Test Bank Docx Data Analytics Chapter 13

CHAPTER 13

Data Analytics

CHAPTER LEARNING OBJECTIVES

1. Discuss how using data analytics provides both opportunities and challenges for cost accounting.

2. Describe sources of common data sets used for retrieval and analysis.

3. Examine the four categories of data analytics used to gain insights for problem-solving.

4. Explore your role in applying data analytics to problem solving in cost accounting.

Current count is:

Knowledge: 29

Comprehension: 21

Application: 47

Analysis: 42

Evaluation: 1

Synthesis: 1

Total: 141

Number and percentage of questions:

Easy: 18 questions, 13 percent (target of 25%)

Medium: 112 questions, 79 percent (target of 65%)

Hard: 11 questions, 8 percent (target of 10%)

Question types:

Multiple Choice: 110

Short Answer: 6

Brief Exercises: 12

Exercises: 10

Problems: 3

Multiple-Choice Questions

1. As consumers have increased their use of and reliance on the internet, data usage has grown exponentially. As consumers use more data, organizations develop ways to gather and retain that information. This big data is divided into structured and unstructured data. Which of the following is an example of a characteristic of unstructured data?
2. Data that exists without definition, like an image.
3. Data that is organized and easy to manipulate.
4. Data that is organized into rows and columns.
5. Data that is ready to be added to a database.

Ans: A, LO 1, Bloom: C, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the characteristics of unstructured and structured data. Choice A is correct because data that exists without definition is an example of unstructured data. The remaining choices are incorrect because they are all examples of structured data.

1. As a result of people’s increased internet usage, companies have an enormous amount of user data. These companies can spend a lot of time and effort trying to determine how to best use this information for themselves. Which of the following represents an appropriate use of data a company collected from its users?
2. A clothing boutique uses recent sales data to determine which type of person is most likely to shoplift so they can ensure they do not leave people fitting that profile alone in the store.
3. A doctor’s office runs an analysis on customer accounts to determine which patients lack insurance so they can intentionally give them poor service.
4. A restaurant uses customer credit card information to add gratuities to closed checks.
5. An airline uses data collected to understand customers’ preferences and other maintenance-related issues.

Ans: D, LO 1, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection and the ways businesses might use the data they collect. This question focuses on determining when the use of that collected data is appropriate. Choice D is correct because it accurately depicts an instance of using data in an appropriate manner. The remaining choices are incorrect since they depict instances where companies use data in an inappropriate manner.

1. As a result of people’s increased internet usage, companies have an enormous amount of user data. These companies can spend a lot of time and effort trying to determine how to best use this information for themselves. Which of the following represents an inappropriate use of data a company collected from its users?
2. A clothing company uses the credit card application data to open additional accounts for their customers as a courtesy.
3. A dental office runs an analysis on their patient ledgers to determine which customers have overdue balances.
4. A restaurant uses the loyalty program sign-up information collected to send customers a free birthday dessert.
5. An airline uses flight check-in information to determine who boarded a flight before taking-off.

Ans: A, LO 1, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection and the ways businesses might use the data they collect. This question focuses on determining when the use of that collected data is inappropriate. Choice A is correct because it accurately depicts an instance where the company uses data collected from customers in an inappropriate manner. The remaining choices are incorrect since they depict instances where the company uses customer data in an appropriate manner.

1. As new aspects of technology work their way into normal business practices, professionals in various fields must adjust. One of the largest adjustments requires learning new terminology in both large and small regards. Which of the following represents the difference between data analytics and big data?
2. Big data is the study of analyzing data and discovering patterns while data analytics represents the kind of data generated from various sources.
3. Big data is the study of analyzing data and discovering patterns while data analytics represents the kind of data generated from a single specific source.
4. Data analytics is the study of analyzing data and discovering patterns while big data refers to the kind of data generated from a variety of sources.
5. Data analytics is the study of analyzing data and discovering patterns while big data represents the kind of data generated from a single specific source.

Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question focuses on the difference between the definitions of big data and data analytics. Choice C is correct because it accurately describes the difference between the definitions of data analytics and big data. The remaining choices are incorrect as they are all incorrect definitions of big data or data analytics or they switch their meanings.

1. As new aspects of technology work their way into normal business practices, professionals in various fields must adjust. One of the largest adjustments requires learning new terminology in both large and small regards. Which of the following represents an example of big data?
2. Data generated from a single source in volumes too large for traditional technology
3. Data generated from a variety of sources in volumes too large for traditional technology
4. Data generated from a variety of sources in volumes too small for traditional technology
5. The study and art of collecting and analyzing massive amounts of data

Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question focuses on knowing differences between big data and data analytics. Choice B correctly describes an example of big data, data generated from a variety of sources in large volumes. The remaining choices are incorrect since they are all incorrect examples of big data or are the definition of data analytics.

1. As data is gathered and collected, organizations must determine how to make the best use of this vast resource. When left in its raw state, this data might remain unusable but would continue to consume storage space at an exponential rate. Within the data, there exists both structured and unstructured data. Which of the following is an example of structured data?
2. A series of digital photographs of a company’s newly designed logo
3. A spreadsheet file containing copy-pasted images of products
4. A spreadsheet file containing customer information for recent orders
5. Sound bites obtained from recordings of local online advertisements

Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection and the ways organizations use this data. This question focuses on differences between structured and unstructured data. Choice C correctly describes an example of structured data, data that uses a known and predefined format. The remaining choices are incorrect as they are all examples of unstructured data.

1. As data is gathered and collected, organizations must determine how to make the best use of this vast resource. When left in its raw state, this data might remain unusable but would continue to consume storage space at an exponential rate. Within the data, there exists both structured and unstructured data. Which of the following is an example of unstructured data?
2. A digital photograph of the client’s customer database
3. A document file exported from a company’s database
4. A printable listing of all company vendors with their contact information
5. A spreadsheet file containing recent customers’ order history

Ans: A, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection and the ways organizations use that data. This question focuses on the differences between structured and unstructured data. Choice A correctly describes an example of unstructured data, data that exists in free form without structured definition. The remaining choices are incorrect as they are all examples of structured data.

1. As companies continue to embrace the evolution of data collection and data analytics, they also need to determine what data to collect. After establishing what data to collect, they may want to determine the best way to collect the needed information. Which of the following best represents information a burger restaurant would need to collect?
2. A forecast of customer demand for their new milkshake flavor
3. Customer satisfaction ratings for drive-thru times across franchise locations
4. Customer satisfaction ratings for the intersection nearest to each franchise location.
5. The temperatures of their fryers after the store has closed

Ans: B, LO 1, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with big data, data analytics, and ways companies might collect and utilize data. Choice B is correct because customer satisfaction ratings for the drive-thru times evaluate aspects of the business operations and operational needs. The remaining choices are incorrect because they describe irrelevant data collection or analyses performed rather than the data needed.

1. As companies continue to embrace the evolution of data collection and data analytics, they also need to determine what data to collect. After establishing what data to collect, they may want to determine the best way to collect the needed information. Which of the following best represents information a lawn care business would need to collect for data analytics?
2. Forecasted weekly customer demand by service offered
3. The contact information of sales team members for the bio section on the company’s website
4. The names of each customer who has currently signed up for services
5. The price per pound of grass seed from various suppliers

Ans: D, LO 1, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with big data, data analytics, and the ways that companies collect and utilize data. Choice D is correct because the price per pound of grass seed from various suppliers would be used to evaluate aspects of the business. The remaining choices are incorrect because they describe irrelevant data collection or analyses performed rather than the data needed.

1. Using data analytics in cost accounting is proving to be a big opportunity to improve operations for various businesses. While data analytics have come a long way, there are still challenges and opportunities to consider. Which of the following is a challenge for an accountant that uses data analytics?
2. Being comfortable working with diverse teams which is not something accountants normally do
3. Convincing others in the organization that data analytics is not a worthwhile endeavor
4. Finding a way to add value through insights generated from data analytics
5. Helping coworkers learn the technical terms associated with data analytics

Ans: D, LO 1, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with challenges and opportunities faced by accountants that use data analytics. Choice D is correct because it accurately describes a challenge that an accountant who uses data analytics might face. The remaining choices are incorrect because they describe opportunities faced by accountants that use data analytics or incorrect assumptions about the uses of data analytics.

