STR 581 Capstone Final Exam Part 2 (Score 20/25)
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1 Intanke Inc. manufactures vacuum cleaners. The following information is
available for the company. Per unit cost Sales
$550 Variable expenses 370
The fixed expenses are $95,000. Calculate the net operating income for 750
vacuum cleaners. A.
$135,000 C. $35,000 D. $40,000 2 Rinetin Corporation
has been falsifying its financial statements for the past year. The staff in the
accounting department of the company have been fake employee IDs and
recording payments on the company’s payroll. The funds sent to these fake
employees are then redirected to the company’s bank accounts. When Rinetin
Corporation is audited, the auditors fail to discover this fraud because of their
negligence. Months later, a whistle-blower alerts the appropriate authorities about
the company’s deceptive practices. In this scenario, the accountants who conducted
the audit of the company will be held civilly liable under __________. A.
Section 32(a) of the Securities Exchange Act of 1934
B. Section 24 of the
Securities Act of 1933
C. Section 11(a) of the Securities Act of 1933 D.
Section 10(b) of the Securities Exchange Act of 1934 3 Jonah’s Restaurant
reports net income of $20,000 during the year 2015. It distributes a dividend of
$6,000 to its shareholders. Calculate the retention ratio. A.
50%
B.
30%
C.
80% D.
70% 4 Wilande Inc., a leading apparel store, acquires Parewa
Inc., an energy drink manufacturer. This is an example of a __________. A.
congeneric merger
B. horizontal merger
C.
conglomerate acquisition
D.
vertical acquisition 5 Gina and Samantha are discussing the Sarbanes-Oxley
Act of 2002. Gina argues that although the act requires the management of a
company to explicitly declare in writing that a company’s financial statements
accurately and fairly represent the financial results, no steps have been taken to
ensure that this rule is followed. Which of the following statements weakens
Gina’s argument? A. An individual who is employed by a certified public
accounting firm that audits a company can be employed as the CEO or CFO of that
company to ensure the fairness of its financial statements.
B. If a company’s
financial statements contain misrepresentations, the CEO and CFO run the risk of
serving time in jail.
C. The Sarbanes-Oxley Act prohibits a public company
from granting personal loans to any of its executive officers or directors D. If a
CEO or CFO of a company fails to comply with the provisions of the act, he or she
is subject to a fine up to $10,000 and one year in jail. 6 Ray is an entrepreneur who
has recently started his own venture. Since he does not have the resources to hire a
financial expert, he has to manage the company’s finance in addition to managing
the company. He needs to calculate the working capital of his business. From the
following information, calculate the net working capital. Cash $20,000 Accounts
receivable 12,000 Accounts payable 14,500 Inventory 32,000 Accrued expenses
6,500 A.
$23,000
B. $49,500
C. $11,000 D. $43,000 7 Blanrin Inc.
currently produces all the components for the products it makes and sells. The total
costs of producing a component, Component Y, for one of its products are given
below. The annual requirement of Component Y is 2,200 units. Direct materials
$19,800 Direct labor
11,000 Variable manufacturing overhead
15,400 Fixed manufacturing overhead 13,200 An external supplier offers to
sell the component to Blanrin Inc. for $23 per unit. After analysis, it is found that if
the company buys the component instead of producing it, all of its variable costs
and $8,200 of its fixed overhead costs will be eliminated. If Blanrin Inc. decides to
buy the component instead of manufacturing it, how will the decision affect the
company? A.
Its net income will increase by $8,200.
B. Its net income will
increase by $3,800.
C. Its net income will decrease by $3,800. D. Its net
income will increase by $4,400. 8 Rick, a certified accountant, is asked to conduct
an audit of the financial statements of Schenk Ltd. However, the company refuses
to cooperate with Rick and does not provide him with the necessary information.
This makes it impossible for him to carry on with the audit. In this scenario, which
of the following opinions is Rick most likely to express? A.
Adverse opinion
B.
Disclaimer of opinion
C.
Unqualified opinion D. Qualified opinion
9 Susan is a financial manager at Rvetz Corporation. She wants to evaluate the
efficiency with which the company is using its resources. For this reason, she
needs to calculate the operating margin from the information given below. Net
sales $3,500,000 Cost of goods sold 1,750,000 Office rent
54,500 Selling
expenses 350,000 Interest expense
50,000 Other operating expenses
88,500 Which of the following will be the result? A. 38.4%
B. 35.9%
C.
