Which of the following is not an advantage of the employment of an enterprise risk management (ERM) system?

If internal control is properly designed, the same employee should not be permitted to

Which of the following types of control plans is particular to a specific process or subsystem, rather than related to the timing of its occurrence?

If a group of consumers decide to boycott a particular product, the expected result would be

The law of diminishing marginal utility states that

This question is based on the following information.
 



 The marginal cost of producing the ninth unit is

In the short run, a severe hurricane creates an immediate strong increase in demand for roofers.  Some roofers in other parts of the country are then attracted to the disaster area.  Assume that in the long run the increase in demand still exceeds the increase in supply. Incorporating these facts in an analysis, the price for roofers in the short run increases, while in the long run the price will

Disposable income is calculated as

Which of the following is most likely to decrease aggregate demand?

For a given level of tax collections, prices, and interest rates, a decrease in government purchases will result in a(n)

Which of the following individuals would be most hurt by an unanticipated increase in inflation?

In the law of comparative advantage, the country that should produce a specific product is determined by

The U.S. dollar has a free‐floating exchange rate. When the dollar has fallen considerably in relation to other currencies, the

Which of the following is a direct effect of imposing a protective tariff on an imported product?

If the dollar price of the euro rises, which of the following will occur?

Freely fluctuating exchange rates perform which of the following functions?

Which of the following most closely represents the U.S. share of worldwide GDP (output)?

Which one of the following countries is not one of the world's largest exporters of goods and services?

Which of the following is not accurate about product differentiation?

Which of the following describes an option?

DQZ Telecom is considering a project for the coming year that will cost $50,000,000.  DQZ plans to use the following combination of debt and equity to finance the investment: 
 



 
 The Capital Asset Pricing Model (CAPM) computes the expected return on a security by adding the risk‐free rate of return to the incremental yield of the expected market return, which is adjusted by the company’s beta. Compute DQZ’s expected rate of return on equity.

The target capital structure of Traggle Co. is 50% debt, 10% preferred equity, and 40% common equity. The interest rate on debt is 6%, the yield on the preferred is 7%, the cost of common equity is 11.5%, and the tax rate is 40%. Traggle does not anticipate issuing any new stock. What is Traggle’s weighted‐average cost of capital?

Axel Corp. is planning to buy a new machine with the expectation that this investment should earn a discounted rate of return of at least 15%. This machine, which costs $150,000, would yield an estimated net cash flow of $30,000 a year for 10 years, after income taxes. In order to determine the net present value of buying the new machine, Axel should first multiply the $30,000 by which of the following factors?

Assume that nominal interest rates just increased substantially but that the expected future dividends for a company over the long run were not affected.  As a result of the increase in nominal interest rates, the company’s stock price should

Which of the following does investment’s beta measure?

A company purchases an item for $43,000.  The salvage value of the item is $3,000.  The cost of capital is 8%. Pertinent information related to this purchase is as follows:
 



 What is the discounted payback period in years?

Disco is considering three capital projects that have the following costs and net present values (NPV):

Using the profitability index, which project, if any, would be ranked as the most desirable?

If it is determined that a project investment is expected to generate $1.20 in present value for each $1.00 invested, which one of the following was most likely used to reach that conclusion?

If the net present value profiles for two mutually exclusive capital projects are shaped as in the graph below, which of the following statements is true?
 


Which of the following decision‐making models equates the initial investment with the present value of the future cash inflows?

A company has an outstanding one‐year bank loan of $500,000 at a stated interest rate of 8%. The company is required to maintain a 20% compensating balance in its checking account. The company would maintain a zero balance in this account if the requirement did not exist. What is the effective interest rate of the loan?

If a firm purchases raw materials from its supplier on a 2/10, net 40, cash discount basis, the equivalent annual interest rate (using a 360‐day year) of forgoing the cash discount and making payment on the 40th day is

Which one of the following responses is not an advantage to a corporation that uses the commercial paper market for short‐term financing?

Which one of the following is a form of inventory secured loan in which the inventory is placed under the control of an independent third party?

Nexco, Inc. is considering factoring its accounts receivable. Factorco, Inc. has offered the following terms for accounts receivable due in 30 days: 

If Nexco plans to factor $200,000 of accounts receivable due in 30 days, which one of the following is the amount it will receive from Factorco at the time the accounts are factored?

A firm has daily cash receipts of $100,000 and collection time of 4 days.  A bank has offered to reduce the collection time on the firm’s deposits by 2 days for a monthly fee of $500.  If money market rates are expected to average 6% during the year, the net annual benefit (loss) from having this service is

What is the major advantage of a zero‐balance account system?

