BEC Trouble Questions
Based on the following data, what is the cost of goods sold for the company? Sales $1M Net purchases of raw mat 600,000 COGM 800,000 Mrkting and admin exp 250,000 Indirect manufacturing costs 500,000 Beg inventory WIP $500,000 FG $100,000 End inventory WIP $ 400,000 FG $ 500,000 A. $400,000 B. $600,000 C. $900,000 D. $200,000
A. $400,000 Why: COGS = COGM + Beg FG - end FG COGS = 800k + 100k - 500k Slow down, don't miss the numbers
The accountant for Champion brake applies overhead based on machine hours. The budgeted overhead and machine hours for the year are $260,000 and 16,000 respectively. The actual overhead and machine hours incurred were $275,000 and 20,000. The cost of goods sold and inventory data compiled for the year is as follows: DM: 50,000 COGS 450,000 WIP (units) 100,000 FG (units) 150,000 What is the amount of over/unapplied overhead for the year? a. $50,000 b. $15,000 c. $65,000 d. $67,000
A. $50,000 Why: charged 275k of actual and applied of $325k ($260k/16k hrs = 16.25/hr -> 20,000 hrs * 16.25 = 325k) 275k - 325k = 50k
Based on the following data, what is the gross profit for the company? Sales: $1M Net purchase of Raw Mat: 600,000 COGM 800,000 Marketing and admin expn 250,000 Indirect manufacturing costs 500,000 Beg inventory: WIP: 500,000 FG: 100,000 End inventory: WIP: 400,000 FG: 500,000 a. $600,000 b. $900,000 c. $200,000 d. $400,000
A. $600,000 Why: Gross profit = sales - cogs needing to solve for COGS 1. Beg FG 100,000 COGM 800,000 End FG -500,000 = COGS of 400,000 2. Sales: 1M less COGS (400k) = 600k
An internet service provider's vision is to provide reliable and consistent network connectivity for all customers. Part of its corporate strategy for achieving that is heavily reliant on all of the following except having: a. A virtual network b. A physical network c. Quick disaster recovery speeds d. All IT personnel on company payroll
A. A virtual network Why: Having a VPN that uses outsourced computing power would not be ideal for an internet service provider. It would remove several layers of control that it otherwise would have if it managed this function on site.
In microeconomics, the distinguishing characteristic of the long run on the supply side is that: a. All inputs are variable b. Only supply factors determine price and output c. Only demand factors determine price and output d. Firms are not allowed to enter or exit the industry.
A. All inputs are variable why: in the long run all supply side inputs are variable.
Which of the following statements is true assuming that demand for a product is price elastic? a. An increase in price will result in a decline in total revenue b. An increase in price will result in an increase in total revenue c. An increase in price will have no effect on total revenue d. An increase in price will result in a decline the quantity demanded that is less than the increase in price.
A. An increase in price will result in a decline in total revenue. why: If demand is price elastic, an increase in price will result in a decline in total revenue. They have a *negative* relationship
Which of the following IT controls would a company appropriately use to mitigate the risk of unauthorized to its payroll data? a. Biometric devices b. Validity checks c. A neural network d. Employee purchase cards
A. Biometric devices why: capture biological data in order to ensure that only authorized individuals can access specific data and systems.
A local food writer is asked by a new restaurant chain to review several menu items after the company's opening night and then write an article for a fee in a popular food periodical. This an example of what type of business model? a. Consumer-to-business b. Consumer-to-consumer c. Business-to-business d. Business-to-consumer
A. Consumer-to-business Why: Even though the business is seeking the individual for services, this would fall w/i the C2B model, because an individual (consumer) is selling services to a business. The distinguishing factor in a C2B model is that the consumer provides the product, service, or overall value to the company.
Which changes in costs are most conducive to switching from a traditional inventory ordering system to a JIT ordering system? a. Cost/PO: Decreasing, Inventory Unit carrying costs: Increasing b. Cost/PO: Increasing, Inventory unit carrying costs: Decreasing c. Cost/PO: Decreasing, Inventory unit carrying costs: Decreasing d. Cost/PO: Increasing, Inventory Unity Carrying Costs: Increasing
A. Cost/PO: Decreasing Inventory Unity Carrying Costs: Increasing Why: JIT is used to lower inventory levels and results in more purchase orders of fewer units each. If Carrying costs are increasing, JIT would be beneficial.
Which of the following information technology (IT) departmental responsibilities should be delegated to separate individuals? a. Data entry and application programming b. Data entry and antivirus management c. Data entry and quality assurance d. Network maintenance and wireless access.
A. Data entry and application programming Why: application programmers should not be allowed to enter data in production systems nor should they have unrestricted and uncontrolled access to application program change management systems. An application programmer is the person responsible for writing or maintaining application programs and should not be responsible for also controlling or handling data.
Which of the following steps is not found in existing product and business process improvements under Six Sigma? a. Design optimization b. Define the problem c. Analyze data d. Control
A. Design optimization Why: design optimization is one of the steps involved in new product or business process development. As this is asking for steps in *existing* product
In a traditional job order cost system, the issue of indirect materials to a production department increases: a. Factory overhead control b. Factory overhead applied c. Stores control d. WIP control
A. Factory overhead control Why: issuing indirect materials would be included in OH, therefore JE would be OH XX Store ctrl XX
The system of user identification and authentication that prevents unauthorized users from gaining access to network resources is called a: a. Firewall b. Network force field c. Login ID and encryption d. Network server
A. Firewall why: a system of user identification and authentication that prevents unauthorized users from gaining access to network resources.
