BEC Cumulative Questions Flashcards
name at least 5 examples of debt financing.
commercial paper
notes payable
lines of credit
debenture
subordinated debentures
junk bonds
income bonds
since annual sales volume is an important variable in the EOQ formula, then what does the EOQ formula assume?
period demand (the demand expected to repeat in every period in the planning horizon) is known
relevant costs are costs that will change in response to the selection of different courses of action. in evaluating costs for decision-making, a company would not use this type of cost as a relevant cost:
variable costs because it changes with the level of output but may not change in response to different alternatives.
what is the sequence of preparing budgets?
production budget, material purchases budget, budgeted income statement and then budgeted balance sheet
what type of market has large number of sellers with differentiated products, few barriers to entry and exit, and firms exert some influence over the price and market (example - brand name products)?
monopolistic competition
what is the difference between a centralized and decentralized organizational structure?
centralized is having one strategy and business objective across the entire organization implemented by one leader. decentralized allows individual leaders to make their own decisions in one organization and running the risk of various leaders making different decisions for the same company.
if management were to consider a one time project for factory with idle capacity, what would be irrelevant to the decision making?
a. incremental costs
b. variable costs
c. direct costs
d. absorption costs
absorption costs because fixed costs are not relevant to the decision making for a one time project and absorption includes o/h fixed costs.
a product with a perfectly inelastic demand would have a price elasticity of:
zero
what does it mean when price elasticity of demand is greater than 1?
the product is price elastic
what does it mean when the price elasticity of demand is less than 1?
the product is price inelastic
what does perfectly inelastic demand indicate?
the demand will stay nearly at the same price level
True/False: Completing an equity carve out requires an IPO with the parent company maintaining a minority interest stake.
false because the parent receives a controlling interest in the operating sub, NOT a minority stake
if tax rates are expected to decrease, the wacc will:
increase because the after tax cost of debt will increase
what is the most logical sequence when planning capital expenditures?
to begin figuring out what capital addition projects and capital needs there are in the organization
what statistical method is best used to classify an object as either fixed or variable costs?
regression analysis
