Question 1 of 20 Jump to Questio The accounts payable entry on the company's balance sheet represents the amounts due for interest on loan outstancling that becomes due in the first quarter of the upcoming year, the amounts due to production workers for incentive bonuses: the amounts the company owes for footwear currently being held in inventory. © 25% of the year’s materials costs incurred in making branded and private-label footwear that are owed to suppliers and that willbe paid for in the frst quarter of the upcoming year (payments for materials delivered by suppliers are not due and payable for 90 days following celivery), the amounts due for income taxes on prior-year profits and the amounts due shareholders for dividends declared the prior-year and payable in the current year,Question 2 of 20 Jump to Question As is explained on both the Help screens for the Branded Sales Report and the Private-Label Sales Report, when exchange rate shifts result in a stronger US$ and a weaker euro, then the euros collected on footwear sales in Europe-Africa, when converted into US$, result in © foreign exchange losses that have the effect of reducing company revenues and profits, © foreign exchange gains thathave the effect of reducing company revenues and profits, O None of the above is accurate, © foreign exchange lasses that have the effect of enhancing company revenues and profits, O foreign exchange gains that have the effect of enhancing company revenues and profits,Question 3 of 20 891011 121314 15 1617 18 1920 Jump to Questior Which one of the following actions is nat an option for trying to lower production costs per branded pair at one of your company's plants? © Reducing the number of branded models/styles pracuced from $50 to 250 “O Reducing the use of superior materials © Installing plant upgrade option & “© Increased spending for new styling and features Reducing expenditures for TOM/Stx Sigma quality controlGiven the following Year 127 Financial Statement data for = footwear company Income Statement Data Net Revenues from Footwear Sales ‘Operating Profit (Less) Met Prafit (oes) Balance Sheet Data Cath on Hand Total Curent Assets Total Assets ‘Overdraft Laan Payable 1-Year Bank Loan Payable ‘Current Portion of Lang-term Laans Tatal Cunant Liabilities Long-Term Bank Loans Gutstanding Shareholder Equity: Corman Stack Additional Capital Retained Eamings Total Shareholder Equity Year 14 Year 12 Balance Change Year 12 o00:) ¥ 300,000. 70,000 ¥ 42,000 10,000 $70,000 300,000 5,000 10,000 47,000 48,000 72,000 10,000 108,000, 62,000 120,000 Based on the abowe Figures and the Formula for calculating retum en average equity Found on p. 20 of the Player's Guide, the company’s Return on Average Equity (the defintion of ROE used in scoring company performance) in Year 12 0 24.036. Mane of thane = 28.456. © 25.636. 9 23.396.Question 5 of 20 Jump to Question; 123456799 10 11 12 13 14 15 16 d7 18 19 20 IF a company wants to enhance the profitability of differentiating its branded product offering from rivals by offering say 500 models, then it should seek to reduce the costs associated with producing 500 models at its plants by © instituting plant upgrade option & at each of the company’s plants, 50 as to conserve on expenditures far TOMJSix Sigma programs. instituting plant upgrade option Cand not hawing nore than 2 plants. ‘Oinstituting plant upgrade option B and perhaps consolidating the production of branded Footwear in just one plant (to only incur the payment of production run setup costs one time). instituting plant upgrade option Band building plants in all Four geographic regions. Oinstituting plant upgrade option CQuestion 6 of 20 Jump to Question: 123456 784 10 11 12 13 1415 16 17 16 19 20 prew next || End Review Assume a company's Income Statement for Year 12 is as Follows: Year 12 Income Statement Data Cin Ooo) Met Rewenues From Footwear Sales # 330,000 Cost of Pairs Sold 240,000 Warehouse Expenses 15,000 Marketing Expenses 35,000 Administrative Expenses 3,000 Operating Profit (Loss) 32.000 Interest Income (expenses) (10,0003, Pre-tax Profit (Loss) 22.000 Income Taxes 5.600 Met Profit (Loss) ¥ 15.400 Bazed on the above data, which of the following statements is False? © Administrative expenses are 2.496 of net revenues. © Interest expenses are 2.896 of net revenues. © Warehouse expenses are 4.596 of net revenues, © Marketing costs are 10.696 of net revenues. © Cost of pairs sold are 72.796 of net revenues,Question 7 of 20 Given the following ‘Tear 12 balance sheet data for = footwear company: Balance Sheet Data Cash on Hand 5,000 Total Curent Assets $ 70,000 Total Assets 200,000 Gverdraft Loan Payable 3,000 1-Year Bank Loan Payable 15,000 (Current Portion of Long-Term Loans 20,000 Total Current Liabilities 55,000 Long-Term Bank Leans Outstanding 100,000 Sharshelder Equity: Year 11 Year 12 Balance Change Common Steck 10,000 0. 