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Q106. Which one of the following groups would be the primary beneficiary of a tariff?
A. Domestic producers of
B. Domestic producers of goods protected by the tariff.
C. Domestic consumers of goods protected by the tariff.
D. Foreign producers of goods protected by the tariff.
Answer: B
Explanation:
Despite the advantages of free trade, nations often levy tariffs to discourage the importation of certain products. A tariff is a tax on imports intended to protect a domestic producer from foreign competition. For instance, a tariff on imported autos benefits domestic auto manufacturers because it is an additional cost imposed on domestic consumers of such products. The disadvantages of the tariff are that it may protect an inefficient domestic producer and increase prices paid by domestic consumers.
Q107. Several surveys paint out that most managers use full product casts, including unit fixed casts and unit variable costs, in developing cast-based pricing. Which one of the following is least associated with cost-based pricing?
A. Price stability.
B. Price justification.
C. Target pricing.
D. Fixed-cost recovery.
Answer: C
Explanation:
A target price is the expected market price of a product, given the company's knowledge of its customers and competitors. Hence, under target pricing, the sales price is known before the product is developed. Subtracting the unit target profit margin determines the long-term unit target cast. If cost-cutting measures do not permit the product to be made at or below the target cast, it will be abandoned.
Q108. Response time on a local area network LAN) was so slow that programmers working on applications kept their code on their own workstations rather than on the server. As a result, daily backups of the server did not contain the current source code. The best approach to detect deteriorating response time is:
A. Parallel testing.
B. Integrated test facility.
C. Performance monitoring.
D. Program code comparison software.
Answer: C
Explanation: Performance monitoring is the systematic measurement and evaluation of operating results such as transaction rates, response times, and incidence of error conditions. Performance monitoring will reveal trends in capacity usage so that capacity can be upgraded before response deteriorates to the point that users behave in unintended or undesirable ways.
Q109. Market-based pricing involves:
A. Adding a standard markup to the cost of the product.
B. Determining the price at which the product' will earn a target profit.
C. Basing prices on the product's perceived value.
D. Basing prices on competitors' prices.
Answer: C
Explanation:
Market-based pricing involves basing prices on the product's perceived value rather than on the seller's cost Jon price variables in the marketing mix augment the perceived value. For example, a cup of coffee may have a higher price at an expensive restaurant than at a fast food outlet.
Q110. The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as:
A. Prevention costs.
B. Appraisal costs.
C. Rework costs.
D. Failure costs.
Answer: B
Explanation:
Appraisal activities include inspection and testing. Appraisal costs (such as test equipment maintenance and destructive testing) are incurred to detect products not conforming to specifications.
Q111. Which of the following is not true about the advantages of adopting ISO 9000 standards?
A. Adoption of ISO 9000 standards may allow the company to sell products in foreign markets.
B. ISO registration makes customers more comfortable with the supplier's products and services.
C. ISO 9000 allows companies to understand who internal customers and users are without sharing private information.
D. ISO registration may help companies discover internal process and quality improvements.
Answer: C
Explanation:
Market pressure is usually the main driving force for companies that adopt ISO 9000 standards. However, many of the companies that register uncover internal process and quality improvement as a result. ISO 9000 forces companies to share information, which leads to a better understanding of who internal customers and users are.
Q112. Two countries have flexible e change rate systems and an active trading relationship. If incomes <List A> in country 1, everything else being equal, then the currency of country 1 will tend to <List B> relative to the currency of country 2.
A. Option A
B. Option B
C. Option C
D. Option D
Answer: C
Explanation:
If incomes in country 1 rise, consumers in country 1 will increase their imports from country 2. The resulting increase in the supply of currency 1 will result in a tendency for it to depreciate relative to the currency of country 2.
Q113. Which of the following is a key to successful total quality management (TQM)?