Which of the following costs would decrease if production levels were increased within the relevant range? a. Fixed costs per unit b. Total variable costs c. Total fixed costs d. Variable costs per unit
A. Fixed costs per unit, because since fixed costs in total are constant, increasing production would ultimately lower fixed costs per unit. Also, increasing production would increase not decrease total variable cost. ***VC = Fixed in unit, varies in total FC = fixed in total, varies in unit ***
Which of the following concepts can best be used to understand oligopoly behavior? a. Game theory model b. Herfindahl index c. Concentration ratio d. Interindustry competition
A. Game theory model why: is a study of mathematical models of conflict and cooperation between rational decision makers. There are several versions used to evaluate participant behavior under oligopolies.
Which of the following is *not* a factor that those in charge of IT governance use to create an organization's IT strategy? a. IT support staff b. Regulations c. Corporate strategy d. Vision statement
A. IT support staff Why: IT strategies are not tactical in nature, they are well-thought-out plans. IT support staff are employees who help maintain an IT environment after it has been designed and implemented. They depend on the strategy created, but the strategy itself is not influenced by them.
The discount rate set by the Federal Reserve is the: a. Rate that the central bank charges for loans to commercial banks b. Rate that commercial banks charge for loans to the general public c. Rate that commercial banks charge for loans to each other d. Ratio of a bank's reserves to its demand deposits
A. Rate that the central bank charges for loans to commercial banks why: The discount rate refers to the rate established by the Federal Reserve for short-term (often overnight) loans it makes to member banks
The kinked demand curve is associated with: a. The analysis of oligopoly b. The analysis of monopolistic competition c. The analysis of pure competition d. The analysis of agricultural markets
A. The analysis of oligopoly why: oligopoly market conditions, the other firms in the market will match any price reduction so they do not lose market share but will not match any price increase of an individual firm.
Which of the following statements is correct regarding an economy at the peak of the business cycle? a. The economy will be at the natural rate of unemployment b. Incomes will be stable c. The rate of inflation will decrease d. The economy will be in a static equilibrium
A. The economy will be at the natural rate of unemployment why: At the natural rate, cyclical unemployment is at 0%, which implies that the economy is operating at its highest potential level
What is the primary objective of data security controls? a. To ensure that storage media are subject to authorization prior to access, change, or destruction b. To formalize standards, rules, and procedures to ensure the organization's controls are properly executed. c. To monitor the use of system software to prevent unauthorized access to system software and computer programs d. To establish a framework for controlling the design, security, and use of computer programs throughout an organization.
A. To ensure that storage media are subject to authorization prior to access, change, or destruction why: The objective is to protect information
Which of the following is *not* a characteristic of Total Quality Management (TQM)? a. Waste reduction b. Continuous improvement c. Quality circles d. Customer focus
A. Waste reduction Why: TQM focuses on customer needs, continuous improvement, and quality circles. Waste reduction = lean manufacturing NOT TQM
Kerner Manufacturing uses a process cost system to manufacture laptop computers. The following information summarizes operations relating to laptop computer model #KJK20 during the quarter ending March 31: Units Direct Materials Work-in-process inventory, January 1 100 $50,000 Started during the quarter 500 Completed during the quarter 400 Work-in-process inventory, March 31 200 Costs added during the quarter $720,000 Beginning work-in-process inventory was 50% complete for direct materials. Ending work-in-process inventory was 75% complete for direct materials. What is the total value of material costs in ending work-in-process inventory using the weighted average unit cost inventory valuation method? a. $216,000 b. $210,000 c. $183,000 d. $194,000
B. $210,000 Why: 1st find EU: 550 (Trunpet U) 2nd: Costs of production: Pmonth 50k current month: 720k = 770k 3. CpU: 770k/550 = $1,400 4. use that X the End inventory # $1,400 * 150= 210,000
A cost driver is defined as: a. An indirect cost that cannot be traced to a particular cost objective but is essential to a business b. A causal factor that increases the total cost of a cost objective c. The largest cost in a manufacturing process d. The significant factor in the development of a new product.
B. A causal factor that increases the total cost of a cost objective Why: A cost factor has a direct impact on the cost of that product (cause and effect instance)
An accounting information system (AIS) is distinguished from a management information system (MIS) by the fact that: a. An AIS is control-oriented while MIS is used exclusively for planning b. An AIS is a subsystem within an MIS c. An AIS deals with financial information while an MIS handles all other information d. Information produced by an AIS is used only by financial people while information produced by an MIS is used throughout the organization.
B. An AIS is a subsystem within an MIS
Which one of the following best describes direct labor? a. A product cost b. Both a product cost and a prime cost c. Both a period cost and a prime cost d. A prime cost
B. Both a product cost and a prime cost, because direct labor is both a prime cost and a conversion cost therefore product and prime would encompass both aspects. (Product costs = DM, DL, and MOH)
At the peak of a business cycle, which of the following conditions is most true? a. Output (GDP) tends to be below the potential level of output b. Capacity constraints and labor shortages are likely to put upward pressure on the overall price level c. There is likely to be an excess supply of labor and business inventories are likely to be high d. The overall price level is likely to be falling
B. Capacity constraints and labor shortages are likely to put upward pressure on the overall price level. why: The peak marks the highest point of economic activity. Firms usually face capacity constraints and labor shortages, which will put upward pressure on the overall price level.
