2013 Midterm MCQs

Question 1

Alberto owns a small bakery near Yonge and Eglinton in Toronto. Over the course of one day, he converts 10 lbs. of flour (bought at $4.50/lb.) and 1 lb. of yeast (bought at $5/lb.) into 100 loaves of bread, which he sells for $2 per loaf. What is his productivity?

a) 2:1
b) 2.5:1
c) 4:1
d) 5:1
e) 10:1

Answer 1

c) 4:1

Question 2

A man goes to his lawyer to discuss the writing of his will, and to plan the creation of a Trust to manage the investments he plans to leave to his family when he dies. The lawyer offers her ideas and suggestions based on the man’s current age, his current income, the number and ages of his children, and begins to discuss their family circumstances (their marital status, number of grand-children, their education levels, employment status, etc.) Based on this information, the lawyer works with her client to structure an appropriate investment management plan and will. This discussion is an example of the service characteristic of ______.

a) intangibility
b) instorability
c) customization
d) perishability

Answer 2

c) customization

Question 3

You are a self-employed design consultant. Over the years, you’ve come to realize that the service you provide – face-to-face design advice - suffers from the quality of unstorability. Trying to combat this, you’ve considered offering which of the following in addition to the one-on-one advice:

a) a motivational talk
b) a video that you have produced, illustrating the principles of good design
c) advice on furnishing a home or office
d) more flexible hours of operation
e) none of the above

Answer 3

b) a video that you have produced, illustrating the principles of good design

Question 4

Economic output per hour worked differs from nation to nation. This is due to all of the following factors EXCEPT:

a) government policies b) the level of education and training within the workforces
c) the level of unemployment
d) the availability of natural resources

Answer 4

c) the level of unemployment

Question 5

Which of the following is an advantage to a firm with increasing productivity?

a) the firm can afford to pay workers higher wages without raising prices
b) workers will not want to unionize
c) raw materials will decline in price
d) machine breakdowns will be less likely
e) the standard of living of its employees will fall

Answer 5

a) the firm can afford to pay workers higher wages without raising prices

Question 6

What kind of transformation occurs in an assembly process?

a) raw materials are mechanically altered
b) various components are transported from one location to another c) various components are put together to create a new product
d) data is combined into useable information for a management report
e) finished products are taken apart for inspection

Answer 6

c) various components are put together to create a new product

Question 7

A simulation is

a) another term for an ineffective computer program
b) a program that models a real situation
c) a data mining program
d) a data warehouse
e) one of the many computer languages

Answer 7

b) a program that models a real situation

Question 8

The term data refers to

a) controlled flow of words for a useful purpose.
b) raw facts and figures.
c) the useful interpretation of facts and figures.
d) conclusions made from information.
e) names and numbers from a large phonebook

Answer 8

b) raw facts and figures.

Question 9

Which of the following best describes an analytic process?

a) The systematic direction and control of the processes that transform resources into finished goods and services that provide value to customers.
b) activities producing tangible and intangible goods and services, such as entertainment, transportation, and education.
c) production processes in which resources are combined to produce finished products.
d) activities producing tangible products, such as radios newspapers and textbooks.
e) production processes in which resources are broken down into components to create finished products.

Answer 9

e) production processes in which resources are broken down into components to create finished products.

Question 10

Which of the following is a primary factor in location planning for producing high-contact services?

a) proximity to labour resources
b) availability of labour c) proximity of customers
d) transportation costs

Answer 10

c) proximity of customers

Question 11

Which is not a dimension of the 4 P’s of Marketing Strategy?

a) Purchase
b) Price
c) Placement
d) Product

Answer 11

a) Purchase

Question 12

The rapid growth of information technologies has changed the very structure of business organizations. All of the following are examples of such changes except:

a) greater independence of company and workplace
b) improved management processes c) increased collaboration
d) leaner organizations e) less flexible operations

Answer 12

e) less flexible operations

Question 13

Which of these basic ideas is correct?

a) Accounting records information but cannot analyze it.
b) Accounting collects information, analyzes it, and then gives it to people who need it.
c) bookkeeping analyzes information.
d) Bookkeeping measures performance.

Answer 13

b) Accounting collects information, analyzes it, and then gives it to people who need it.

Question 14

A fixed asset is

a) an expense, such as rent, that is paid before the upcoming period in which it is due.
b) a nonphysical asset, such as a patent or trademark, that has economic value in the form of expected benefit.
c) an asset with long-term use or value, such as land, buildings, and equipment.
d) an amount due from a customer who has purchased goods on credit.
e) an asset that can or will be converted to cash within the following year.

