CPA Business Environment and Concepts (BEC) : Operations Management: Planning Techniques
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #1 : Learning Curve
What is a company's margin of safety if it has sales of $200,000, a contribution margin of $120,000, fixed costs of $90,000, and income taxes of $12,000?
$182,000
$50,000
$168,000
$150,000
$50,000
$90,000/($120,000/$200,000) = $150,000. $200,000 - $150,000 = $50,000.
Example Question #161 : Cpa Business Environment And Concepts (Bec)
Sales forecasts are formed considering all of the following factors except:
Sunk costs
Competitor plans
Past historical sales data
Estimates of future sales
Sunk costs
Sunk costs should not be considered as there is no recuperating them and they do not play a role in forecasts at all.
Example Question #1 : Risk Management
Probability (risk) analysis is:
An extension of sensitivity analysis
Used only for situations in which the summation of probability weights is greater than one
Incompatible with sensitivity analysis
Used only for situations involving five or fewer possible outcomes
An extension of sensitivity analysis
Probability analysis is an extension of sensitivity analysis.
Example Question #2 : Risk Management
Which of the following factors is inherent in a firm's operations if it utilizes only equity financing?
Interest rate risk
Business risk
Financial risk
Marginal risk
Business risk
Business risk represents the risk associated with the unique circumstances of a particular company, as they might affect the shareholder value of that company.
Example Question #14 : Operations Management: Planning Techniques
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be:
Risk seeking
Cautious
Risk indifferent
Risk averse
Risk seeking
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be risk seeking.
Example Question #15 : Operations Management: Planning Techniques
The mission and vision of an organization most closely relate with its:
Capabilities
Culture
Practices
Strategy
Strategy
Mission and vision are keywords associated with a firm's strategy.
Example Question #16 : Operations Management: Planning Techniques
The performance component of COSO's ERM framework is supported by which of the following principles?
Defines risk appetite
Analyzes business context
Establishes operating structure
Identifies risk
Identifies risk
Identifies risk is included under the umbrella of performance.
Example Question #6 : Risk Management
Proper risk management includes all of the following except:
Well balanced risk tolerance
Well compensated employees
Secure levels of safety stock
Ensuring proper internal controls
Well compensated employees
While choosing to compensate workers additionally is a good faith action, it does not assist in proper risk management.
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