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

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.

Cog is effective but less efficient than Gear.

Gear is effective and more efficient then Cog.

Gear is effective but less efficient than Cog.

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.