10,000 Additional Capital 110,000 0 110,000 Retained Eamings 15,000 10,000 25,000 Total Shareholder Equity 125,000 410,000 145,000 Based on the abave figures and the formula for calculating the debt-assets ratio Faund on the Help screen for p. 5 of the Footwear Industry Report, the company’s debt-assets ratio (where debt is defined to include both short-term and long-term debt) is, 45.056 © None of these, 0 46.096, w= 33.356 © 40.096Given the following Year 12 Financial Staternent data tor a footwear company’: Income Statement Data Nat Revenues from Footwear Sales (Operating Profit (Lo#=) Nat Profit (Loss) Balance Sheet Data Gash on Hand Total Cumant Assets Total Assets Overdraft Laan Payable 1eYear Bande Laan Payable Current Portion of Long-term Loans Total Curent Liabilities Long-Teinn Banke Laane Outstanding Shareholder Equity: ‘Comman Steck Additional Gapital Retained Eamings Total Shareholder Equity Other Financial Data Depreciation Dividend payments Year 12 Gin 000s), 300,000 70,000 $42,000 10,000 $70,000 300,000 5,000 10,000 47,000 4,000 72,000 Year 11 Year 12 Balance Change 1.000 10,000 ing,000 0 108,000 30,000 32,000 62,000 148,000 +32,000 180,000 11,500 10,000, ated on the above Rgures and the Formula For calulating the default-sk vatis Found on the Help screen for p.5 of the Footwear Industry Report and p. 28 of the Player’s Guide, the ‘company’ dofaultrisvatia in Year 12 war 0 136, O None af there,Question 9 of 20 Jump to Question: § 123456789 if if 1? 13 1415 16 17 1% 1920 pre newt |) End Review Given the Following exchange rate changes: Year 1 Year 2 Euros (6) per US$ 0.8210 0.8285 Sing per Brazilian real 0.5660 0.5610 Brazilian real per euro (€) 3.7350 3.7150 US$ per Sing$ o5ai0 0.5980 Then, a5 explained on the Help screen for the Branded Sales Report, it follows that: Oo The US$ has grown stronger wersus the Sings. O The Sing has grown stronger against the Brazilian real. © The Brazilian real has grown weaker versus the euro, O The euro has grown stronger against the Brazilian real, The euro has grown stronger versus the LIS$,Question 10 of 20 Jump to Question: 1234 prew next || End Review In supplying private-label Footwear to chain retailers, the sizes of a company's margins aver direct costs should be wiewed as ‘how much the company received from private-label sales over and above materials costs and direct labor costshese dollars thus represent a “contribution” to the payrnent of the company’s marketing expenses and warehouse expenses. ‘how much the company received from private-label sales over and above materials costs and direct labor costs—these dollars can be used to help cower the company's income taxes and dividend payments. how much the company received from private-label sales aver and shove materials costs and direct labor costs—these dollars can be used to defray the ized costs of plant operations and, once these are covered, the remainder is net profit. w@ how rouch private-label sales added to the company's pretax profits, assuming that the company's margins on branded Footwear were sufficient to cover all administrative expenses and all interest costs. ‘Othe net profit a company eames on private-label sales, O 11 12 13 14 15 16 17 18 13.20Question 11 of 20 Jump to Question: 12345678910 11 12 13 1415 16 17 18 19 20 prev neat || End Review As explained on the Help screen For the Cash Flow Statement, iF a company generates rewenues of $220 million in ‘Year 11, revenues of $240 million in ‘Year 12, and revenues of $300 thillion in Year 13, then its cash receipts From footwear sales will be $760 million in ‘Year 14, cannot be determined from the information prowided because it depends on whether retailers pay For the pairs ordered in the wear they are delivered or decide to wait to pay in the Following year, @ one-third of Year 12 rewenues and two-thirds of Year 13 revenues for a total cash inflow of $280 million in Year 14, © $460 million in Year 13. 