Strategic Management and Policy

PRACTICE QUESTION#16 Assume a company's Income Statement for Year 12 is as follows: Income Statement Data Year 12 (in 000s) Net Revenues from Footwear Sales $ 330,000 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) (10,000) Pre-tax Profit (Loss) 22,000 Income Taxes 6,600 Net Profit (Loss) $ 15,400 Based on the above data, which of the following statements is false? Cost of pairs sold are 72.7% of net revenues. Warehouse expenses are 4.5% of net revenues. Marketing costs are 10.6% of net revenues. Administrative expenses are 2.4% of net revenues. Interest expenses are 2.8% of net revenues. PRACTICE QUESTION#17 Assume a company's Income Statement for Year 12 is as follows: Income Statement Data Year 12 (in 000s) Net Revenues from Footwear Sales $ 290,000 Cost of Pairs Sold 180,000 Warehouse Expenses 16,000 Marketing Expenses 42,000 Administrative Expenses 8,000 Operating Profit (Loss) 44,000 Interest Income (expenses) (10,000) Pre-tax Profit (Loss) 34,000 Income Taxes 10,200 Net Profit (Loss) $ 23,800 Based on the above income statement data, the company's interest coverage ratio is 2.38. 290.0. 4.40. 3.40. None of the above. PRACTICE QUESTION#18 If a company pays a production worker a base wage of $3,000 and a piecework incentive of $0.25 per pair, if a production worker's annual productivity is 3,000 pairs per year, and if a plant's reject rate averages 5%, then the average annual compensation of production workers would be $3,450. $3,712.50. $3,750. $3,850. None of the above. PRACTICE QUESTION#19 The accounts payable entry on the company's balance sheet represents the amount due for income taxes on prior-year profits. the amounts due shareholders for dividends declared the prior-year and payable in the current year. the amounts due for interest on loans outstanding that becomes due in the first quarter of the upcoming year, plus the amount that the company has designated to be put into its retained earnings account. 25% of the year's materials costs incurred in making branded and private-label footwear that are owed to suppliers and that will be paid for in the first quarter of the upcoming year (payments for materials delivered by suppliers are not due and payable for 90 days following delivery). the principal payments due on loans outstanding. PRACTICE QUESTION#20 Which one of the following is included as part of a company's cost in supplying private-label footwear to chain retailers? Advertising expenditures Costs for celebrity endorsement contracts Expenditures for retailer support Plant supervision costs, plant maintenance, and plant depreciation Administrative expenses

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