Uop STR 581 Capstone Final Exam Part 2 NEW
Check this A+ tutorial guideline at
http://www.str581assignment.com/STR-581-UOP/str-
581-capstone-final-exam-part-2-new
For more classes visit
http://www.str581assignment.com
1 Intanke Inc. manufactures vacuum cleaners. The following
information is available for the company.
Per unit cost
Sales $550
Variable expenses 370
The fixed expenses are $95,000. Calculate the net operating
income for 750 vacuum cleaners.
A. $135,000
C. $35,000
D. $40,000
2 Rinetin Corporation has been falsifying its financial
statements for the past year. The staff in the accounting
department of the company have been fake employee IDs and
recording payments on the company’s payroll. The funds sent
to these fake employees are then redirected to the company’s
bank accounts. When Rinetin Corporation is audited, the
auditors fail to discover this fraud because of their negligence.

Months later, a whistle-blower alerts the appropriate
authorities about the company’s deceptive practices. In this
scenario, the accountants who conducted the audit of the
company will be held civilly liable under __________.
A. Section 32(a) of the Securities Exchange Act of 1934
B. Section 24 of the Securities Act of 1933
C. Section 11(a) of the Securities Act of 1933
D. Section 10(b) of the Securities Exchange Act of 1934
3 Jonah’s Restaurant reports net income of $20,000 during the
year 2015. It distributes a dividend of $6,000 to its
shareholders. Calculate the retention ratio.
A. 50%
B. 30%
C. 80%
D. 70%
4 Wilande Inc., a leading apparel store, acquires Parewa Inc., an
energy drink manufacturer. This is an example of a __________.
A. congeneric merger
B. horizontal merger
C. conglomerate acquisition
D. vertical acquisition
5 Gina and Samantha are discussing the Sarbanes-Oxley Act of
2002. Gina argues that although the act requires the
management of a company to explicitly declare in writing that a
company’s financial statements accurately and fairly represent
the financial results, no steps have been taken to ensure that
this rule is followed. Which of the following statements
weakens Gina’s argument?
A. An individual who is employed by a certified public
accounting firm that audits a company can be employed as the
CEO or CFO of that company to ensure the fairness of its

financial statements.
B. If a company’s financial statements contain
misrepresentations, the CEO and CFO run the risk of serving
time in jail.
C. The Sarbanes-Oxley Act prohibits a public company from
granting personal loans to any of its executive officers or
directors
D. If a CEO or CFO of a company fails to comply with the
provisions of the act, he or she is subject to a fine up to $10,000
and one year in jail.
6 Ray is an entrepreneur who has recently started his own
venture. Since he does not have the resources to hire a financial
expert, he has to manage the company’s finance in addition to
managing the company. He needs to calculate the working
capital of his business. From the following information,
calculate the net working capital.
Cash $20,000
Accounts receivable 12,000
Accounts payable 14,500
Inventory 32,000
Accrued expenses 6,500
A. $23,000
B. $49,500
C. $11,000
D. $43,000
7 Blanrin Inc. currently produces all the components for the
products it makes and sells. The total costs of producing a
component,
Component Y, for one of its products are given below. The

annual requirement of Component Y is 2,200 units.
Direct materials $19,800
Direct labor 11,000
Variable manufacturing overhead 15,400
Fixed manufacturing overhead 13,200
An external supplier offers to sell the component to Blanrin Inc.
for $23 per unit. After analysis, it is found that if the company
buys the component instead of producing it, all of its variable
costs and $8,200 of its fixed overhead costs will be eliminated.
If Blanrin Inc. decides to buy the component instead of
manufacturing it, how will the decision affect the company?
A. Its net income will increase by $8,200.
B. Its net income will increase by $3,800.
C. Its net income will decrease by $3,800.
D. Its net income will increase by $4,400.
8 Rick, a certified accountant, is asked to conduct an audit of
the financial statements of Schenk Ltd. However, the company
refuses to cooperate with Rick and does not provide him with
the necessary information. This makes it impossible for him to
carry on with the audit. In this scenario, which of the following
opinions is Rick most likely to express?
A. Adverse opinion
B. Disclaimer of opinion
C. Unqualified opinion
D. Qualified opinion
9 Susan is a financial manager at Rvetz Corporation. She wants
to evaluate the efficiency with which the company is using its
resources. For this reason, she needs to calculate the operating
margin from the information given below.