A company switches all processing to an alternative site, and staff members report to the alternative site to verify that they are able to connect to all major systems and perform all core business processes from the alternative site. Which of the following best identifies the activities performed by the staff? a. Segregation control testing b. Disaster recovery planning c. Authentication validation d. Closed loop verification
B. Disaster recovery planning why: involves a company ensuring that it is able to restore and continue its operations in the event that its computing systems are shut down or destroyed.
Which of the following is not typically a function of the information systems steering committee? a. Ensuring top-management participation, guidance, and control b. frequently communication with users and holding regular meetings to consider ideas and discuss progress so there are no surprises at project completion c. Facilitating coordination and integration of info systems activities to increase goal congruence and reduce goal conflict. d. Setting governing policies for the various info systems within the company.
B. Frequently communicating with users and holding regular meetings to consider ideas and discuss progress so there are no surprises at project completion. Why: The project development team, not the IS steering committee, is responsible for frequently communicating and working with users during the systems design process.
An increase in the personal income tax will tend to cause: a. GDP to rise and unemployment to rise b. GDP to fall and unemployment to rise c. GDP to rise and unemployment to fall d. GDP to fall and unemployment to fall
B. GDP to fall and unemployment to rise why: It will take money out of the hands of consumers and lead to a reduction in economic activity
Which of the following is an essential detective element of any IT control system for a management information system (MIS)? a. Segregation of duties b. Incident alert reporting c. Firewalls d. Scheduled system upgrades
B. Incident alert reporting why: A detective control is the mechanism that reveals issues that are not averted by preventative controls. Incident alert reporting is detective because it generates reports or alerts if there is a failed transaction or if other predefined criteria are met.
In a large multinational organization, which of the following job responsibilities should be assigned to the network administrator? a. Installing operating system upgrades b. Managing remote access c. Developing application programs d. Reviewing security policy
B. Managing remote access why: since it is large and multinational a network admin wouldn't perform any of these other functions.
In order to sell at the rate of output in markets controlled by monopolists, price is set where: a. Marginal revenue equals average total cost b. Marginal revenue equals marginal cost c. Price equals average total cost d. Price equals marginal cost
B. Marginal revenue equals marginal cost why: In order to sell at the rate of output in markets controlled by monopolists, the price is set where marginal revenue equals marginal cost. The monopolist's price will be higher than MR resulting in large profits.
Costs are allocated to cost objectives in many ways and for many reasons. Which one of the following is a purpose of cost allocation? a. Aiding in variable costing for internal reporting b. Measuring income and assets for external reporting c. Implementing activity-based costing. d. Evaluating revenue center performance
B. Measuring income and assets for external reporting Why: Allocation of costs helps in determining OH, therefore, it gives a more accurate depiction of assets for financial reporting. Not talking about cost drivers here - this is describing the standard or typical allocation of overhead.
Huron Industries has recently developed two new products, a cleaning unit for laser discs and a tape duplicator for reproducing movies taken with a video camera. However, Huron has only enough plant capacity to introduce one of these products during the current year. The Company controller has gathered the following data to assist management in deciding which product should be selected for production. Huron's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to products. Tape Duplicator Raw Mat - $44 Machining @ $12/hr - $18 Assembly @ $10/hr - $30 Variable Overhead @ $8/hr. - $36 Fixed Overhead @ $4/hr - 18 Cleaning unit Raw Mat - 36 Machining @ $12/hr - $15 Assembly @ $10/hr - 10 Variable Overhead @ $8/hr. - 18 Fixed Overhead @ $4/hr - 9 The total overhead cost of $27.00 for Huron's laser disc cleaning unit is a: a. carrying cost b. mixed cost c. sunk cost d. committed cost
B. Mixed cost, because it includes both fixed and variable components.
The federal reserve wishes to conduct expansionary monetary policy. Which of the following policy approaches will be most successful? a. Sell government securities and lower the discount rate b. Purchase government securities and lower the discount rate c. Sell government securities and raise the required reserve ratio d. Purchase government securities and raise the required reserve ratio
B. Purchase government securities and lower the discount rate why: for expansionary monetary policy, the Fed would purchase government securities, lower the discount rate, and/or lower the reserve requirement.
If a product has a price elasticity of demand of 2.0, the demand is said to be: a. Perfectly elastic b. Relatively elastic c. Perfectly inelastic d. Relatively inelastic
B. Relatively elastic why: means demand will change by 2x (as a percentage) for any change in price. AKA elastic.
Which of the following statements presents an example of a general control for a computerized system? a. Creating hash total from social security numbers for the weekly payroll b. Restricting access to the computer center by use of biometric devices c. Restricting entry of accounts payable transactions to only authorized users d. Limiting entry of sales transactions to only valid credit customers
B. Restricting access to the computer center by use of biometric devices why: use of biometric devices represents a general control. General controls are designed to ensure that an organization's control environment is stable and well managed
Which of the following statements regarding a computer network is incorrect? a. Routers assign IP addresses b. Servers act as an intermediary among different networks c. Gateways convert protocols to communicate with other network devices d. Switches can divide one connection into multiple connections
B. Servers act as an intermediary among different networks Why: servers aren't an intermediary - gateways are. servers provide computing power for other machines on the network
Which of the following is *not* a feature of a firm operating in a monopolistic competition environment? a. The firm faces few barriers to entry b. The firm faces a downward sloping and fairly inelastic demand curve c. The firm is able to influence prices d. Other companies produce similar products
B. The firm faces a downward sloping and fairly inelastic demand curve
Organizations with one-piece flow manufacturing environments that are experiencing bottlenecks in production are most likely to develop strategies associated with: a. Lean manufacturing b. Theory of constraints c. Demand flow manufacturing d. Just-in-time management
B. Theory of Constraints Why: ToC says that organizations are impeded from achieving objectives by the existence of one or more constraints. Organizations or projects must be operated in a manner that either works around or leverages the constraint - in this case, the bottleneck.
