To Encourage Performance,loyalty,and Continuing Education,the Human Resources Department at a Large

question 77

Multiple Choice

To encourage performance,loyalty,and continuing education,the human resources department at a large company wants to develop a regression-based compensation model for mid-level managers based on three variables: business unit-profitability in $1,000s (Profit) ,years with company (Years) ,and dummy variable (Grad) ,graduate degree in relevant field.Data have been collected for 36 managers.The sample regression equation is = - 13,264.3 + 14.13Profit + 1,868.53Years + 45,121.94Grad - 0.1539Profit × Grad - 198.34Years × Grad.Which of the following is the difference in predicted compensations for two managers,one having graduate degree,the other one not,both having 10 years with the company,and having the same business-unit profit of $3,000,000?

• A) $34,456.51
• B) $38,980.72
• C) $41,235.52
• D) $47,566.51

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Definitions:

Primary Market

The financial market where new securities are issued and sold for the first time, typically through public offerings or private placements.

Controller

A senior financial officer responsible for managing the accounting operations of a business, including financial reporting and budgeting.

Tax Management

The process of analyzing financial situations or decisions from a tax perspective with the aim to minimize tax liability.

Financial Accounting

Financial accounting refers to the process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement, and cash flow statement, that record the company's operating performance over a specific period.