Net sales $3,500,000
Cost of goods sold 1,750,000
Office rent 54,500
Selling expenses 350,000
Interest expense 50,000
Other operating expenses 88,500
Which of the following will be the result?
A. 38.4%
B. 35.9%
C. 85.9%
D. 64.1%
10 Calculate depreciation from the following information.
Accounting profit break-even point 2,871 units
Fixed costs $4,083,200
Sales price $42 per unit
Total variable costs $2,600
Number of units 100
A. $706,200
B. $510,400
C. $812,000
D. $1,483,200
10 Calculate depreciation from the following information.
Accounting profit break-even point 2,871 units
Fixed costs $4,083,200
Sales price $42 per unit
Total variable costs $2,600
Number of units 100
A. $706,200
B. $510,400

C. $812,000
D. $1,483,200
11 Yalken Corporation is considering the purchase of a new
machine. The cost of the machine is $250,000. The cash flows
for five years are given below.
Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows $84,790 $102,500 $70,580 $64,760
$115,700
The company is in the 35 percent tax bracket. Assuming that
the cost of capital is 12%, calculate the net present value.
A. $314,452
B. $64,463
C. $(64,452)
D. $204,394
12 Which of the following scenarios illustrates a violation of the
Sarbanes-Oxley Act?
• Natalie is assigned to audit a company’s financial
records. She finds it impossible to arrive at a conclusion and
issues a disclaimer of opinion.
• Ronan, the CFO of Puvane Inc., is granted an unsecured
loan by the company to pay his son’s medical bills.
• Tina, an accountant, fails to detect a fraud in the financial
statements of the company she audits.
• Wong is a member of the audit committee of a public
corporation. However, he is an external member and was not
employed by the corporation.
13 Tanial Inc. has $950,000 in assets and $400,000 in debt. If it
earns net income of $350,000, calculate the return on assets
A. 63.6%

B. 36.8%
C. 271.4%
D. 87.5%
The financial manager of a company needs to measure
how efficiently the company’s total assets are being used to
generate sales. From the information given below, calculate the
relevant ratio he needs for this purpose.
Cash $220,000
Accounts receivable 1,800,000
Inventory 950,000
Plant and equipment 1,330,000
Sales 10,000,000
A. Assets turnover ratio of 0.3
B. Debt to assets ratio of 3.4
C. Assets turnover ratio of 2.3
D. Debt to assets ratio of 0.4
15 Jose, a financial expert of Cerione Ltd., analyzes the data
given below. What conclusion is he likely to arrive at?
Sales $161,000
Cost of goods sold 110,000
Gross margin $ 51,000
Total selling and administrative expenses 39,500
Net operating income $ 11,500
Interest expenses 2,170
Net income before taxes $ 9,330
Income tax (30%) 2,799
Net income $ 6,531
A. The company does not have adequate resources to pay
the interest due to creditors.

B. The company’s gross margin is 20 percent.
C. The company has sufficient resources to pay the interest
due to creditors.
D. The company’s earnings before interest is the same as its
earnings after taxes.
16 The capital structure for Purnen Corporation is given below.
Calculate the weighted average cost of capital (WACC).
Debt: 10%, 1,500 bonds, 20 years to maturity, selling for 105%
of par. The bonds have a $1,000 par value each and make
annual payments.
Common stock: 3,000,000 shares outstanding at a par value of
$1, selling for $35 a share. The expected dividend is $2.8, and
the growth rate is 10%.
Preferred stock: 5,000 shares of 6% preferred stock
outstanding, selling for $103 a share and having a par value of
$100. The flotation cost is $3, and the dividend is $9.
The corporate tax rate is 35%.
A. 8.4%
B. 16.5%
C. 9.96%
D. 13.65%
17 Raul needs to choose one alternative from the four
alternatives given below. Applying the concept of time value of
money, which of the following alternatives should he select?
A. Receiving $130 at the end of two years at an interest rate
of 8% compounded annually
B. Receiving $100 at the end of two years at an interest rate
of 9% compounded annually
C. Receiving $150 at the end of three years at an interest
rate of 7% compounded annually
D. Receiving $90 at the end of one year at an interest rate of
5% compounded annually

