ETS MAJOR FIELD TEST IN BUSINESS A.
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In marketing research, a firm might consider using secondary data over primary data
because
a) secondary data usually cost less
b) secondary data are usually more accurate
c) primary data are usually non specific
d) primary data are likely to be outdated - Answer: a) secondary data usually cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the
a) enforcement of internal policies
b) settlement of legal disputes
c) restructuring of outstanding loans
d) compliance with federal regulations - Answer: a) enforcement of internal policies
The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold - Answer: (C) 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.
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,Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per 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?
(A) 300
(B) 350
(C) 600
(D) 700 - Answer: (D) 700
VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
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 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per 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
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2
,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?
(A) 417
(B) 500
(C) 625
(D) 875 - Answer: (C) 625
Dreamland VC per unit = $12
FC = $4,000
CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
Which of the following statements about a systems flowchart is true?
(A) It is used in systems design to define and describe each piece of data.
(B) It is a method of writing programs using only three basic constructs: sequence,
selection, and repetition.
(C) It documents the sequence of processing steps that take place in an information
system.
(D) It documents the logical design of an information system. - Answer: (D) It documents
the logical design of an information system.
Which of the following statements about the tort of negligence is true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
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, (C) It requires proof of some intentional conduct.
(D) It requires proof of breach of a statutory or common-law duty. - Answer: (C) It requires
proof of some intentional conduct.
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 customer's $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?
(A) $4,905
(B) $5,080
(C) $5,166
(D) $5,204 - Answer: (B) $5,080
Cash Balance 5,123.00
Service charge (3.00)
NSF Check from customer (40.00)
Correct cash balance 5,080.00
Within the context of the capital asset pricing model (CAPM), the risk measure known as
beta is often computed by regressing the return of the company's stock against the
(A) return on the company's bonds
(B) return on the market portfolio
(C) change in the gross domestic product
APPHIA – Crafted with Care and Precision for Academic Excellence.
4
The smart way to Pass | Real Tests, Real results!
In marketing research, a firm might consider using secondary data over primary data
because
a) secondary data usually cost less
b) secondary data are usually more accurate
c) primary data are usually non specific
d) primary data are likely to be outdated - Answer: a) secondary data usually cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the
a) enforcement of internal policies
b) settlement of legal disputes
c) restructuring of outstanding loans
d) compliance with federal regulations - Answer: a) enforcement of internal policies
The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold - Answer: (C) 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.
APPHIA – Crafted with Care and Precision for Academic Excellence.
1
,Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per 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?
(A) 300
(B) 350
(C) 600
(D) 700 - Answer: (D) 700
VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
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 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per 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
APPHIA – Crafted with Care and Precision for Academic Excellence.
2
,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?
(A) 417
(B) 500
(C) 625
(D) 875 - Answer: (C) 625
Dreamland VC per unit = $12
FC = $4,000
CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
Which of the following statements about a systems flowchart is true?
(A) It is used in systems design to define and describe each piece of data.
(B) It is a method of writing programs using only three basic constructs: sequence,
selection, and repetition.
(C) It documents the sequence of processing steps that take place in an information
system.
(D) It documents the logical design of an information system. - Answer: (D) It documents
the logical design of an information system.
Which of the following statements about the tort of negligence is true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
APPHIA – Crafted with Care and Precision for Academic Excellence.
3
, (C) It requires proof of some intentional conduct.
(D) It requires proof of breach of a statutory or common-law duty. - Answer: (C) It requires
proof of some intentional conduct.
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 customer's $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?
(A) $4,905
(B) $5,080
(C) $5,166
(D) $5,204 - Answer: (B) $5,080
Cash Balance 5,123.00
Service charge (3.00)
NSF Check from customer (40.00)
Correct cash balance 5,080.00
Within the context of the capital asset pricing model (CAPM), the risk measure known as
beta is often computed by regressing the return of the company's stock against the
(A) return on the company's bonds
(B) return on the market portfolio
(C) change in the gross domestic product
APPHIA – Crafted with Care and Precision for Academic Excellence.
4
