The State of Illinois Has Passed a Law Requiring That

question 136

Multiple Choice

The state of Illinois has passed a law requiring that every automobile be inspected at least once a year for pollution control. Anfang Enterprises is considering entering into this type of business. After extensive studies, Joseph Anfang has developed the following set of projected annual data on which to make his decision: $\begin{array}{|l|l|}\hline \text { Direct service labor } & \$ 363,000.00 \\\hline \text { Variable service overhead costs } & 270,000.00 \\\hline \text { Fixed service overhead costs } & 280,000.00 \\\hline \text { Marketing expenses } & 120,000.00 \\\hline \text { General and administrative expenses } & 170,000.00 \\\hline \text { Minimum profit } & 90,000.00 \\\hline \text { Cost of assets employed } & 500,000.00 \\\hline\end{array}$
Anfang believes that his company will inspect 100,000 automobiles per year. The company earns an average of 18.75 percent return on its assets.
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The price to be charged for inspecting each automobile using the return on assets pricing method would be calculated as follows:

• A) ($913,000.00 \(\div\) 100,000) + {($913,000.00 \(\div\) 100,000) ´ [($90,000 + $290,000) \(\div\) $913,000.00]}
• B) ($1,203,000.00 \(\div\) 100,000) + [($1,203,000.00 \(\div\) 100,000) ´ ($90,000 \(\div\) $1,203,000.00)]
• C) ($1,203,000.00 \(\div\) 100,000) + [($500,000 \(\div\) 100,000) ´ 0.1875]
• D) None of these

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Definitions:

Controlled Before-after

An experimental research design that compares the outcomes of a group subjected to a treatment with its conditions prior to the treatment.

Experimental Design

A systematic method in research for conducting experiments to test hypotheses, involving manipulation of variables to assess their effects on certain outcomes.

Plagiarism

The practice of taking someone else's work or ideas and passing them off as one's own.

Pilot Study

An initial, small-scale experiment or set of observations undertaken to test the feasibility, duration, cost, risk, and adverse events in a research study, before a full-scale research project is conducted.