85.9% D. 64.1% 10 Calculate depreciation from the following
information. Accounting profit break-even point 2,871 units Fixed costs
$4,083,200 Sales price $42 per unit Total variable costs
$2,600
Number of units 100 A.
$706,200
B.
$510,400
C.
$812,000 D.
$1,483,200 10 Calculate depreciation from the following information.
Accounting profit break-even point 2,871 units Fixed costs $4,083,200 Sales
price $42 per unit Total variable costs
$2,600 Number of units 100 A.
$706,200
B.
$510,400
C.
$812,000 D. $1,483,200 11 Yalken
Corporation is considering the purchase of a new machine. The cost of the machine
is $250,000. The cash flows for five years are given below. Year 1
Year 2
Year 3
Year 4
Year 5 Cash flows $84,790
$102,500
$70,580
$64,760 $115,700 The company is in the 35 percent tax bracket.
Assuming that the cost of capital is 12%, calculate the net present value. A.
$314,452
B.
$64,463
C. $(64,452) D.$204,394 12 Which of the
following scenarios illustrates a violation of the Sarbanes-Oxley Act? •
Natalie is assigned to audit a company’s financial records. She finds it
impossible to arrive at a conclusion and issues a disclaimer of opinion.
•
Ronan, the CFO of Puvane Inc., is granted an unsecured loan by the
company to pay his son’s medical bills.
• Tina, an accountant, fails to detect a
fraud in the financial statements of the company she audits. • Wong is a member
of the audit committee of a public corporation. However, he is an external member
and was not employed by the corporation. 13 Tanial Inc. has $950,000 in assets
and $400,000 in debt. If it earns net income of $350,000, calculate the return on
assets A.
63.6%
B. 36.8%
C. 271.4% D. 87.5% The financial manager
of a company needs to measure how efficiently the company’s total assets are
being used to generate sales. From the information given below, calculate the
relevant ratio he needs for this purpose. Cash
$220,000 Accounts receivable
1,800,000 Inventory
950,000 Plant and equipment 1,330,000 Sales
10,000,000 A.
Assets turnover ratio of 0.3
B. Debt to assets ratio of 3.4
C.
Assets turnover ratio of 2.3 D. Debt to assets ratio of 0.4 15 Jose, a
financial expert of Cerione Ltd., analyzes the data given below. What conclusion is
he likely to arrive at? Sales
$161,000 Cost of goods sold 110,000 Gross
margin
$ 51,000 Total selling and administrative expenses 39,500 Net
operating income $ 11,500 Interest expenses
2,170 Net income before taxes
$ 9,330 Income tax (30%)
2,799 Net income $ 6,531 A. The
company does not have adequate resources to pay the interest due to creditors.
B.
The company’s gross margin is 20 percent.
C.
The company has
sufficient resources to pay the interest due to creditors. D.The company’s earnings
before interest is the same as its earnings after taxes. 16 The capital structure for
Purnen Corporation is given below. Calculate the weighted average cost of capital
(WACC). Debt: 10%, 1,500 bonds, 20 years to maturity, selling for 105% of par.
The bonds have a $1,000 par value each and make annual payments. Common
stock: 3,000,000 shares outstanding at a par value of $1, selling for $35 a share.
The expected dividend is $2.8, and the growth rate is 10%. Preferred stock: 5,000
shares of 6% preferred stock outstanding, selling for $103 a share and having a par
value of $100. The flotation cost is $3, and the dividend is $9. The corporate tax
rate is 35%. A.
8.4%
B. 16.5%
C. 9.96% D. 13.65% 17 Raul needs to
choose one alternative from the four alternatives given below. Applying the
concept of time value of money, which of the following alternatives should he
select? A. Receiving $130 at the end of two years at an interest rate of 8%
compounded annually
B.
Receiving $100 at the end of two years at an
interest rate of 9% compounded annually
C.
Receiving $150 at the end of
three years at an interest rate of 7% compounded annually D. Receiving $90 at
the end of one year at an interest rate of 5% compounded annually 18 Josh and
Mike are discussing the pros and cons of the Sarbanes-Oxley Act. While Josh
argues that the act has a high compliance cost, Mike is of the opinion that
companies can easily avoid these costs by choosing to go dark and delisting their
shares from exchanges. Josh, in turn, states that such a choice comes with its own
drawbacks. Which of the following statements best supports Josh’s argument? A.
Companies that choose to go dark typically have only limited access to
capital markets.
B.
Mandatory annual audits by independent auditors are
carried out regardless of whether or not companies choose to go dark.
C.