18 Josh and Mike are discussing the pros and cons of the
Sarbanes-Oxley Act. While Josh argues that the act has a high
compliance cost, Mike is of the opinion that companies can
easily avoid these costs by choosing to go dark and delisting
their shares from exchanges. Josh, in turn, states that such a
choice comes with its own drawbacks. Which of the following
statements best supports Josh’s argument?
A. Companies that choose to go dark typically have only
limited access to capital markets.
B. Mandatory annual audits by independent auditors are
carried out regardless of whether or not companies choose to
go dark.
C. Executives of companies that choose to go dark are
required to certify the accuracy of financial statements.
D. Companies that go dark are required to file annual
reports.
19 Robert is a manager of a small-scale firm. He needs to decide
whether the firm has sufficient resources to meet its short-term
obligations. Calculate the ratio that Robert needs to calculate
from the information given below.
Cash and cash equivalents $1,057,600
Accounts receivables 1,556,500
Short-term investments 770,300
Other current assets 420,500
Accounts payable 995,700
Long-term debt 528,000
Short-term debt 176,000
Other current liabilities 2,495,700
A. Current ratio of 0.92
B. Current ratio of 1.04

C. Debt ratio of 0.91
D. Debt ratio of 1.26
20 Mark wants to withdraw $6,500 at the end of three years
and $8,000 at the end of five years. He wants to do this in such a
way that the account balance drops to zero after the last
withdrawal. Assuming that the interest rate is 5%, how much
money should Mark deposit today to ensure that his needs are
met?
A. $11,883.15
B. $653.26
C. 5,614.94
D. $6,268.21
21 Darrin Corporation is considering a proposal to purchase a
new piece of equipment. The cost of the equipment is $16,611.
The equipment is estimated to provide an annual cash flow of
$3,000 for the next nine years. The company has a required
rate of return of 15%. Calculate the internal rate of return
(IRR), and interpret the results. Use the present value of an
annuity table.
• Since the cash flows are evenly distributed, the proposal
should be accepted.
• Since the IRR is lesser than the required rate of return,
the proposal should be rejected.
• Since the capital investment is higher than $15,000, the
proposal should be rejected.
• Since the IRR is greater than the required rate of return,
the proposal should be accepted.
22 Calculate the total equivalent units for materials from the
information given below.
Percentage complete

Units Materials Conversion
Work in process, June 1 1,100 60% 35%
Units started into production during June 22,500
Units completed and transferred to the next department
21,800 100% 100%
Work in process, June 30 1,800 50% 15%
A. 2,070
B. 23,400
C. 22,700
D. 21,260
23 Bob is a project leader in a software company. He assigns
tasks to his team members, explains how to execute the tasks,
and sets weekly goals for them. He convenes meetings to
discuss the progress of projects at each stage of execution and
does not bother about the personal issues of his team when he
evaluates any dip in their performance with respect to the
targets he set. In accordance with House’s path-goal theory,
which of the following leadership behaviors does Bob display?
A. Participative behavior
B. Directive behavior
C. Supportive behavior
D. Achievement-oriented behavior
24 The following information is given for Rafea Corporation.
Rafea Corporation
Balance Sheet
December 31, 2016
Assets Liabilities
Cash $ 20,300 Accounts payable $ 82,400
Marketable securities 33,000 Bonds payable 215,300

Accounts receivable 74,200 Common stock 78,900
Inventory 82,400 Paid-in-capital 37,600
Fixed assets 258,500 Retained earnings 54,200
468,400 468,400
Which of the following can be inferred from the data?
A. The company has a current ratio of 1.51.
B. The company has a debt-to-equity ratio of 1.74.
C. The company has a debt-to-equity ratio of 0.71.
D. The company has a current ratio of 1.13.
25 Calculate the direct labor quantity variance from the
information given below.
Standard rate $13 per hour
Standard hours 4,300 hours
Actual hours 5,000 hours
Actual rate $11.50 per hour
A. $15,550 unfavorable
B. $1,600 favorable
C. $9,100 unfavorable
D. $6,450 unfavorable