A. Training quality inspectors.
B. Focusing intensely on the customer.
C. Creating appropriate hierarchies to increase efficiency.
D. Establishing a well-defined quality standard, then focusing on meeting it.
Answer: B
Explanation:
TQM emphasizes satisfaction of customers, both internal and external. TQM considers the supplier's relationship with the customer, identifies customer needs, and recognizes that everyone in a process is at some time a customer or supplier of someone else, either inside or outside of the organization. Thus, TQM begins with external customer requirements, identifies internal customer- supplier relationships and requirements, and establishes requirements for external suppliers.
Q114. Two major retail companies, both publicly traded and operating in the same geographic area, have recently merged. The companies are approximately the same size and have audit departments. Company A has little EDI experience. Company B has invested heavily in information technology and has EDI connections with its major vendors. Which of the following is the least important risk factor considering the ability to integrate the two companies' computer systems?
A. The number of programmers and systems analysts employed by each company.
B. The extent of EDI connections with vendors.
C. The compatibility of existing operating systems and database structures.
D. The size of company databases and the number of database servers used.
Answer: A
Explanation:
The number of systems personnel employed may reflect differences in operating philosophy (outsourcing vs. in-house development of applications). However, the number of personnel in each company is a less serious concern than the compatibility of hardware and software.
Q115. Which statement best describes total quality management TOM)?
A. TOM emphasizes reducing the cast of inspection.
B. TOM emphasizes better statistical quality control techniques.
C. TOM emphasizes doing each job right the first time.
D. TOM emphasizes encouraging crass-functional teamwork.
Answer: C
Explanation: TOM establishes quality as an organizational objective and views it as a major component of the organization's service to its customers. It emphasizes employee training and commitment, product/service design and production, and customer service. Ordinarily, the quality of a product or service is as important to customers as cast and timeliness. Superior product quality is not attained merely through more inspection, better statistical quality control, and cross- functional teamwork. Manufactures must make fundamental changes in the way they produce products and do each jab right the first time.
Q116. Which of the following project scheduling techniques is commonly used in total quality management for simplifying work processes?
A. Gantt charts.
B. Flowcharting.
C. Program evaluation and review technique.
D. Critical path method.
Answer: B
Explanation:
Flowcharting is commonly used in computer programming for determining program logic and in total quality management for simplifying work processes. However, they are also used for establishing the desirable sequence of activities and decisions.
Q117. The internal auditor of a bank has developed a multiple regression model that has been used for a number of years to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the r2 value has decreased dramatically, but the model otherwise seems to be working.
Which of the following conclusions is justified by the change?
A. Changing to a cross-sectional regression analysis should cause r2to increase.
B. Regression analysis is no longer an appropriate technique to estimate interest income.
C. Some new factors not included in the model are causing interest income to change.
D. A linear regression analysis would increase the model's reliability.
Answer: C
Explanation:
The coefficient of determination (r2) is the amount of variation in the dependent variable (interest income) that is explained by the independent variables. In this case, less of the change in interest income is explained by the model. Thus, some other factor must be causing interest income to change. This change merits audit investigation.
Q118. An employee in the receiving department keyed in a shipment to the accounts payable system and inadvertently omitted the purchase order number. The best systems control to detect this error is:
A. Completeness test.
B. Sequence check.
C. Reasonableness test.
D. Compatibility test.
Answer: A
Explanation:
A completeness test checks that all data elements are entered before processing. An interactive system can be programmed to notify the user to enter the number before accepting the receiving report.
Q119. Which of the following is not a required element of a contract?
A. Legality.
B. Consideration.
C. Legal capacity.
D. A writing.
Answer: D
Explanation:
The four essential elements of a contract are an agreement offer and acceptance), consideration, legal capacity of the parties to contract, and a legal objective or purpose A writing is not required to enter into a contract. However, some contracts are not enforceable unless a writing evidences the contract
Q120. The emergence of electronic data interchange EDI) as standard operating practice increases the risk of:
A. Unauthorized third-party access to systems
B. Systematic programming errors.
C. Inadequate knowledge bases.
D. Unsuccessful system use.
Answer: A
Explanation:
EDI is the communication of electronic documents directly from a computer in one entity to a computer in another entity. EDI for business documents between unrelated parties has the potential to increase the risk of unauthorized third-party access to systems because more outsiders will have access to internal systems.