LSU AGEC 1003 Fannin- Test 3

The most complex legal structure is a) corporations b) limited partnership c) partnership d) sole proprietorship

a) corporations

These employees have the ability to make decisions a) line b) staff c) temporary d) seasonal

a) line

A sole proprietorship is an organizational structure where an individual owns, manages, assumes all the risks, and derived all the profit from a business. a) true b) false

a) true

From the following table determine the marginal product of labor when the firm increases from three to four units of labor input a) 5 b) 10 c) 15 d) 60 e) 240 Total Input Total Product 0 0 1 15 2 35 3 50 4 60 5 65

b) 10

OC=(R/Q)S

Ordering Costs=(Annual requirements for items/Amount ordered each time) X Cost of placing an order

Contribution= (TFC+PG)/Y

Contribution=(Total Fixed Cost+Profit Goal)/Estimated Quantity

BEP$=(TFC+PG)/CMP

BEP$= (Total fixed costs+Profit goal)/Contribution Margin Percentage

BE Y=TFC/(P-VC)

Break-even is calculated from profit equation when profit is ZERO. Quantity sold=Total fixed costs/(Per unit selling price - Variable costs per unit)

BE$=TFC/CMP

Break-even points in dollars. BE$= Total fixed costs/Contribution Margin Percentage

BE with PG Y=(TFC+PG)/(P-VC)

Break-even with Profit Goal Quantity sold=(Total fixed costs+Profit goal)/(Per unit selling price - Variable costs per unit)

CC=(Q/2)PC

Carrying Costs=(Level of inventory/2) X Price per unit X Carrying cost percentage

Contribution=TFC/Y

Contribution=Total Fixed Cost/Estimated Quantity

ROP=(Yearly REQ/360)*#days to receive order

EXAMPLE- 320 units = Yearly Requirements 21 days = number of days to receive ROP= (320/360) X 21 ROP= 18.7 Round to nearest whole number ROP= 19

Q=sqrt((2RS)/PC)

Level of Inventory= SQRT((2 X Annual requirements for items X Cost of placing and order)/Price per unit X Carrying cost percentage)

Detre Corp. has a contribution margin percentage of 0.40. They are considering increasing their advertising expenditures by $25,000 to promote increased sales. How many additional dollars in sales must they have to cover the additional advertising costs (i.e. how much does breakeven sales go up)? a) $62,500 b) $41,667 c) $10,000 d) $15,000

a) $62,500

If 25 workers can pick 100 flats of strawberries per hour, then average product is a) 4 flats/hr b) 75 flats/hr c) 100 flats/hr d) 125 flats/hr

a) 4 flats/hr

An effective business structure is important to accomplishing the business objectives of an agribusiness a) true b) false

a) true

Break-even analysis can be used to evaluate effectiveness of advertising. a) true b) false

a) true

By comparing marginal revenue and marginal cost, managers can determine the optimal level of output. a) true b) false

a) true

Once a company sells more units of a product than are required to break even the company will make a profit. a) true b) false

a) true

The matrix approach to organizing work is where employees are responsible to two or more bosses a) true b) false

a) true

In what way does the average fixed cost per unit change as output rises? a) it increases average fixed cost per unit, because it reflects the fact that firms are less efficient when they operate on a larger scale b) It reduces average fixed cost per unit, because a given fixed cost can be spread across more units of outputs c) It reduces average fixed costs per unit, because a firm's total fixed cost will decline as more s produced d) It increases average fixed cost per unit, because it reflects the fact that workers are spread out across ore tasks when output rises

b) It reduces average fixed cost per unit, because a given fixed cost can be spread across more units of outputs

If the price of the product s greater than the breakeven price, the firm should quit producing. a) true b) false

b) false

In the long run, a firm will produce even if price does not cover all costs so long as contribution per unit is positive. a) true b) fa1se

b) false

The principles of equi-marginal allocations always leads to production in the third stage a) true b) false

b) false

The profit-maximizing production area is between the minimum efficiency level of input use and the maximum efficiency level of input use. a) true b) false

b) false

There is one single best legal structure for all firms a) true b) false

b) false

If average product is decreasing, then marginal product a) must be greater than average product b) must be less than average product c) must be increasing d) cannot be decreasing e) both a and c

b) must be less than average product

Double taxation involves a) dividends received by shareholders being taxed and then personal income being taxed b) profits being taxed and then dividends received by shareholders being taxed c) both a & b d) none of the above

b) profits being taxed and then dividends received by shareholders being taxed

What is on the horizontal (x) axis when we draw the graphs for the total product, average product, and the marginal curves? a) marginal cost b) quantity of the input c) quantity of output d) total cost

b) quantity of the input

Autonomous profit centers (business units) offer all of the following benefits except a) put people in charge of their own destiny b) slow feedback on performance c) keep work units small d) minimum number of management levels

b) slow feedback on performance

If a firm is producing a given level of output in a technically-efficient manner, then it must be the case that a) it is choosing the lowest-cost method of producing that output. b) this output level is the most that can be produced with the given levels of inputs. c) each input is producing its maximum marginal product. d) both a and b e) both a and c

b) this output level is the most that can be produced with the given levels of inputs.