Executives of companies that choose to go dark are required to certify the accuracy
of financial statements. D. Companies that go dark are required to file annual
reports. 19 Robert is a manager of a small-scale firm. He needs to decide whether
the firm has sufficient resources to meet its short-term obligations. Calculate the
ratio that Robert needs to calculate from the information given below. Cash and
cash equivalents $1,057,600 Accounts receivables 1,556,500 Short-term
investments 770,300 Other current assets 420,500 Accounts payable
995,700 Long-term debt 528,000 Short-term debt 176,000 Other current
liabilities 2,495,700 A.
Current ratio of 0.92
B. Current ratio of 1.04
C.
Debt ratio of 0.91 D.
Debt ratio of 1.26 20 Mark wants to withdraw $6,500 at
the end of three years and $8,000 at the end of five years. He wants to do this in
such a way that the account balance drops to zero after the last withdrawal.
Assuming that the interest rate is 5%, how much money should Mark deposit today
to ensure that his needs are met? A. $11,883.15
B.
$653.26
C. 5,614.94 D.
$6,268.21 21 Darrin Corporation is considering a proposal to purchase a new
piece of equipment. The cost of the equipment is $16,611. The equipment is
estimated to provide an annual cash flow of $3,000 for the next nine years. The
company has a required rate of return of 15%. Calculate the internal rate of return
(IRR), and interpret the results. Use the present value of an annuity table. • Since
the cash flows are evenly distributed, the proposal should be accepted.
•
Since
the IRR is lesser than the required rate of return, the proposal should be rejected.
•
Since the capital investment is higher than $15,000, the proposal should be
rejected. • Since the IRR is greater than the required rate of return, the proposal
should be accepted. 22 Calculate the total equivalent units for materials from the
information given below. Percentage complete Units Materials Conversion Work
in process, June 1 1,100 60% 35% Units started into production during June
22,500 Units completed and transferred to the next department 21,800
100% 100% Work in process, June 30 1,800 50% 15% A.2,070
B.
23,400
C. 22,700
D. 21,260 23 Bob is a project leader in a software
company. He assigns tasks to his team members, explains how to execute the tasks,
and sets weekly goals for them. He convenes meetings to discuss the progress of
projects at each stage of execution and does not bother about the personal issues of
his team when he evaluates any dip in their performance with respect to the targets
he set. In accordance with House’s path-goal theory, which of the following
leadership behaviors does Bob display? A. Participative behavior
B. Directive
behavior
C.
Supportive behavior D. Achievement-oriented behavior 24
The following information is given for Rafea Corporation. Rafea Corporation
Balance Sheet December 31, 2016 Assets Liabilities Cash $ 20,300 Accounts
payable
$ 82,400 Marketable securities 33,000
Bonds payable
215,300 Accounts receivable 74,200 Common stock 78,900 Inventory
82,400
Paid-in-capital
37,600 Fixed assets
258,500
Retained earnings 54,200 468,400 468,400 Which of the following can
be inferred from the data? A. The company has a current ratio of 1.51.
B.The
company has a debt-to-equity ratio of 1.74.
C.
The company has a debt-toequity ratio of 0.71. D. The company has a current ratio of 1.13. 25 Calculate the
direct labor quantity variance from the information given below. Standard rate
$13 per hour Standard hours 4,300 hours Actual hours 5,000 hours Actual
rate $11.50 per hour A. $15,550 unfavorable
B. $1,600 favorable
C.
$9,100 unfavorable D. $6,450 unfavorable
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STR 581 Capstone Final Exam Part 3 (Score 20/25)
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Please Note: Score of this Final Guide is 20/25 1.Tarow is a leading manufacturer
of designer handbags. The company has stores all over the world and is especially
famous for the high-quality leather used in its handbags. However, the company
soon realizes that a cheap liquor brand has been using its logo for the past six
months. In this scenario, the company owning the liquor brand is guilty of
__________. blurring tarnishment reverse engineering conscious parallelism 2
Felicia, a marketing executive of Trinola Inc., a manufacturer of nutritional
supplements, visits a high school to promote Trinola’s products. She conducts a
survey among students and classifies them into three groups: those who do not take
any nutritional supplements, those who take Trinola’s nutritional supplements, and
those who prefer nutritional supplements of other brands. Felicia talks to the first
group about the importance of consuming nutritional supplements and to the
second group about Trinola’s products in detail. To the third group, she explains
why Trinola’s products are better than those of other brands. In this scenario,
which of the following types of market segmentation does Felicia employ?
