ACC – You invested $5,000 in the Cog corporation

ACC – You invested $5,000 in the Cog corporation

Question


You invested $5,000 in the Cog corporation and $5,000 in the Gear corporation. Both of these corporations have $100 million in total assets. The Cog corporation had a net profit of $5 million and the Gear corporation had a net profit of $10 million. You read their annual reports and both companies had established a goal of having net profit equal to 10% of total assets. Which of the following statements is true regarding these 2 firms?

Cog is effective and more efficient than Gear.

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Cog is effective but less efficient than Gear.

Gear is effective and more efficient then Cog.

Gear is effective but less efficient than Cog.

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Cannot tell without more information.
2 points
Question 3

Sam quit his job as an accountant with We Keep Books Accurately to open his own accounting firm. He earned $40,000 with the accounting firm We Keep Books Accurately. During the current year Sam had revenues of $190,000 and total expenses of $110,000. Sam earned an

accounting profit of $40,000.

accounting profit of $80,000 and an entrepreneurial profit of $40,000.

entrepreneurial profit of $80,000, but an accounting of $40,000.

entrepreneurial profit of $80,000.

Cannot tell from the information provided.
2 points
Question 4

Sam quit his job as an accountant with We Keep Books Accurately to open his own accounting firm. He earned $40,000 with the accounting firm We Keep Books Accurately. During the current year Sam had revenues of $150,000 and total expenses of $110,000. For Sam the opportunity cost of going into business was

$40,000.

$110,000.

$150,000.

zero because he has a profitable business.
2 points
Question 5

All of the costs that a firm must pay, even if there are no sales, are

contribution costs.

fixed costs.

variable costs.

sales cost.
2 points
Question 6

Table 5-1. Steel Shelf Company

Category Cost Payment Period Cost

Rent Monthly $ 3,000

Utilities Monthly 1,100

Insurance Quarterly 1,200

Property Taxes Annually 6,000

Steel Per Shelf 9.00

Forming Per Shelf 0.25

Labor Per Shelf 0.75

Price Per Shelf 20.00

Refer to Table 5-1. The Steel Shelf company has variable costs per unit of ________ .

$10.00

$18.33

$20.00

$25.00

$30,00
2 points
Question 7

Table 5-1. Steel Shelf Company

Category Cost Payment Period Cost

Rent Monthly $ 3,000

Utilities Monthly 1,100

Insurance Quarterly 1,200

Property Taxes Annually 6,000

Steel Per Shelf 9.00

Forming Per Shelf 0.25

Labor Per Shelf 0.75

Price Per Shelf 20.00

Refer to Table 5-1. The Steel Shelf company has monthly fixed costs of _____ and a contribution margin of _____.

$5,000; $10

$5,000; $20

$5,800; $10

$11,300; $10

$11,300; $20
2 points
Question 8

Refer to Table 5-1. The Steel Shelf company has a monthly break-even quantity of _____ shelves.

250

500

580

1,130

Cannot calculate with information provided.
2 points
Question 9

Refer to Table 5-1. If the Steel Shelf Company wants to earn a profit of $3,000 per month they will have to produce _____ shelves.

500

800

1,000

1,500
2 points
Question 10

Refer to Table 5-1. The Steel Shelf company has annual fixed costs of ________ .

$5,300

$56,400

$60,000

$69,600

$135,600
2 points
Question 11
The Steel Shelf company has to have annual revenue of _____ in order to break even.

$10,000

$120,000

$69,600

$135,600

Cannot calculate with information provided.
2 points
Question 12

The earning power of a company can be defined as the product of 2 factors:

fixed asset turnover and cash flow per share.

net profit margin and fixed asset turnover.

net profit margin and total asset turnover.

total asset turnover and earnings per share.