1. When measuring lost profits or other damages, it is necessary for the plaintiff to
A) to attempt to mitigate its damages.
B) to show that the defendant’s actions clearly call for punitive damages.
C) to prove that fraud was involved in the case.
D) to prove that there was no liability in the case.
2. A simple but potentially useful method of estimating cost behavior is the
A) regression-correlation method.
B) high-low method.
C) scatter-gram method.
D) by gut and by golly method.
3. Cost behavior refers to
A) how managers behave in response to cost data.
B) how costs change with respect to management decisions.
C) how businesses behave in connection with cost changes.
D) how costs change with respect to changes in the volume of activity.
4. In order to win damages in a case, generally a plaintiff must prove
A) liability and blame by the defendant.
B) damages occurred and they were large.
C) the defendant was liable in the case and the liability resulted in damages.
D) there was no breach of contract.
5. Two major theories of damages are
A) out-of-pocket and reasonable certainty.
B) benefit-of-the-bargain and reliance.
C) benefit-of-the-bargain and lost profits.
D) out-of-pocket and benefit-of-the-bargain.
6. Georgetown Company’s weekly store operating costs for a 10-week period had a value of $300,000 and a low value of $260,000. Sales volumes for the 2 weeks were $4,000,000 and $3,200,000 respectively. The estimated fixed cost using the high-low method is
7. Beth Company sold assets to Karen Company with an alleged value of $2,400,000. Beth Company paid $2,100,000 for the assets. The actual value of the assets was $1,700,000. Using the benefit-of-the-bargain damage loss rule, the fraud damages would be
8. Assume a regression analysis yields a regression line with the values Y = $100,000 + $.090X, where Y equals plant labor costs and X equals dollars of production output. The standard error of the estimate is $40,000. The appropriate z value for a 95% confidence interval is 1.96. If the company plans to produce $2,000,000 of product during the upcoming month, what is the projected range of plant labor costs for the month?
A) $180,000 to $380,000
B) $201,600 to $358,400
C) $1,921,600 to $2,078,400
D) $240,000 to $320,000
9. Beth Company sold assets to Karen Company with an alleged value of $2,400,000. Beth Company paid $2,100,000 for the assets. The actual value of the assets was $1,700,000. Using the out-of-pocket damage loss rule, the fraud damages would be
10. Plaintiff G Company convinced the court that J Company had engaged in antitrust actions that had caused GG serious financial damages. As part of GG’s expert’s damage testimony, it was shown that during the 18-month time period covered by the case, G Company’s sales had fallen from an average of $600,000 per month to $500,000 per month. In addition, G Company’s profits had gone from an average loss of $10,000 per month to an average loss of $50,000 per month. Given this information, what is G Company’s damages in the case?
11. The primary determinants of the damage model used in a case are
A) the guidelines provided by the Association of Certified Fraud Examiners (ACFE).
B) the American Institute of Certified Public Accountant (AICPA) guidelines.
C) the American Bar Association (ABA) rules.
D) state laws in the state the case is being tried.
12. Georgetown Company’s weekly store operating costs for a 10-week period had a value of $300,000 and a low value of $260,000. Sales volumes for the 2 weeks were $4,000,000 and $3,200,000 respectively. At a sales level of $3,500,000, the estimated store operating costs using the high-low method of cost analysis would be
13. Georgetown Company’s weekly store operating costs for a 10-week period had a value of $300,000 and a low value of $260,000. Sales volumes for the 2 weeks were $4,000,000 and $3,200,000 respectively. The estimated variable cost per dollar of sales using the high-low method is
A) $0.1067 per sales dollar.
B) $0.08125 per sales dollar.
C) $0.075 per sales dollar.
D) $0.05 per sales dollar.
14. Jones Lumber had an exclusive 5-year supply agreement with Wood Construction. The contract called for lumber sales of $3,000,000 per year. After 3 years, Wood Construction canceled the contract without cause. The court found Wood Construction liable under the contract. Jones Lumber had average gross margins of 50% and average net income of 20% of sales. Jones Lumber’s operating expenses average 60% fixed. The damages from the loss of this contract would be
15. In analyzing cost behavior data for cases, most experts find that the most effective and defensible analysis method is
C) scatter diagram.
D) experienced employee information.
1:A, 2:B, 3:D, 4:C, 5:D, 6:A, 7:C, 8:B, 9:D, 10:C, 11:D, 12:C, 13:D, 14:C, 15:A,
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