Which of the following describes the derivative risk that relates to the possibility of loss from regulatory action?

Southern Corp. has a debt‐to‐equity ratio of 1.75, and total assets of $275 million. Southern is considering issuing another $20 million of debt and another $20 million of equity. What will be Southern's debt‐to‐equity ratio after the issuance?

If a firm increases its cash balance by issuing additional shares of common stock, working capital

Compared to online real‐time processing, batch processing has which of the following disadvantages?

In an accounting information system, which of the following types of computer files most likely would be a master file?

Which of the following transaction processing modes provides the most accurate and complete information for decision making?

What is the computer process called when data processing is performed concurrently with a particular activity and the results are available soon enough to influence the particular course of action being taken or the decision being made?

The machine‐language program that results when a symbolic‐language program is translated is called a(n)

Which of the following is not true? Relational databases

Bacchus, Inc. is a large multinational corporation with various business units around the world.  After a fire destroyed the corporate headquarters and largest manufacturing site, plans for which of the following would help Bacchus ensure a timely recovery?

The use of a header label in conjunction with magnetic tape is most likely to prevent errors by the

Which of the following statements best characterizes the function of a physical access control?

The most appropriate type of network for a company that needs its network to function inexpensively in widely separated geographical areas is

The Internet is made up of a series of networks which include

A value‐added network (VAN) is a privately owned network that performs which of the following functions?

A customer’s order was never filled because an order entry clerk transposed the customer identification number while entering the sales transaction into the system.  Which of the following controls would most likely have detected the transposition?

Which of the following is considered an application input control?

A brokerage firm has changed a program so as to permit higher transaction volumes. After proper testing of the change, the revised programs were authorized and copied to the production library.  This practice is an example of

An accounts payable clerk is accused of making unauthorized changes to previous payments to a vendor.  Proof could be uncovered in which of the following places?

A fast‐growing service company is developing its information technology internally.  What is the first step in the company’s systems development life cycle?

ABC, Inc. assessed overall risks of MIS systems projects on two standard criteria: technology used and design structure. The following systems projects have been assessed on these risk criteria. Which of the following projects holds the highest risk to ABC?
 
 

Under the balanced scorecard concept developed by Kaplan and Norton, employee satisfaction and retention are measures used under which of the following perspectives?

What is the primary disadvantage of using return on investment (ROI) rather than residual income (RI) to evaluate the performance of investment center managers?

A company uses a standard costing system. At the end of the current year, the company provides the following overhead information:
 



 
 What amount is variable overhead efficiency variance?

Relevant information for product A follows:
 



 What was the variable overhead spending variance for product A?


Which of the statements best describes the concept of six‐sigma quality?

A tool which indicates how frequently each type of defect occurs is a

The regression analysis results for ABC Co. are shown as y = 90x + 45. The standard error (S ) is 30 and coefficient of determination (r ) is 0.81.  The budget calls for production of 100 units. What is ABC’s estimate of total costs?

A company is offered a one‐time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10%, which is 15% less than the usual gross profit. What impact will this order have on total fixed costs and operating income?

Ajax Division of Carlyle Corporation produces electric motors, 20% of which are sold to Bradley Division of Carlyle and the remainder to outside customers.  Carlyle treats its divisions as profit centers and allows division managers to choose their sources of sale and supply.  Corporate policy requires that all interdivisional sales and purchases be recorded at variable cost as a transfer price. Ajax Division’s estimated sales and standard cost data for the year ending December 31, 2012, based on the full capacity of 100,000 units, are as follows:
 



 
 Carlyle is considering permitting the division managers to negotiate the transfer price for 2013. The managers agreed on a tentative transfer price of $75 per unit, to be reduced based on an equal sharing of the additional gross margin to Ajax resulting from sales to Bradley at $75 per unit instead of at variable cost.  To evaluate this proposal, Carlyle would like to compare it with current policy based on 2012 results.  Under the proposed action, the actual transfer price for 2012 sales of 20,000 motors would have been

A basic assumption of activity‐based costing (ABC) is that

Lincoln Company, a glove manufacturer, has enough idle capacity available to accept a special order of 20,000 pairs of gloves at $12.00 a pair. The normal selling price is $20.00 a pair. Variable manufacturing costs are $9.00 a pair, and fixed manufacturing costs are $3.00 a pair. Lincoln will not incur any selling expenses as a result of the special order. What would be the effect on operating income if the special order could be accepted without affecting normal sales?

Bowie Inc., a manufacturer of earrings, has accumulated the following cost information for products A and B:
 
 
 Assuming activity‐based costing (ABC) is used, what is the engineering cost per unit for products A and B?