Major Field Test (Business) Actual TEST questions and answers + rationales

In marketing research, a firm might consider using secondary data over primary data because

secondary data usually cost less

In organizational decision making, managers are able to exercise the greatest degree of discretion in the

enforcement of internal policies

The term "net working capital" refers to

current assets less short-term liabilities

Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow requires two pounds of raw material and one hour of direct labor to manufacture.

Raw material costs $3 per pound and direct production labor is paid $4/hr. Fixed supervisory costs are $2,000/month and Dreamland rents its factory on a five-year lease for $4,000/month. All costs are considered costs of production.

How many pillows must Dreamland produce and sell each month to earn a monthly gross profit of $1,000?

700

Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow requires two pounds of raw material and one hour of direct labor to manufacture.

Raw material costs $3 per pound and direct production labor is paid $4/hr. Fixed supervisory costs are $2,000/month and Dreamland rents its factory on a five-year lease for $4,000/month. All costs are considered costs of production.

Another firm has offered to produce "Old Softy" pillows and sell them to Dreamland for $12 each. Dreamland cannot avoid the factory lease payments, but can avoid all labor costs if it does not produce these pillows. Under these conditions, how many "Old Softy" pillows must Dreamland sell to earn monthly gross profits of $1,000?

625

Which of the following statements about the tort of negligence is true?

it requires proof of breach of a statutory or common-law duty

Which of the following statements about a systems flowchart is true?

it documents the sequence of processing steps that take place in an information system

On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank statement shows a balance of $4,905. Other information is available as follows:

1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge does

2. A customers $40 insufficient funds check has been returned with the bank statement

3. Outstanding checks of $10, $15, and $100 are identified on May

What is the correct cash balance on May 31?

$5,080

Within the context of the CAPM, the risk measure known as beta is often computed by regressing the return of the company's stock against the

return on the market portfolio

A project consists of 150 jobs. The expected completion time for each job is given in days. The project has three critical paths with two jobs in common, J and K. In order to finish the project one day early, the completion time should be reduced one day for

either Job J or Job K

The Organization of the Petroleum Exporting Countries (OPEC) reduces production by 10% and the growth rate of the world economy begins to escalate. How will the simultaneous occurrence of these events affect the equilibrium price and quantity in the world petroleum market?

price will increase, but quantity is indeterminate

Which of the following would most likely occur as a result of the US govt imposing tariffs on foreign steel imports?

employment in the US steel industry would increase

In an economy the unemployment rate is 10% and the inflation rate is 1%. An appropriate fiscal policy in this phase of the business cycle would be to

increase govt spending

Which of the following is an appropriate Fed Reserve action to stimulate the US economy?

reducing the reserve requirement

If the spread between the spot and forward exchange rates of two currencies equals the interest rate difference between the two countries, this phenomenon is referred to as

interest-rate parity

A firm that would like to know whether it has enough cash to meet its bills would be most likely to use which category of financial ratio/

liquidity

In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory and the lowest net income figure?

last in, first out (LIFO)

In the statement of cash flows, the section for CF from operating activities will include which of the following?

a decrease in accounts payable

Net Income = $100,000

Depreciation Expense = $10,000

Net increase in A/R = $5,000

Net increase in A/P = $3,000

On the basis of the info for the corp, the corps net CF from operating activities for the current year is

$108,000

All of the following are true regarding a sellers rights to reduce legal liability in the sale of nonconsumer goods EXCEPT:

1. the seller can disclaim consequential damages if it is done clearly and conspicuously

2. the seller can limit the remedy available to the buyer if he/she does so clearly and fairly

3. the seller can place reasonable conditions on the warranty coverage and a shorter time limit of warranty coverage

4. the seller can disclaim all implied warranties by simply stating that there are no implied warranties

the seller can disclaim all implied warranties by simply stating that there are no implied warranties

Green desires to form a new company to manufacture lawn mowers. Green is concerned about having his personal assets exposed to liability for the new company's contracts and torts. Furthermore, he wants to retain control over the company's operations and growth for the next few years. He will need an infusion of equity capital to begin operations. He hopes to take the company public in about five years if it is advantageous to do so at the time. Which of the following types of business associations would be best for Greens new company?

corporation

A small number of people with complementary skills who are committed to a common purpose, a set of performance goals, and an approach for which they hold themselves mutually accountable is referred to as a

team

A department manager telephoned two managers in other departments to discuss a cost savings idea that would benefit their departments as well as her own. Which of the following most accurately defines the communication channel that the manager was using?

lateral

Based on his scientific management theory, Frederick Taylor developed what pay principle?

incentive pay

When a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty, the process is termed

licensing

An information system that enables all business departments in the same firm to share relevant information and data is called

an enterprise resource planning (ERP) system

The central processing unit (CPU) in a personal computer contains the

control unit and arithmetic/logic unit

Web 2.0 is best represented by which of the following phenomena?

social networking sites

Family branding refers to a group of

different products sold by small, family-owned firms

In a large firm, the pool of applicants for the positions of sales manager and sales associate consists of three men and three women. If each candidate has an equal chance of being selected, what is the probability that both positions will be filled by men?

50%