The following information pertains to Lap Co.'s Palo Division for the month of April: # of units: BWIP 15,000 Started in April 40,000 Units completed 42,500 EWIP 12,500 Cost of Materials: BWIP $5,500 Started in April $18,000 All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for materials is: a. $.59 b. $.43 c. $.45 d. $.55
B.$.43 Why: Cost per EU for materials is: (Beg cost + Current cost) / Equivalent units of production (5,500 + 18,000) / 55,000 = .43
A company uses a process costing system to record inventory costs. Data at the end of the month are as follows: *Units*: WIP: 100 FG: 900 *DM % complete*: WIP: 100% FG: 100% *Conversion costs % complete*: WIP: 80% FG: 100% The company uses the weighted average method to compute the costs. Its total costs for the month are $10,000 for DM and $19,600 for conversion. What is the total conversion cost per equivalent unit? a. $19.60 b.$24.50 c. $20 d. $30
C. $20 Why: End of month units: 80% (100*.8) 80 FG units 900 total units 980 Costs: $19,600/980 = $20
A company that produces a signle product using a continuous process had no wip on april 1. During the month of april, 10,000 units were started and 9,000 complete units were transferred. The ending wip was complete as to mat and 50% complete as to conversion. The cost of DM was $114,000 and the cost of direct labor amounted to $38,000. MOH is assigned the rate of 50% of DM. For the purpose of determining the cost of goods manufactured in april, what is the cost per equivalent whole unit? a. $23.22 b. $20.90 c. $21.40 d. $15.40
C. $21.40 Why: EU = $114,000 / 10,000 = $11.40 for materials = ($38,000 + $57,000) = 95,000 / 9,500 = 10 11.40 + 10 = 21.40
A company wants to protect its IT systems from unauthorized users accessing the system. Which of the following controls would best serve to mitigate the risk? a. A transaction log b. Public key encryption c. A biometric device d. A keystroke log
C. A biometric device Why: uses characteristics such as voice recognition or fingerprints to identify and authenticate an individual. It would be the best since voices and fingerprints are unique.
Companies that adopt just-in-time purchasing systems often experience: a. Less need for linkage with a vendor's computerized order entry system b. A greater need for inspection of goods as the goods arrive. c. A reduction in the number of suppliers d. Fewer deliveries from supplies
C. A reduction in the number of suppliers Why: JIT usually results in a reduction in the # of suppliers. JIT companies are extremely dependent on supplier performance, typically fewer suppliers are used and a very close working relationship is developed w/ existing suppliers.
An advertisement in a local newspaper stated that a local business required "someone who can get our new off-the-shelf production software to do what we want it to do so we can get on with running our business". What type of computer professional is this business looking to recruit? a. An IT supervisor b. A computer programmer c. A systems analyst d. A network administrator
C. A systems analyst why: would take on the role of learning a purchased package and would have the job of integrating it into any existing software.
Cost drivers are: a. Accounting measurements used to evaluate whether or not performance is proceeding according to plan. b. A mechanical basis, such as machine hours, computer time, size of equipment, or square footage of factory, used to assign to activities. c. Activities that cause costs to increase as the activity increases. d. Costs linked to two or more other costs
C. Activities that cause costs to increase as the activity increases why: Associate cost drivers with cause and effect, also, the cost driver is often non-financial
Which of the following statements is true assuming that demand for a product is price inelastic? a. An increase in price will result in an increase the quantity demanded that is more than the increase in price. b. An increase in price will result in a decrease in total revenue c. An increase in price will result in an increase in total revenue d. An increase in price will have no effect on total revenue
C. An increase in price will result in an increase in total revenue. why: If demand is price inelastic, an increase in price will result in an increase in total revenue (*positive* relationship)
What is a major disadvantage to using symmetric encryption to encrypt data? a. The private key is used by the sender for encryption but not by the receiver for decryption. b. The private key is used by the receiver for decryption but not by the sender for encryption. c. Both sender and receiver must have the private key before this encryption method will work d. The private key cannot be broken into fragments and distributed to the receiver.
C. Both sender and receiver must have the private key before this encryption method will work why: both parties use the same key to encrypt and decrypt the message so that the key must be shared. This would require a unique private key for each entity with which one wanted to share encrypted data
To maintain effective segregation of duties within the information technology function, an application programmer should have which of the following responsibilities? a. Correct detected data entry errors for the cash disbursement system b. Modify and adapt operating system software c. Code approved changes to a payroll program d. Maintain custody of the billing program code and its documentation
C. Code approved changes to a payroll system why: a payroll program is an application program. Note that the changes have been previously "approved"
Which of the following types of business planning focuses on how a company can most effectively restore business operations following a disaster? a. Strategy planning b. Budget planning c. Continuity planning d. Capacity planning
C. Continuity planning Why: focuses on restoring and continuing operations in the event a disaster occurs that affects an organization.