1. Using data analytics in cost accounting is proving to be a big opportunity to improve operations for various businesses. While data analytics have come a long way, there are still challenges and opportunities to consider. Which of the following is an opportunity for an accountant that uses data analytics?
2. Helping coworkers learn the technical terms associated with data analytics
3. Training other employees and managers with the technical skills necessary to perform effective data analytics
4. Using data analytics to select data relevant to an identified business problem the company would like to address
5. Using good oral and written communication skills to help others see how decisions impact various financial aspects of the business

Ans: D, LO 1, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the challenges and opportunities faced by accountants that use data analytics. Choice D is correct because it accurately describes an opportunity an accountant who uses data analytics might face. The remaining choices are incorrect because they describe challenges faced by accountants that use data analytics.

1. A public university has been evaluating its admissions policies and procedures. The university has recently seen a downturn in enrollment, and the university’s leadership does not entirely understand why this happened. The university has not changed or updated their admissions decision-making processes in years. The current process uses an algorithm based on data available years ago to do enrollment modeling. What change or changes could they make to try and increase in the number of enrollments?
2. The university may need to dig deep and update its data analytical practice to stay competitive.
3. The university may want to lower their stated target number of enrollments during analyses so the downturn in the enrollment is not highlighted.
4. The university may want to attract new professors since they recently launched a new faculty recruitment campaign.
5. The university may want to maintain the status quo and collect more input from their various funding streams.

Ans: A, LO 1, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and the importance of modernizing methodology as new tools, techniques, and inputs become available. Choice A is correct because competitive data analytical practice should optimize enrollment potential. The remaining choices are incorrect since they are not directly relevant to the question asked.

1. A public university has been evaluating its admissions policies and procedures. The university has recently seen a downturn in enrollment, and university leadership does not entirely understand why this happened. The university has not changed or updated their admissions decision-making processes in years. The current process uses an algorithm based on data available years ago to do enrollment modeling. Which of the following could be a disadvantage of not updating the process?
2. The algorithm is probably outdated, and that could result in the university missing out on quality applicants.
3. The algorithm might be outdated, and that could lead to results that build a robust and diverse applicant pool.
4. The university will have a better chance of maintaining their current standards even with a smaller applicant pool by not examining changes in the available data.
5. The university will save much-needed funds that it can spend on more pressing needs.

Ans: A, LO 1, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and the importance of modernizing methodology as new tools, techniques, and inputs become available. Choice A is correct because not updating the algorithm used in the admissions process would almost definitely lead to it being outdated and they would subsequently miss potential candidates they could have enrolled with a better model. The remaining choices are incorrect.

1. Marco Corp. is a medium-sized textile factory that supplies local boutiques in their area. In the past few years, they have experienced a lot of growth and would like to continue to grow at a manageable rate. Marco knows that to do so, they will need to become more data-informed in their decision-making processes. To make the best use of their available resources, which of the following should Marco Corp. consider?
2. Hire a Chief Data Analyst to handle all data analytics for the company
3. Train multiple employees in the basics of data analytics techniques so they can form a team and consolidate the knowledge
4. Train multiple employees in the basics of data analytics techniques so they can be dispersed throughout the organization in multiple departments
5. Train upper management on data analytics so they have something to discuss at weekly strategy meetings

Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the ways that companies can effectively integrate data analytics into their existing operations. Choice C is correct because training multiple employees and dispersing them throughout the organization is generally the best use of existing resources and provides an opportunity for all departments to benefit from individuals with those skills. The remaining choices are incorrect because they represent using resources the company may not currently have or they would not be the most effective use.