Suppose you operate a sandwich shop and currently have two employees, If you hire a third employee, your output of sandwiches per day rises from 75 to 90. If you hire a fourth employee, output rises to 110 per day. A fifth and sixth employee would cause output to rise to 120 and 125 per day, respectively. Choose the correct statement: a) decreasing marginal physical product has not set in yet because output is still increases. b) decreasing marginal physical product set in with the hiring of the fourth worker. c) decreasing marginal physical product set in with the hiring of the fifth worker d) decreasing marginal physical product set in with the hiring of the sixth worker

c) decreasing marginal physical product set in with the hiring of the fifth worker

In decentralized decision making, more decision making authority is given to: a) the board of directors b) upper level management c) lower level management d) all of the above e) none of the above

c) lower level management

Which of these is not one of the four principles of organization design a) keep the organization structure simple b) give critical tasks prominence and allow them to function without restriction c) make sure all decision are made at the highest level possible d) keep support staff to a minimum e) keep working units small

c) make sure all decision are made at the highest level possible

What group of individuals typically help a firm determine technical efficiency a) accountants b) human resources c) production managers d) lawyers

c) production managers

In any production process the marginal product of an input equals a) total output divided by total input b) total output minus the total capital stock c) the change in total output divided by the change in the input d) total output produced multiplied by the number of inputs

c) the change in total output divided by the change in the input

Dr. Detre operates a tutoring business at LSU. He charges a price of $47 per hour (i.e. marginal revenue). The marginal cost of working the 36th hour each week is $42; the marginal cost of working the 37th hour is $44, of the 38th hour is $46, and of the 39th hour is $48. How many hours should he work each week? a) He should work 36 hrs/week, because the marginal cost of working rises after this point b) He should work 40 hrs/week, because he can always earn more revenue by working more c) He should work 39 hrs/week, because he would have to lower his price if he wanted to work more than that d) He should work 38 hrs/week, because this is the workload that maximizes his net revenue (profit)

d) He should work 38 hrs/week, because this is the workload that maximizes his net revenue (profit)

The contribution per unit is made to a) profits b) paying off fixed costs c) variable cost/unit d) a and b only e) a, b, and c

d) a and b only (a) profits, b) paying off fixed costs)

What are the characteristics of a Limited Liability Company? a) all members may enjoy limited liability b) all members participate freely in management c) individuals are taxed as partners d) all of the above

d) all of the above

If a firm is producing a given level of output in an economically-efficient manner, then it must be the case that a) it is choosing the lowest-cost method of producing that output. b) this output level is the most that can be produced with the given level of inputs. c) each input is producing its maximum marginal product. d) both a and b e) both a and c

d) both a and b (a) it is choosing the lowest-cost method of producing that output, b) this output level is the most that can be produced with the given level of inputs.)

Return increase at an increasing rate, increase at a decreasing rate, reach a maximum, and then decline is the economic principle of a) sustainable competitive advantage b) economies of scale c) economies of scope d) diminishing marginal returns

d) diminishing marginal returns

Corporations a) are easiest to create b) have the most flexibility c) allow management decision to be made by the owner d) have the greatest access to capital

d) have the greatest access to capital

Developing an effective organizational structure is important because it a) determines the firms competitive advantage b) Impacts how investors view the firm c) influences how forecasting is done d) impacts financial and marketing performance

d) impacts financial and marketing performance

General characteristics of a partnership include all but which of the following a) how profits are shared b) how losses are shared c) assets are shared jointly d) multiple business records for each partner

d) multiple business records for each partner

Choosing a legal business structure falls within which function of management? a) directing b) planning c) controlling d) organizing

d) organizing

Economists assume that producers try to maximize a) revenue b) utility c) sales d) profit

d) profit

Which type of legal structure is limited to 75 shareholders? a) C corporations b) limited partnerships c) partnerships d) sole proprietorship e) sub-chapter S corporations

e) sub-chapter S corporations

The contribution margin in break-even analysis is derived by subtracting a) fixed costs from output price b) fixed costs from variable costs c) output price from variable costs d) variable cost per unit from fixed costs e) variable cost per unit from output price

e) variable cost per unit from output price