Sales 20 million cost of goods sold 70 of sales

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Sales $20 million Cost of goods sold 70% of sales General & administrative expenses $300,000 Selling expense $100,000 plus 10% of sales Debt outstanding $5 million @ 8% interest rate Effective tax rate 35% Common shares outstanding 2 million She is now interested in the sensitivity of earnings per share to sales forecast changes. A 10% sales increase would increase earnings per share by a. 7.0 cents per share. b. 10.4 cents per share. c. 13.0 cents per share. d. 20.0 cents per share.
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275 317. CSO: 2E4a LOS: 2E4b The modeling technique that should be used in a complex situation involving uncertainty is a(n) a. expected value analysis. b. program evaluation review technique. c. Monte Carlo simulation. d. Markov process. 318. CSO: 2E4a LOS: 2E4b Janet Jones, an analyst with All Purpose Heater Company, plans to use a Monte Carlo experiment to estimate the simulated daily demand for All Purpose’s heaters. The probability distribution for the daily demand for heaters is as follows. Daily demand Random number for heaters Probability intervals 0 .10 00-09 1 .15 10-24 2 .20 25-44 3 .20 45-64 4 .25 5 .10 Jones is trying to assign random number intervals for each of the demand levels. She has done so for the first four levels. If a total of 100 two-digit numbers are used in a simulation, what random number intervals should Jones assign to the 4 and 5 heaters demand levels, respectively? a. 65-69; 70-88. b. 65-84; 85-99. c. 65-84; 85-99. d. 65-89; 90-99. 319. CSO: 2E4a LOS: 2E4b All of the following are advantages of a simulation model except that it a. allows what-if type of questions. b. does not interfere with the real world systems. c. generates optimal solutions to problems. d. allows the study of the interactive effect of variables.
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276 320. CSO: 2E4a LOS: 2E4b Logan Corporation, located in Boston, has experienced major distribution problems in supplying key Los Angeles-based customers. Delivery times have been as follows over the last four months. Delivery Time Number of Times in Days Occurring 5 12 6 18 7 15 8 9 9 6 The company’s marketing manager wants to simulate the distribution process by assigning random numbers to delivery times and to other random variables. If the marketing manager uses 100 different random numbers to simulate the process, an appropriate assignment of random numbers to a 6-day delivery time would be a. 09-14. b. 30-60. c. 45-74. d. 00-18. Section F: Professional Ethics 321. CSO: 2F1a LOS: 2F1c Recently Fan Club Inc. submitted a budget for the coming year to management. Included in the budget were the plans for a new product, a rechargeable fan. The new fan will not only last longer than the competitor’s product but is also more quiet. While not yet approved, the budget called for aggressive advertising to support its sales targets, as the business community was not yet aware that Fan Club was close to production of a new fan. A member of the management accounting staff “shared” the budget with a distributor. In accordance with IMA’s “Statement of Ethical Professional Practice,” which one of the following would best represent an ethical conflict in this situation?
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