02596 of Year 12 revenues and 7596 of Year 13 rewenues for a total cash inflow of $285 million in Year 13.Question 12 of 20 Jump to wenn “A248 Assume a company haz 10 milion shares of stock outstanding and that its Ineame Statement for Year 12 is as Follows: Year 12 Income Statement Data (in 0005) Net Rewenuas from Footwear Sales $ 200,000 Gost of Pairs Sold 190,000 Warehouse Expenses 15,000 Marketing Expenses 40,000 Administrative Expenses 8,000 Gperating Profit (Loss) 47,000 Interest Income (expenses) (10,000), Pre-tax Profit (Lass) 37,000 Incorne Taxes 11,100 Net Profit (Loss) $25,900 Basad on the abowe income statement data, the company's operating profit margin and EPS are © 18.396 and $2.53, O Mone of the above, 15.7% and $2.54, 18,73 and $3.70, 15.7% and £4.70,‘Question 13 of 20 Jump to Quest Based on information on the Help sereen For the Marketing and Admin Repott (see the section on Administration Expenses), which of the following statements regarding your company's administrative costs is Fase? © The “Other Corporate Overhead” category of administrative costs always awerages $1 per pair of plant capacity (hat including avertime): other Corporate Owarhead changes by $1 per palin the same year az any new plant capacity comes online (hew or used) and in the same year that any capacity is sold off to the merchants of used Footwear-making equipment. © Adrainistrative costs are allocated between branded production and private-label production according to their respective percentages of total revenue generated.thus, if 5536 of the company.s revenues come from branded sales then 5596 of annual adrninistrative costs are allocated to branded Footwear, © Within 3 region, administrative expenses are allocated between online branded sales and wholesale branded sales based on thair respective proportion of total branded sales in the region: thus iF 80% oF total branded sales in a region ware to area retailer then 8096 of tha region's total administrstive expenses would be allocated to the wholesale segment and 20% would be allocated ta the Intemet segment, © No administrative expenses are allocated to private-label Footwear: the company's accounting system allocates all administrative expenses to branded Footwear, © Administrative expenses are allocated to each region based on each region's percentage of total companywide branded sales; thus, if 309 of the company's branded sales are in North America, then North America is allocated 3095 of companywide administrative expenses.Question 14 of 20 Jump to Que: 12345678310 11 12 13 14 15 16 17 18 19 20 a 4s is explained on both the Help screens for the Branded Sales Report and the Private-Label Sales Report, an exchange rate shift that causes the Sing to be stronger wersus the Brazilian real - signaled by a positive percentage number for the Exchange Rate Impact on Cost of Pairs shipped from an Asian-Pacific plant to Latin America (R per Sing) in the Exchange Rate box on your Corporate Lobby screen. © should be interpreted as meaning that footwear produced in Latin American plants is more profitable per pair than Footwear produced in Asia-Pacific plants. ‘O weakens the cost-competitiveness of footwear made in Asia-Pacific plants and exported to Latin American distribution centers for sale to footwear customers in Latin America, ‘OC immediately increases the cash Hows a company receives when it ships pairs made in Asia-Pacific plant te its distribution center in Latin Arnerica, @ should be interpreted as meaning the Footwear produced in Latin Aérmerican plants is less profitable per pair than Footwear produced in Europe-dsfrica plants. Ohas the effect of lowering the costs of all Footwear that is made in Asia-Pacific plants and then exported to Latin American distribution centers For sale to Footwear custorers in Latin Amatica,Question 15 oF 20 Jump to Qs 122345628910 11 12 13 14.15 16 12 18 19 20 Assume a company's Income Statement for Vear 12 is as Follows: Year 12 Income Statement Data Gn 000s) Net Revenues from Footwear Sales $320,000 Cost of Pairs Sold 240,000 Warehouse Expenses 15,000 Marketing Expenses 35,000 Administrative Expenses 8,000 ‘Operating Profit (Loss) 32,000 Interest Income (expenses) (ag.000), Pre-tax Profit (Lozs) 