequences?
Question 10. Evaluate this decision situation using tradeoffs. What location should they select? Are there any linked decisions? Discuss any assumptions as needed.

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MGMT 530 Managerial Decision-Making Final Exam Complete Answer