Answer 14

c) an asset with long-term use or value, such as land, buildings, and equipment.

Question 15

Which of the following best describes materials management?

a) A production schedule specifying the sequence and critical path for performing the steps in a project
b) planning organizing and controlling the flow of materials from design through distribution of finished goods
c) a production control activity for ensuring that production decisions are being implemented
d) the use of standard and uniform components in the production process
e) a production schedule diagramming the steps in a project and specifying the time required for each.

Answer 15

b) planning organizing and controlling the flow of materials from design through distribution of finished goods

Question 16

Once a consumer recognizes a need or problem that must be satisfied, they generally engage in

a) Purchase
b) Consumption
c) Evaluation
d) Information seeking
e) Retrospection

Answer 16

d) Information seeking

Question 17

Andy Griffith, purchasing manager at Mayberry Industries, has recently informed the company’s VP of Sales Barney Fife, that in order to help the company to improve its profitability, he will be placing smaller, more frequent orders with suppliers than he has in the past. This is expected to improve profitability by:

a) improving the relationship with the company’s suppliers
b) increasing the quality of the supplied products
c) reducing ordering costs
d) reducing inventory holding costs

Answer 17

d) reducing inventory holding costs

Question 18

Dave is planning to segment his market and hopes to find potential customers with common lifestyles and attitudes. Dave is employing what type of segmentation?

a) Demographic
b) Geographic
c) Systematic
d) Psychographic

Answer 18

d) Psychographic

Question 19

Your job includes helping to decide the capacity of the company’s new manufacturing facility in Regina, SK. You must make the factory large enough to satisfy forecast demand in the prairie provinces, but you want to be careful not to build too large a factory, What is one reason why it is a bad idea for a company to have excess capacity?

a) wastes raw materials b) decreases form utility c) ties up money in extra machines
d) increases customer dissatisfaction
e) slows delivery of product

Answer 19

c) ties up money in extra machines

Question 20

_________________ studies the process by which customers come to purchase and consume a product or service:

a) Focus group
b) Experiment
c) Survey
d) Consumer behavior

Answer 20

d) Consumer behavior

Question 21

One way you could start a small business is to purchase an existing company. If you do that, you will:

a) owe the liabilities.
b) own the assets.
c) have some equity.
d) All of the above.
e) None of the above.

Answer 21

d) All of the above.

Question 22

A decision support system is

a) an information processing application for routine business activities involving well-defined processing steps.
b) a quick-reference, easy-access application of information systems specifically designed for instant access by upper-level managers. c) a system of hardware and software that imitates human behavior.
d) an interactive system that locates and presents information needed to support the decision- making process.
e) a system that supports an organization’s managers by providing daily reports, schedules, plans, and budgets that can be used for making decisions.

Answer 22

d) an interactive system that locates and presents information needed to support the decision- making process.

Question 23

Which of the following is NOT a result of the rapid growth of information technology?

a) more flexible operations
b) greater independence of business and workplace
c) taller organizations and structures
d) leaner organizations and structures
e) increased collaboration

Answer 23

c) taller organizations and structures

Question 24

How has technological change and improved management information expanded the phenomenon known as globalisation?

a) manufactured goods which are bulky can now be exported
b) low wage economies can now import technology
c) high wage economies no longer do any manufacturing
d) improved communication means the risk and cost of outsourcing to foreign countries is reduced
e) low contact industries can substitute raw materials for capital

Answer 24

d) improved communication means the risk and cost of outsourcing to foreign countries is reduced

Question 25

What is the meaning of “operations control”?

a) monitoring production performance by comparing results with plans and schedules
b) purchasing the right raw materials, in the right quantity, at the right price, and at the right time
c) stocking items needed for production that are themselves produced within the firm
d) planning and organizing the flow of materials
e) checking to ensure that production decisions are being implemented

Answer 25

a) monitoring production performance by comparing results with plans and schedules

Question 26

A manager would like to make quality improvements. Where should she begin?

a) knowledge of current cost levels
b) competitive product analysis
c) statistical process control
d) attention to customer needs
e) total productivity ratios and quality/cost studies

Answer 26

d) attention to customer needs

Question 27

Which is not considered a rational motive for a purchase?

a) Fear
b) Usefulness
c) Cost
d) Quality

Answer 27

a) Fear

Question 28

Which of the following is the most common reason for increases in labour productivity?

a) the dollar value of output is increased by raising prices
b) inflation increases the value of the output c) the number of workers is increased
d) non-labour resources are added so that fewer workers can accomplish more e) wages for workers are reduced

