Bsg quiz 2 full part

Topics: Revenue, Generally Accepted Accounting Principles, Balance sheet, Profit, Earnings before interest and taxes / Pages: 22 (4120 words) / Published: May 6th, 2015
1. Assume a company's Income Statement for Year 12 is as follows:

Income Statement Data
Year 12
(in 000s)
Net Revenues from Footwear Sales
$ 280,000
Cost of Pairs Sold
150,000
Warehouse Expenses
15,000
Marketing Expenses
35,000
Administrative Expenses
8,000
Operating Profit (Loss)
72,000
Interest Income (expenses)
(10,000)
Pre-tax Profit (Loss)
62,000
Income Taxes
18,600
Net Profit (Loss)
$ 43,400

Based on the above income statement data (assume interest income is zero), the company's interest coverage ratio is

28.0.

280.0.

4.34.

7.20.

6.20
2.
Which of the following statements about striving to reduce labor costs per pair produced at each of the company's plants is true?

The most cost effective way for a company to achieve low labor costs per pair produced is to keep its total annual compensation per plant worker at levels that are close to the highest (if not the highest) in the industry in each geographic region where it has plants.

As long as labor productivity at a company's plant is in the range of 2,500 to 3,000 pairs produced per worker, then labor costs per pair produced at that plant will be competitive with the labor costs per pair produced at the plants of other companies in the industry.

Companies producing branded footwear with a high S/Q rating are unlikely to achieve labor costs per pair produced that are below the industry average in those geographic regions where they have plants.

Achieving labor costs per pair produced at a particular plant that are the lowest (or close to the lowest) of any plant in the same geographic region requires company managers each year to seek out a combination of base pay increases, piecework incentives per non-defective pair produced, and expenditures for best practices training at the plant that is projected to drive down labor costs even further.

The most effective way for a company to achieve labor costs per pair produced that are below the industry average is to give

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