D accurate recording of customer accounts and

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d. accurate recording of customer accounts and finished goods inventories. 33. A company reported first quarter revenues of $10,000,000, gross profit margin of 25%, and operating income of 15%. To reduce overhead expenses, a consultant recommends that the company outsource some of its operating activities beginning with the second quarter. This recommendation is anticipated to reduce operating expenses by 20% without affecting sales volume. The company has an income tax rate of 35%. Assuming cost of sales remains at 75%, what is the impact on the income statement if the company implements the recommendation? a. Gross profit will increase by 8.0%. b. Operating income will increase by 8.7%. c. Operating income will increase by $200,000. d. Operating expenses will be reduced by $300,000.
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441 34. During the strategic planning process, which one of the following is an external factor to be analyzed? a. Organizational culture. b. Societal culture. c. Employee morale. d. Organizational structure. 35. The major feature of zero-based budgeting is that it a. assumes all activities are legitimate and worthy of receiving budget increases to cover any increased costs. b. evaluates each activity and determines whether it should be maintained as it is, reduced, or eliminated. c. uses the previous year’s budget and adjusts it for inflation. d. focuses on planned capital outlays for property, plant, and equipment. 36. A company has in its disaster recovery plan a process to store in a secure, offsite warehouse building a back-up of its current financial operating systems. What type of back-up location is the company most likely using? a. A hot site. b. A cold site. c. A mirrored data center. d. A recovery operations center. 37. At the beginning of the year, a company budgeted to sell 600,000 units at a price of $12 per unit. It actually sold 585,000 units at a price of $12.50 per unit. The sales-volume variance is a. $112,500 favorable. b. $180,000 unfavorable. c. $187,500 unfavorable. d. $292,500 favorable.
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442 38. A sign of the successful implementation of a balanced scorecard is the presence of cause-and- effect relationship. An example of this success for a hotel is meeting the target of a. decreasing a customer’s check-in time, which causes an increase in the number of implemented employee suggestions. b. increasing employee training hours, which causes employee compensation to increase. c. increasing profit, which causes an increase in employee job satisfaction ratings. d. receiving more 5-star ratings from customers, which causes an increase in profit. 39. A manager is reviewing a potential investment, which has significant uncertainty related to its ultimate financial outcome. The manager has estimated the following probabilities for the various levels of net cash flows that may result from the investment. Likelihood of Outcome Net Cash Flows 10% (300,000) 20% 0 50% 100,000 20% 600,000 What is the expected value of net cash flows that the manager should use in evaluating the investment?
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