A company began issuing handheld devices to key executives. Each of the following factors is a reason for requiring changes to the security policy, *except*: a. Portability of the device b. Vulnerability c. Convenience of the device d. Storage of sensitive data
C. Convenience of the device why: convenience is a benefit, rather than a reason for requiring a change to a security policy.
Which of the following is one of the seven critical factors identified by total quality management (TQM)? a. Waste reduction b. Internal constraints c. Customer focus d. Continuous improvement (Kaizen)
C. Customer focus Why: TQM is characterized by the recognition that each function of the corporation exists to satisfy the customer.
All of the following are different types of reporting risk than an accountant must recognize as threats to accuracy of reports, *except*: a. Financial risk b. Information risk c. Data integrity risk d. Strategic risk
C. Data integrity risk why: There is no separate data integrity risk category
An increase in the quantity demanded for a product would be associated with a(n): a. Increase in the price of a complementary product b. Increase in average household income c. Decrease in the price of that product d. Decrease in the price of a substitute product
C. Decrease in the price of that product why: The fundamental law of demand holds that there is an inverse relationship b/t price of the product and quantity demanded.
What should a company do when seeking competitive advantages in planning for the implementation of a new software system? a. Design the software to fit the existing processes b. Allow management to dictate processes c. Design an optimal process and then align software d. Direct manpower to the non-bottleneck process areas.
C. Design an optimal process and then align the software Why: implementation is often a great opportunity to not only assess the software's capabilities but also to revisit and ultimately optimize processes in order to align them with the software.
The concept of timeliness of data availability is most relevant to: a. Risk management b. Data analytics c. IT governance d. Process management
C. IT Governance Why: depicts the way an organization achieves its mission-critical goals using IT strategies, processes, and resources. Governance focuses on the effective management of data and is ultimately the responsibility of management and the BOD.
Which one of the following statements about supply and demand is true? a. If demand increases and supply increases, equilibrium quantity will fall b. If supply increases and demand remains constant, equilibrium price will rise. c. If demand increases and supply decreases, equilibrium price will increase. d. If demand increases and supply remains constant, equilibrium price will fall
C. If demand increases and supply decreases, equilibrium price will increase. why: If quantity demanded for a product goes up, this drives price up. Additionally, if supply decreases, this will also drive prices up. If price is driven up, given an increase in demand and a decrease in supply.
Which of the following uses analysis of production processes to ensure that resource uses stay within target costs? a. Activity-based costing b. Value chain analysis c. Kaizen d. Just-in-time (JIT)
C. Kaizen Why: Kaizen = continuous improvement - occurs when the ongoing search for cost reduction takes the form of analysis of production processes to ensure that resource uses stay w/i target costs.
In an e-commerce environment that requires that the information technology (IT) system be available on a continuous basis, more emphasis will be placed on which of the following aspects of the planning than in a traditional organization? a. Assure that appropriate data backups are stored in an off-site location b. Review additional expenses to obtain the required amount of business interruption insurance coverage for the organization c. Maintain redundant systems for instant availability to assure the flow of transactions d. Maintain an appropriate written source documents so that data can be re-entered if it is lost or compromised.
C. Maintain redundant systems for instant availability to assure the flow of transactions. Why: e-commerce environments are more highly dependent upon robust communication systems than traditional organizations to ensure continuous service. Maintenance of redundant systems for instant availability to assure the flow of transactions would require more emphasis in an e-commerce environment than a traditional organization.
During the risk assessment process, information resources are categorized by the impact to the day-to-day operations of an organization. If the organization could work around the loss of an information resource for days or perhaps a week, but eventual restoration of the resource must occur, this would imply that the information resource should be categorized as: a. High impact (H) b. Low impact (L) c. Medium impact (M) d. No impact (N)
C. Medium impact (M) Why: An info resource should be considered medium impact if the work-around for its loss is ST, but recovery is considered necessary for LT operations.
Which of the following is true regarding Public Key Infrastructure (PKI)? a. PKI assumes asymmetric encryption to create legally-binding electronic documents b. PKI is intended for e-business use and is typically available through commercial certificate authorities c. PKI refers to the system and processes used to issue and manage asymmetric keys and digital certificates d. PKI includes a "tree of trust" that's checked each time a certificate is presented as proof of one's identity
C. PKI refers to the system and processes used to issue and manage asymmetric keys and digital certificates why: represents the mechanisms used to issue keys and digital certificates.
Which of the following are network devices that assign IP addresses? a. Servers b. Gateways c. Routers d. Switches
C. Routers Why: Routers are hardware pieces that manage network traffic by reading source and destination fields w/i information packets to determine the proper path for a data packet to flow. Part of a router's job in network management involves assigning IP addresses to different devices.
Which one of the following is not a requirement of just-in-time systems? a. Employee empowerment b. Supplies received as needed throughout the day c. Strong job specialization d. Reduced setup time
C. Strong job specialization Why: JIT means that employees with multiple skills are used more efficiently and will not specialize in merely one job or task.
An organization houses its network servers at a facility within a known floodplain. It decided to raise the floors in the room where the network servers reside to avoid flood damage. This is an example of what type of control? a. Logical access control b. Physical access control c. System availability control d. Data encryption control
C. System availability control why: The potential for flooding is high in this situation, it poses a risk that the company's servers could be impacted, causing a system outage. Such controls ensure that networks that are heavily relied upon by users are not disrupted due to physical damage from natural disasters, national security incidents, etc.