Psychographic segmentation Demographic segmentation Geographic segmentation
Behavioral segmentation 3. Which of the following statements is true of social
marketing programs? They require an entirely different planning process from
what is used for traditional products. They are complex and time consuming. They
should be executed in a single phase. They usually use a single tactic to achieve
their goals. 4. Celestia's is a newly opened bakery that is looking to reach more
customers. Ria, a social media marketer by profession and a regular customer at
the bakery, offers to help the bakery establish a strong online presence. She says
that she will create a website for the bakery and use various social media platforms
to promote the bakery’s goods and services. In return, she is promised a free
supply of baked goods for the next three months. Which of the following concepts
does this scenario illustrate? Divesting Positioning Co-branding Bartering 5.
Which of the following scenarios illustrates the impact of political and legal forces
on the marketing environment? After a shoe manufacturing company experiences
an increase in demand for its products, it opens retail outlets in several locations.
With the number of smartphone users on the rise, Taalia Inc., an electronics
company, decides to create mobile advertisements for its products in addition to
print and television advertisements. The raise in the legal drinking age from 21 to
25 in Florida might force marketing managers of alcohol companies to minimize
their target market and reposition their offerings. Lianet Ltd. hires a gay individual
as its marketing manager in an attempt to encourage diversity in the organization. 6.
An organization that decides to measure how its marketing efforts influence its
external stakeholders is most likely to gauge __________. resource adequacy
employees’ commitment to goals employees’ desire to learn consumer satisfaction
7. Archofan Associates, a firm that specializes in the sale of historical artifacts,
comes into possession of an antique royal crown. It confirms the authenticity of the
crown and holds an auction to sell it. Several interested buyers participate in the
auction and quote their prices. The price of the crown is raised each time a person
bids until Emily, a bidder, offers an exorbitant price that no other bidder is able to
match. Archofan then sells the crown to Emily. Which of the following types of
auctions does this scenario illustrate? A minimum bid auction A sealed-bid auction
An English auction A Dutch auction 8. Feisla Inc. is a manufacturer of high-end
smartphones. It therefore caters only to the upper class and the upper middle class.
However, the company soon realizes that it has enormous growth potential among
middle-class consumers. To tap this potential market, it releases a new range of
smartphones that are less expensive. This move proves to be successful and
eventually helps the company gain a larger market share. Which of the following
concepts does this scenario illustrate? Line modernization Pure bundling Line
stretching Dual branding 9. The management of Aurosa Inc., a chain of retail
stores that sells home appliances, observes that its expenditure on sales and
promotions is skyrocketing and decides to implement a new pricing method to
attract more customers. It sets a fixed low price for all the appliances offered in the
store and completely withdraws all promotion activities. This builds confidence in
customers who dislike the uncertainty that comes with price fluctuations. Which of
the following pricing methods does this scenario illustrate? High-low pricing
Going-rate pricing Auction-type pricing Everyday low pricing 10. Vatain Inc. is an
apparel manufacturer that markets its products based on consumers’ tastes and
preferences. It has introduced several brands to achieve this purpose. Another
brand is directed at high-end customers who do not have budget constraints. One
brand caters to the fashion-conscious customers who watch out for the latest trends
in fashion. Yet another brand is meant to attract customers who value comfort over
fashion. In this scenario, which of the following marketing strategies has Vatain
employed? Multiple segment specialization Mass marketing Single-segment
concentration Differentiated marketing 11. Eania Inc. manufactures toys and
games for children. After achieving a high growth rate and establishing itself as a
market favorite, Eania introduces a clothing brand for adults. In this scenario,
Eania pursues a __________. market-development strategy diversification strategy
product-development strategy market-penetration strategy 12. Latia is a popular
fruit juice brand in the food and beverage market. Once the brand reaches the
maturity stage of the product life-cycle, its growth rate begins to decline slowly.