22,000 Income Tares 6,600 Net Profit (Lacs) $15,400 Based on the above income statement data (aztume interast inearne is zere) and the Formula For calculating the coverage ratio presented on the Help ccreen for p, S of the Footwear Industry Report, the company’: interest cowerage ratio it © 330.0, © None of the above. O14 2.20, 3.20,Question 16 of 20 Jump to Quest According to the cost allocation procedures discussed on the Help screens For the Private Label Sales Report and the Marketing and Admin Report, which one of the Following is not included as part of a company’s cost in supplying privatedabel footwear to chain retailers? © Expenditures for TQM/Six Sigma quality control Plant supervision costs, © Expenditures for plant maintenance © Production run set-up costs, © Advertising expensesQuestion 17 of 20 Jump to Question: 12245672910 11 12 12 14 15 16 17 18 19.20 prev | | next || End Review According to the cost allocation principles used in the company’s accounting systems (that are explained on the Help screen for the Marketing and Admin Report), iF.a company spends $5 million on advertising in 2 given geographic region, sells 600,000 branded pairs online in the region, and sells 2.4 million branded pairs to Footwear retailers in the region, then O adwertising costs per branded pair sold to retailers would be $0.80, O adwartising costs per pair sold online would be $1.00, advertising casts per online pair sold would be $1.50, 92546 of the company's adwertising expenditures would be allocated to Internet marketing, © 2096 of the company's advertising expenditures would be allocated to Internet marketing and advertising costs per online pair sold would be $1.67,Question 18 of 20 Jump to Questi TF a company pays a production worker s base wage of $22,000 and a piecework incentive of $1 per pair, iF a production worker's annual productivity is 5,000 pairs per year, and if a plant's reject rate averages 5%, then the average annual compensation of production workers would be ONone of the abowe, © $26,750 (because workers do not receive a piecework incentive on pair rejected due to defects), 927,000, $21,150. $26,850,Question 19 of 20 Jump to Question: Based on information on bath the Help screens For the Plant Operations Report and the Private- Label Sales Report, which oF the Following statements regarding haw plant casts are allocated betwean branded and private-label Footwear is False? ® The total amount the company spends for materials is allocated between branded production and private-label production according ta their respective percentages of total pairs produced—thus, if 80%6 of the total pairs produced at a plant are branded then 803% of total materials costs ate allocated to branded production, © @nnual plant supervision costs are allacated between branded production and private- label production according to their respective percentages of tatal palts praduced—thus, iF 9596 of the total pairs preduced at a plant are branded then 9596 of annual plant supervision costs are allacated to branded production, © Annual deprecistion costs are allocated between branded production and private-label production accarding to their respectine percentages of total pairs produced—thus, if 3596 of the total pairs produced at a plant are branded then 8596 of annwal depreciation costs are allocated ta branded production. © Tatal plant maintanance casts arz allocated betwean branded production and privata- label production according to their respective percentages of tatal palts produced—thus, iF 9096 of the total pairs preduced at a plant are branded then 9096 of tatal plant maintenance costs are allocated to branded production. © The total amount the company spends For best practices training is allocated between branded production and private-label production according to their respective percentages of total pairs produced—thus, if 88% of the total pairs produced at a plant are branded then 8836 of best practices training costs ate allocated to branded production. 12345678910 11 12 13 1415 16 17 18:19 2Question 20 of 20 Based on information on the Help Screen for the Plant Operations Report (see the Plant Investment section), if a company adds new plant capacity at a cost of $40 million, then its annual depreciation costs will rise by: $1,600,000, Mone oF these, © Fe,000,000, o-$160,000. © 200,000,