Which of the following individuals or groups within an organization reviews and approves long-range plans and oversees its information systems? a. Project development team b. Database administrator c. Systems steering committee d. Systems analyst
C. Systems steering committee Why: responsible for the oversight of the info system function. Has a more holistic view than the project development team and is able to review and approve plans to align with strategic goals.
In order to increase the profit margin for a certain product, a company is planning to purchase a custom-made machine for $5M. It is anticipated that the introduction of the new machine will reduce the product's variable costs of labor and maintenance by $5.50 per unit and $.95 per unit, respectively. The product manager estimates that 500,000 units of the product lifecycle of two years, at which time the machine will be discarded with no sal val. What is the company's total cost savings over the product's life cycle? a. $725,000 b. $6,450,000 c. $3,225,000 d. $1,450,000
D. $1,450,000 Why: = # of units sold X (Savings per unit) X 2 years = (500k U * (5.50+.95) ) * 2 yrs = $6,450,000 $5M (amt purchased) (6.450M) Amt potentially saved ----------- $1.450M
Fab Co. manufactures textiles. Among Fab's yr 1 manufacturing costs were the following salaries and wages: Loom operators $120,000 Factory foremen $ 45,000 Machine mechanics $30,000 What was the amount of Fab's yr 1 direct labor? a. $150,000 b. $195,000 c.$165,000 d. $120,000
D. $120,000 Why: Slow down and read the question The co is a textile company therefore loom operators are directly involved in the process, whereas mechanic and foreman would be supporting roles.
Alex company had the following inventories at the beginning and end of the month of Jan. 1/1: Finished good 125,000 WIP 235,000 DM 134,000 1/31: Finished good 117,000 WIP 251,000 DM 124,000 The following additional manufacturing data was available for the month of Jan. DM purchased 189,000 Purchase returns/allowances 1,000 Transportation in 3,000 DL 300,000 Actual factory overhead 175,000 Alex company applies factory overhead at a rate of 60% of DL cost and any overapplied or underapplied factory overhead is deferred until the end of the year, Dec 31. Alex company's prime cost for Jan was: a. $499,000 b. $489,000 c. $201,000 d. $501,000
D. $501,000 Why: Step 1: Find DM used B 134,000 A 189,000 A 3000 S 326,000 S 1,000 DM available 325k End (124,000) Used = 201,000 Step 2: Find prime cost PC = DM used + DL = 201k + 300k = 501k
A company is conducting a risk analysis on a project. One task has a risk probability estimated to be .15. The task has a budget of $35,000. If the risk occurs, it will cost $6,000 to correct the problem caused by the risk event. What is the expected monetary value of the risk event? a. $5,250 b. $4,350 c. $6,150 d. $900
D. $900 why: The risk event has a low likelihood of occurrence, at an estimated 15% and an 85% chance of not occurring. Risk event is $6,000. (15% * 6,000) * 85% * $0 = $900
During May, Mercer company completed 50,000 units costing $600,000, exclusive of spoilage allocation. Of these completed units, 25,000 were sold during the month. An additional 10,000 units, costing $80,000 were 50% complete at May 31. All units are inspected between the completion of manufacturing and transfer to finished goods inventory. Normal spoilage for the month was $20,000, and abnormal spoilage of $50,000 was also incurred during the month. The portion of total spoilage that should be charged against revenue in May is: a. $20,000 b. $50,000 c. $70,000 d. $60,000
D. 60,000 Why: Normal spoilage = $20,000 x 50% sold = 10,000 + all of abnormal (50,000) = 60,000
Which of the following is the most likely result of imposing tariffs to increase domestic employment? a. A decrease in the tariff rates of foreign nations b. A short-run increase in domestic employment in import industries from export industries c. A decrease in consumer prices in the domestic market d. A long-run reallocation of workers from export industries to protected domestic industries
D. A long-run reallocation of workers from export industries to protected domestic industries why: Tariff = tax imposed on imported goods and services. Taxes have a negative effect on international business, thereby increasing domestic business. Workers will be needed to meet the demand domestically.
Which of the following spreadsheets most likely has the highest risk of data integrity errors? a. A spreadsheet that displays imported comma-delimited text files from the check payment module and is reviewed by the accounts payable administrator. b. A spreadsheet the CFO uses that is directly linked to the company's accounting system database c. A spreadsheet that captures time and attendance transactions from an automated time clock system. d. A spreadsheet into which the controller enters summary daily sales data from a printed report of an automated accounting system.
D. A spreadsheet into which the controller enter summary daily sales data from a printed report of an automated accounting system. why: spreadsheets with manual inputs carry a higher risk of errors than those with automated processes.
An organization is conducting a Beta test with its top customer. The developer will not be present during the test, and the customer gets to test the software at its own site. What type of test is this? a. Unit test b. Validation test c. Integration test d. Acceptance test
D. Acceptance test Why: ensures that the software works correctly for the intended user in their normal work environment
Which of the following definitions best describes a business cycle? a. Activity where GDP declines, inflation moderates, and unemployment increases b. Activity marked by a relatively high level of GDP, full employment, and inflation c. Activity where the decline in the economy's real gross domestic product (GDP) persists for at least half-a-year. d. Activity that alternates periods of growth and decline in an economy's GDP.
D. Activity that alternates periods of growth and decline in an economy's GDP why: Business cycle represent the rise and fall of economic activity relative to long-term growth trends. Business cycles show GDP rising and falling over time.