The company that owns the brand decides to adopt a market modification approach
by increasing the consumption rate among its existing customers. Which of the
following strategies is most likely to help the company achieve its goal? Listing
out reasons for potential customers to try Latia fruit juices Advertising the benefits
of drinking Latia fruit juices more than once a day Making changes to the
packaging of Latia products Identifying new market segments and strategizing on
the best ways to enter them 13. Millennials are likely to be receptive to marketing
efforts that: carry direct appeals where value is clear. emphasize their role as
grandparents. align with their perception of retirement as a new beginning. address
social and environmental issues. 14. Rotego Inc., an automobile manufacturer,
releases two new models of cars. The first model is an expensive luxury car
targeted at high-income groups, whereas the second model is an affordable car
targeted at low-income groups. Through the introduction of these two models,
Rotego intends to present itself as a company that caters to people across all
income groups. In this scenario, which of the following types of market
segmentation does Rotego employ? Behavioral segmentation Demographic
segmentation Occasion segmentation Geographic segmentation 15. An advantage
of a firm pursuing multiple segment specialization is that: it creates the largest
potential market for the firm’s products. it increases the extent to which the firm
can engage in mass customization. it helps the firm achieve the lowest cost in each
segment. it diversifies the firm’s risk across segments. 16. 16 Lanase, a leading
producer of aerated drinks, decides to introduce fruit juices and bottled water into
the market. The company’s budget requires it to keep advertising and marketing
costs as low as possible. It therefore decides to introduce the products under the
company brand name. Which of the following is a likely consequence of the
decision? Consumers will buy the products since the company name will be easily
recognizable to them. If the products do not perform well in the market, the
company will not be affected since it has not tied its reputation to the products. The
development costs for future products will be extremely high. The company’s
goodwill will be unaffected since consumers will find it easy to differentiate one
product from another. 17. Gallide is a warehouse retailer that conducts special instore demonstrations of certain products. This allows potential customers to see
and feel the products for themselves and be convinced that the products are worth
purchasing. The salespeople of the store receive a bonus if a customer buys the
products after a demonstration. Which of the following is a likely reason that the
store has adopted this approach for some of its products? Consumers know which
brand they want to purchase before they enter the store. Consumers are inclined to
make many of their brand choices only when they are at the store. Consumers
respond well to the use of product placement as an advertising technique.
Consumers are brand-conscious and display high brand loyalty in certain product
categories. 18. The __________ occurs when the demand for plant and equipment
in an organization turns volatile because of the combined effects of the normal
year-to-year replacement demand and the need to satisfy an increase or decrease in
consumer demand for the organization’s products. boomerang effect billboard
effect acceleration effect halo effect 19. Ma Chère Inc. is a cosmetics store that has
introduced a new range of hair care products. The store’s salespeople are being
given a high commission for every sale that they make on these products. They are
asked to aggressively sell the products and target as many potential customers as
possible. In this scenario, which of the following strategies is being employed by
the cosmetics store? A pull strategy A push strategy Category extension Brand
extension 20. Mojo Marinade, a popular restaurant, creates history by becoming
the world’s first restaurant to use lab-grown meat in its dishes. It charges
exorbitant prices for its dishes to communicate its exclusivity to customers. Over
time, Mojo Marinade keeps reducing the prices of its dishes and attracts customers
from different market segments. Which of the following pricing objectives does
this scenario illustrate? Maximum market skimming Product-quality leadership
Partial cost recovery Maximum market share 21. Viva Pisto, a restaurant, has
received numerous complaints from customers about its slow service and
unfriendly waiters. The management of the restaurant needs to address these
complaints promptly and ensure that similar complaints do not arise in the future.
Which of the following practices will help the restaurant restore customer goodwill?
Monitoring social media only if there are more than five complaints Responding to
customer complaints only if they are raised formally Taking a defensive stance if
the complaints are justified Accepting responsibility for customers’ dissatisfaction
and disappointment 22. Which of the following scenarios illustrates marketpenetration pricing? Aulaan, a newly established discount store, sells products at
prices that are very low when compared to other stores. Iratan, a manufacturer of
smartphones, prices its latest models between $600 and $700. After a few months,
it steadily reduces these prices. Bakers and Eaters, a confectionery company, offers
high-quality chocolates at affordable rates. Ban World Hunger is a nonprofit
organization that works to end world hunger. It relies on donations and government
grants for financial support. 23. Milk Genii Inc., a manufacturer of dairy products,
has a state-of-the-art manufacturing facility where the processes of production and
packaging are carried out. After packaging, the products are directly sold to
customers through the company’s outlets located in all major cities. Which of the
following marketing channel levels does Milk Genii use in this scenario? A zerolevel channel A three-level channel A one-level channel A two-level chann 24.
Which of the following statements is true of consumer markets? The buyers in
consumer markets are geographically concentrated. In consumer markets,
purchasing is often executed through intermediaries. In consumer markets, sales
are finalized after multiple sales calls. The suppliers in consumer markets
customize their products to suit the needs of consumers. 25. Which of the
following is a limitation of marketing-mix modeling? It is less effective at
evaluating how different marketing elements work together. It overlooks the
importance of incremental growth. It is not capable of isolating the impact of
specific marketing activities. It does not allow marketers to conduct multivariate
analyses
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