BUSN 278 Midterm Exam Guide

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BUSN 278 Midterm Exam Guide

1. : (TCO 4) It is important that budgets be accepted by:

2. : (TCO 5) The qualitative forecasting method that individually questions a panel of experts is ________________

3. : (TCO 3) The regression statistic that measures how many standard errors the coefficient is from zero is the ________________

4. : (TCO 1) Which of the following statements regarding research and development is incorrect?

5. : (TCO 2) Priority budgeting that ranks activities is known as:

6. : (TCO 6) Which of the following is a disadvantage of the payback technique?

7. : (TCO 1) There are several approaches that may be used to develop the budget. Managers typically prefer an approach known as participative budgeting. Discuss this form of budgeting and identify its advantages and disadvantages.

8. : (TCO 2) There are a variety of forecasting techniques that a company may use. Identify and discuss the three main quantitative approaches used for time series forecasting models.

9. : (TCO 2) Use the table “Manufacturing Capacity Utilization” to answer the questions below.Manufacturing Capacity UtilizationIn PercentagesDay Utilization Day Utilization1 82.5 9 78.82 81.3 10 78.73 81.3 11 78.44 79.0 12 80.05 76.6 13 80.76 78.0 14 80.77 78.4 15 80.88 78.0Part (a) What is the project manufacturing capacity utilization for Day 16 using a three day moving average?Part (b) What is the project manufacturing capacity utilization for Day 16 using a six day moving average?

Part (c) Use the mean absolute deviation (MAD) and mean square error (MSE) to determine which average provides the better forecast.

10. : (TCO 3) Use the table “Food and Beverage Sales for Luigi’s Italian Restaurant” to answer the questions below.Food and Beverage Sales for Luigi’s Italian Restaurant ($000s)Month First Year Second YearJanuary 218 237February 212 215March 209 223April 251 174May 256 174June 216 135July 131 142August 137 145September 99 110October 117 117November 137 151December 213 208Part (a) Calculate the regression line and forecast sales for February of Year 3.Part (b) Calculate the seasonal forecast of sales for February of Year 3.Part (c) Which forecast do you think is most accurate and why?

11. : (TCO 6) Davis Company is considering two capital investment proposals. Estimates regarding each project are provided below:Project A Project BInitial Investment $800,000 $650,000Annual Net Income $50,000 45,000Annual Cash Inflow $220,000 $200,000Salvage Value $0 $0Estimated Useful Life 5 years 4 yearsThe company requires a 10% rate of return on all new investments.Part (a) Calculate the payback period for each project.Part (b) Calculate the net present value for each project.Part (c) Which project should Jackson Company accept and why?

12. : (TCO 6) Top Growth Farms, a farming cooperative, is considering purchasing a tractor for $468,000. The machine has a 10-year life and an estimated salvage value of $32,000. Top Growth uses straight-line depreciation. Top Growth estimates that the annual cash flow will be $78,000. The required rate of return is 9%.Part (a) Calculate the payback period.Part (b) Calculate the net present value.Part (c) Calculate the accounting rate of return.