Information regarding four aluminum manufacturers is as follows: Alpha: Avg production cost: 60 Mill price to domestic: 56 Mill price to foreign: 59 Spot alumin. price: 56 Brighton: Avg production cost: 54 Mill price to domestic: 49 Mill price to foreign: 57 Spot alumin. price: 56 Cobalt: Avg production cost: 53 Mill price to domestic: 54 Mill price to foreign: 55 Spot alum. price: 56 Driftwood: Avg production cost: 52 Mill price to domestic: 49 Mill price to foreign: 55 Spot alum. Price: 56 According to international law, which of the following aluminum producers is dumping? a. Driftwood b. Brighton c. Cobalt d. Alpha
D. Alpha why: Dumping = when the price charged to foreign customers on exported goods is less than either the price charged in the domestic market or less than the production cost. Alpha - Price to foreign customers is $59, which is less than the production costs of $60.
Which of the following terms refers to a site that has been identified and maintained by the organization as a data processing disaster recovery site but has *not* been stoked with equipment? a. Flying start b. Hot c. Warm d. Cold
D. Cold Why: cold site is an off-site location that has all the electrical connections and other physical requirements for data processing, but does not have the actual equipment
Which of the following economic terms describes a general decline in prices for goods and services? a. Recession b. Expansion c. Inflation d. Deflation
D. Deflation why: defined as a sustained decrease in the general prices of goods and services. Occurs when prices on average are falling over time.
Which one of the following is *not* a key assumption of perfect competition? a. The level of a firm's output is small relative to the industry's total output. b. There is freedom of entry into and exit out of the industry c. Customers are indifferent about which firm they buy from d. Each firm can price its product above the industry price.
D. Each firm can price its product above the industry price why: key assumptions of perfect competition include: - Customers are indifferent about which firm they buy from - The level of a firm's output is small relative to the industry's total output - There is freedom of entry into and exit out of the industry
A natural monopoly exists because: a. Other firms are unable to enter the industry b. The firm owns natural resources c. The government is the only supplier d. Economic and technical conditions permit only one efficient supplier.
D. Economic and technical conditions permit only one efficient supplier why: A natural monopoly exists when economic and technical conditions permit only one efficient supplier.
The benefits of a just-in-time system for raw materials usually include: a. Decrease in the number of deliveries required to maintain production b. Increase in the number of suppliers, thereby ensuring competitive bidding c. Maximization of the standard delivery quantity, thereby lessening the paperwork for each delivery d. Elimination of non-value-adding operations
D. Elimination of non-value-adding operations -Why: Focuses on expediting the production process by having materials available as needed w/o having to store them prior to usage. Those not required immediately are eliminated.
A large organization uses batch processing to process sales transactions. The system sorts sales transactions by customer number and performs edit checks when preparing invoices, processing payment information, recording journal entries, and updating customer account balances. Which of the following reports should be analyzed most frequently to ensure correct customer balances? a. A report on the sales-price master file b. An accounts receivable aging report c. A cash reconciliation report d. Exception reports with control totals
D. Exception reports with control totals why: designed to capture the difference between actual results and expected results. It would help a company identify where there may be discrepancies in customer account balances to ensure that sales totals by customers are correct.
An organization is in the process of aligning its corporate strategy with its vision and IT strategy. Which of the following accurately describes the responsibility of those involved in this process and in proper IT governance? a. Middle management creates the corporate strategy b. The board of directors enforces all governance policies c. IT support staff creates the IT strategy d. Executive management structures IT governance controls.
D. Executive management structures IT governance controls Why: administering effective IT governance requires input from various stakeholders both internal and external to an organization. BOD holds responsibility for all governance process and appoints executives to ensure the proper structures are in place to meet governance standards. Executive management is primarily concerned with making sure the IT governance structure is in place and is executed.
When markets are perfectly competitive, consumers: a. Must choose the brands they buy solely on the basis of informational advertising b. Do not receive any consumer surplus unless producers choose to overproduce c. Must search for the lowest price for the products they buy d. Have goods and services produced at the lowest cost in the long run
D. Have goods and services produced at the lowest cost in the long run why: Since price is barely sufficient to give a firm a normal profit and stay in business, the consumer obtains the product at as low a price as is economically feasible.
During which of the following periods will prices generally increase the fastest? a. Recession b. Inflation c. Deflation d. Hyperinflation
D. Hyperinflation why: defined as an increase in prices over time, and hyperinflation occurs when a country sees very high price level increases.
Hidelt Company uses data encryption for certain key data in its application systems. Which of the following statements is correct with respect to data encryption? a. Data encryption is based on the concept of keys. With data encryption, the sophistication of the encryption algorithm is important and the length of the key is not significant. b. Symmetric encryption techniques are much more computationally intensive than asymmetric encryption techniques. c. In asymmetric encryption, a public key is used to encrypt messages. The same public key is transmitted along with the message and is used to decrypt the message at the other end. d. In asymmetric encryption, a public key is used to encrypt messages. A private key is normally used to decrypt the message at the other end.
D. In asymmetric encryption, a pubic key is used to encrypt messages. A private key is normally used to decrypt the message at the other end.
Which of the following statements regarding inflation is correct? a. Demand-pull inflation can be caused by tax increases b. Companies and individuals with fixed interest debt will be at a disadvantage during period of inflation. c. Cost-push inflation can be caused by a decrease in nominal wages d. Individuals holding monetary assets will be at a disadvantage during periods of inflation
D. Individuals holding monetary assets will be at a disadvantage during periods of inflation why: holding monetary assets will cause an individual to lose purchasing power, and thus be at a disadvantage.