Answer 28

d) non-labour resources are added so that fewer workers can accomplish more

Question 29

Dr. Strangelove is dealing with an unusual medical case. He consults a computer program to help him make the diagnosis, and is probably using:

a) an application system
b) a decision support system
c) an executive support system
d) a data management system
e) a simulation system

Answer 29

b) a decision support system

Question 30

Which financial statement shows the cost of obtaining materials to make products that were sold during the year?

a) statement of retained earnings
b) balance sheet
c) operating expenses statement
d) income statement
e) statement of cash flows

Answer 30

d) income statement

Question 31

Expert systems are programs

a) developed by experienced programmers
b) that locate experts within the organization c) that apply complex rules and experience to solve problems
d) that have been tested extensively to eliminate defects
e) that are databases of written expert opinions

Answer 31

c) that apply complex rules and experience to solve problems

Question 32

Which of the following statements about the impact of information technology is NOT true?

a) information networks permit widespread reductions in the number of middle management positions and shrink the layers of organizational structure
b) electronic networks allow businesses to offer customers greater variety and faster delivery cycles
c) collaboration with outside firms is increasing
d) a business may be geographically scattered but highly coordinated as a result of modern communication networks
e) upper level managers are less likely to focus on detailed information, leaving these activities to lower-level employees.

Answer 32

e) upper level managers are less likely to focus on detailed information, leaving these activities to lower-level employees.

Question 33

What purpose does the balance sheet serve?

a) it shows investors how much profit the firm made during the last year
b) it shows a firm’s financial condition on a particular date in terms of its assets, liabilities, and owners’ equity
c) it shows short- and long-term liquidity ratios, profitability ratios, and activity ratios
d) it shows the stock price of the firm during the last year and how much fluctuations there have been in the stock price
e) it shows a firm’s sources and uses of cash

Answer 33

b) it shows a firm’s financial condition on a particular date in terms of its assets, liabilities, and owners’ equity

Question 34

__________ consists of money originally invested by owners and profits earned and reinvested in the company.

a) Inventory
b) Owners’ equity
c) Remaining liabilities d) Debits
e) Assets

Answer 34

b) Owners’ equity

Question 35

36) A banker is most likely to review the income statement of a potential customer for the following reason:
a) to determine whether the business has been profitable
b) to determine how much money the business has already borrowed
c) to determine what it has spent its money buying
d) to determine how much money has been invested by the business’ owners
e) all of the above

Answer 35

a) to determine whether the business has been profitable

Question 36

Shown below is the balance sheet for Scarborough Fine Fashions Corp, on January 1, 2012.
Scarborough Fine Fashions Corp,
Balance Sheet as at January 1, 2012(in $’000)
Assets Liabilities

Current Assets Current Liabilities
Cash 10 Accounts Payable 15
Inventory 15 Wages Payable 5
Accounts Receivable 5

Fixed Assets Long Term Liabilities
Furniture 10 Bank Loan 10
Machinery 45 Mortgage on Building 50
Building 75
Equity
Common Shares 35
Retained Earnings 25

Total Assets 160 Total Liabs. + Equity 160
On a very busy January 11, 2012, the Corporation completed a number of financial transactions. Specifically, it:
1. Raised $30,000 by selling shares to new common shareholders.
2. Used 1/2 of the proceeds of the share sale to purchase a new piece of equipment.
3. Used $5,000 to buy more materials to make clothes
4. Put the rest of the proceeds into the bank.

37) On January 12 (i.e. the day after these transactions took place), the company’s working capital was:
a) $25,000
b) $15,000
c) $10,000
d) $5,000
e) we don’t have enough information to calculate the working capital

38) As a result of these transactions, does the company have more or less liquidity?
a) more liquidity
b) less liquidity
c) the liquidity is unchanged
d) we don’t have enough information to calculate the organisation’s liquidity

39) As a result of these transactions does the company have more or less leverage?
a) more leverage
b) less leverage
c) the leverage is unchanged
d) we don’t have enough information to calculate the organisation’s leverage

Answer 36

37. a) $25,000
38. a) more liquidity
39. b) less leverage

Question 37

Consumers who always buy one brand are classified as

a) steady stagers
b) non-movers
c) stable partriots
d) hard-core loyalists
e) none of the above

Answer 37

e) none of the above

Question 38

Samantha Sang has recently been made Supply Chain Manager at DerryCorp, working in the Operations Department. As Supply Chain Manager, her principal responsibility will be:

a) improving the flow of goods and information in the supply chain
b) creating a just in time inventory system with suppliers in the supply chain
c) establishing information links to customers in the supply chain
d) vertically integrating the businesses in the supply chain
e) horizontally integrating businesses in the supply chain

Answer 38

a) improving the flow of goods and information in the supply chain