COMM_305_Winter_2003_Final_Exam[1]

# COMM_305_Winter_2003_Final_Exam[1] - Concordia University...

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Concordia University Comm 305/4Winter 2003 John Molson School of Business Final Examination 2 Question 1 Multiple Choice (20 marks) 1. The operations of Highway Construction Inc. are divided into the Asphalt Division and the Cement Division. Projections for the next year are as follows: Asphalt Cement Division Division Total Sales \$560,000 \$336,000 \$896,000 Variable costs 196,000 154,000 350,000 Contribution margin \$364,000 \$182,000 \$546,000 Direct fixed costs 168,000 140,000 308,000 Segment margin \$196,000 \$ 42,000 \$238,000 Allocated common costs 84,000 63,000 147,000 Operating income (loss) \$112,000 \$(21,000 ) \$91,000 Figure 1 Operating income for Highway Construction Inc. as a whole if the Cement Division were dropped, would be: (2 marks) A. \$42,000 B. \$21,000 C. \$91,000 D. \$49,000 I n f o r m a t i o n a b o u t T r a n e C o m p a n y i s a s f o l l o w s : P r i o r Y e a r C u r r e n t Y e a r O u t p u t ( u n i t s ) 3 0 , 0 0 0 4 0 , 0 0 0 I n p u t q u a n t i t i e s : L a b o u r ( h o u r s ) 3 0 , 0 0 0 2 5 , 0 0 0 F i g u r e 2 2. Refer to Figure 2. Trane's partial operational productivity measure for labour for the prior year is: (2 marks) A. 0.75 B. 1.0 C. 0.625 D. 0.833

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Concordia University Comm 305/4Winter 2003 John Molson School of Business Final Examination 3 3. Incredible.com's balance sheet reveals the following sources of financing: \$2,000,000, 7- percent, long-term debt and \$4,000,000 common stock. The operating income for last year was \$600,000 after taxes. The company's marginal tax rate is 30 percent. The interest rate on long- term government bonds is 5 percent. During the past several years, the company's shareholders have received, on average, one percent above the government bond rate. The after-tax cost of bonds is: (2 marks) A. 5.3 percent B. 3.5 percent C. 7.0 percent D. 4.9 percent .4. Monitoring the number of defects produced is an example of the management function of: (1 mark) A. planning B. control C. decision making D. none of the above 5. The Barnes Company manufactures two products. Information about the two product lines for 2002 follows: Product K Product Y Selling price per unit \$80 \$30 Variable costs per unit 45 15 Contribution margin per unit \$35 \$15 The company expects fixed costs to be \$189,000 in 2003. The firm expects 60% of its sales (in units) to be Product K (a sales mix of 3:2). The break-even point in units is: (2 marks) Product K Product Y A. 4,200 2,800 B. 1,100 1,400 C. 2,800 4,200 D. 8,400 5,600
Concordia University Comm 305/4Winter 2003 John Molson School of Business Final Examination 4 6. In the activity-based model of quality: (2 marks) A. control costs do not increase without limit B. control costs initially increase and then decrease as the firm approaches the robust start C. failure costs can be driven to zero D. all of the above 7. Armstrong Industries has two divisions: the Tile Division and the Flooring Division. Information about a component produced by the Flooring Division follows:

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• Winter '03
• JOHN
• John Molson School, Concordia University John Molson School of Business, University John Molson, Concordia University John

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COMM_305_Winter_2003_Final_Exam[1] - Concordia University...

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