Which one of the following statements about an executive information system (EIS) is incorrect? The EIS: a. Is designed to accept data from many different sources; to combine, integrate, and summarize the data; and to display this data in a format that is easy to understand and use. b. Helps executives monitor business conditions in general and assists in strategic planning to control and operate the company. c. Provides top executives with immediate and easy access to information in a highly interactive format d. Is likely to be one of the most widely used and the largest of the information subsystems in a business.
D. Is likely to be one of the most widely used and the largest of the information subsystems in a business. Why: it is utilized by senior management. It's tailored to the needs of top management and only used by a select few individuals. It would not be widely used throughout an organization and would likely be one of the smallest subsystems in terms of usage.
In an ETL process, if a user must use advanced data mining software and time-intensive queries to obtain information, then that user is performing a: a. Manual transformation b. Manual data load c. Manual validation d. Manual extraction
D. Manual extraction Why: ETL = extract, transfer, and load. It involves capturing info from its source and transferring it into the custody of another source. Info must first be requested before it can be transferred and then loaded into its final destination.
Which of the following is usually a benefit of using electronic funds transfer for international cash transactions? a. Off-site storage of source documents for cash transactions b. Improvement of the audit trail for cash receipts and disbursements c. Creation of self-monitoring access controls d. Reduction of the frequency of data entry errors
D. Reduction of the frequency of data entry errors Why: EFTs reduce the need for manual data entry, this reduces the occurrence of data entry errors.
Entry into monopolistic competition is: a. Difficult, with significant obstacles b. Frequent, as no obstacles exist c. Rare, as significant capital is required d. Relatively easy, with only a few obstacles
D. Relatively easy, with only a few obstacles why: Characteristics - Numerous firms with differentiated products - Ease of entry - few barriers - Firms exact some influence over price and market - Non-price competition is frequent and critical
Which type of system test would best validate the logical reasoning of the system? a. Stress test b. Security test c. Regression test d. Sanity test
D. Sanity test Why: it gauges whether the system behaves as it was designed, verifying that the design parameters align with all intended use cases for the system. It would reveal abnormalities or outcomes that are illogical based on the system input and expected output.
The demand curve for a product reflects which of the following? a. The impact of prices on the amount of product offered. b. The impact that price has on the purchase amount of two related products. c. The willingness of producers to offer a product at alternative prices. d. The impact that price has on the amount of a product purchased.
D. The impact that price has on the amount of a product purchased. why: illustrates the maximum quantity of a specific good that consumers are willing and able to purchase at each and every price. The demand curve reflects the impact that price has on the amount of a product purchased.
Which of the following describes the primary purpose of a disaster recovery plan? a. To test how well prepared the company is to recover data b. To document how data will be backed to expedite recovery c. To document the location of off-site replacement facilities d. To specify the steps required to resume operations
D. To specify the steps required to resume operations why: Company must have plans in place to restore and continue operations in the event that programs and/or files are destroyed.
Which of the following is not a benefit of the implementation of the Just-in-time management strategy? a. Quality improvement b. Cost reduction c. Work-in-process (WIP) d. Variability increase
D. Variability increase Why: JIT is not designed to produce variability, but to accommodate production cycles and reduce carried inventory by delivering goods to JIT.
An organization has decided to analyze social media postings concerning the industry in which it operates. The resulting data include text, numbers, images, and videos. Which category of Big Data best describes these items? a. Veracity b. Velocity c. Volume d. Variety
D. Variety Why: refers to the different types of data that are involved in the analysis. Since there's many different types of data, variety is the best choice.
Which of the following is *not* supporting documentation for an organization's IT security policy? a. Protocols for IT processes b. Industry regulations c. Performance standards for IT assets d. Vision statement
D. Vision Statement Why: security policy outlines how an organization will protect its tangible and intangible IT assets. A vision statement is a stand-alone statement, not a part of a company's IT-specific security
An oligopolist faces a "kinked" demand curve. This terminology indicates that: a. An oligopolist faces a non-linear demand for its product, and price changes will have little effect on demand for that product. b. An oligopolist can sell its product at any price, but after the "saturation point" another oligopolist will lower its price and therefore shift the demand curve to the left. c. An oligopolist is similar to a monopolist, and as the quantity demanded for its product increases, the demand curve for that firm shifts to the right. d. When an oligopolist lowers its price, the other firms in the oligopoly will match the price reduction, but if the oligopolist raises its price, the other firms will ignore the price change.
D. When an oligopolist lowers its price, the other firms in the oligopoly will match the price reduction, but if the oligopolist raises its price, the other firms will ignore the price change. Why: Others match price cuts, but ignore price increases. The "kink" is at the prevailing price.
When implementing or developing a new software system, the first job role to start the process is most likely which of the following? a. Software programmer b. Hardware technician c. Systems analyst d. Network administrator
c. Systems analyst why: several job roles involved in the creation and implementation of software systems, each with different yet important separate functions. Systems analyst is responsible for determining user needs and designing software to meet those needs. It is most likely the first job role to begin the software development and implementation process
The maximization of throughput is an inherent concept in which of the following management philosophies? a. Activity-based Costing b. Six sigma c. Theory of constraints d. Total quality management (TQM)
c. Theory of Constraints Why: ToC is concerned with maximizing throughput by identifying and alleviating constraints.