1. Marco Corp. is a medium-sized textile factory that supplies local boutiques in their area. In the past few years, they have experienced a lot of growth and would like to continue to grow at a manageable rate. Marco knows that to do so, they will need to become more data-informed in their decision-making processes. To make best use of their resources, which of the following represents the most effective way to integrate data analytics into the company?
2. Create a silo, much like accounting or human resources, to consolidate those with the skillset in a single area of the company.
3. Do the analyses with a team sport mentality where everyone shares knowledge and works collaboratively.
4. Train all employees to use data analytics, and make it a priority over any of their other tasks.
5. Treat the analyses like a team sport where there is often a single star and many supporting players.

Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with ways companies can effectively integrate data analytics into their existing operations. Choice B is correct because data analytics and its integration should be treated like a team sport where skills are shared amongst a group with the same goal in mind. The remaining choices are incorrect because they place focus on consolidating the skillset to one or very few people and do not prioritize the skills-sharing aspects of a company-wide data analytics deployment.

1. Companies doing business in the modern era often look for ways to maximize the resources they have at their disposal. This can vary in the way it is executed and will look different from company to company. Which of the following represents an effective way for individual employees to add to their personal data analytics skillset?
2. Alexis, who works in human resources, is taking an economics course after work at the local community college.
3. David, who works in accounting, is pursuing a certification in Microsoft Excel.
4. Jerry, who works in production, is taking a course about improving time management skills in the workplace.
5. Sarah, who works in advertising, is pursuing an online certificate in Microsoft Word.

Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with effective ways employees can learn about, expand, or improve their own data analytics skills. Choice B is correct because expert level proficiency with Microsoft Excel is an excellent skill to have and increases the employee’s data-specific knowledge and abilities. The remaining choices are incorrect because they are skills that are useful for their jobs but do not directly improve or enhance the other employees’ data analytics skillsets.

1. Companies doing business in the modern era often look for ways to maximize the resources they have at their disposal. This can vary in the way it is executed and will look different from company to company. Which of the following represents an ineffective way for employees to add to their data analytics skillset?
2. Christopher is taking a training course about sourcing data to meet a company’s needs.
3. Jaclyn has decided to pursue a certification in Tableau to help with her evolving workload at work.
4. Jason decided to take a class at the local community college about Microsoft Access.
5. Roland signed up for a session at the local community center that will give an introduction to hand-illustrating beautiful and effective graphs and posters.

Ans: D, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with effective ways employees can learn about and acquire data analytics skills. Choice D is correct because it even though it does relate to graphs and visual presentation, it is not an effective way to add to their data analytics skillset. The remaining choices are incorrect since they do represent effective ways for employees to add to their data analytics skillset.

1. Sharon is the marketing manager for Smith Inc., and she has decided to launch a new campaign in the next couple of months. For this to be successful, Sharon will need to accumulate data and determine how to best target her demographic of young working professionals. Which of the following is an example of hard data that may be helpful as she plans her campaign?
2. A dataset about employment trends from the Department of Labor
3. A dataset that contains customer review comments from Google
4. A report commissioned from a website reviewer that writes for the youth section
5. Customer service survey results from existing customers

Ans: A, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the difference between hard and soft data. Choice A is correct since a dataset about employment trends from a government agency is verifiable and acquired from a reliable source. The remaining choices are incorrect as they are examples of soft data.

1. Sharon is the marketing manager for Smith Inc., and she has decided to launch a new campaign in the next couple of months. For this to be successful, Sharon will need to accumulate data and determine how to best target her demographic of young working professionals. Which of the following is an example of soft data that may be helpful as she plans her campaign?
2. A report about average employment ages generated by a state’s labor board
3. A report from the Internal Revenue Service (IRS) that provides data about average earned income by age groups
4. A research paper published by scholars about desired salary ranges of recent college graduates
5. Click ad survey results from the young professionals’ section of the company’s website

Ans: D, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the difference between hard and soft data. Choice D is correct because a click ad survey from a portion of the company’s website targeting professionals is subjective data that is more qualitative in nature. The remaining choices are incorrect as they are examples of hard data.

1. The management for Lyra Corp. has decided to work towards streamlining processes across many of their divisions. Each department chair must collect data relevant to their unique functions and operations to assist management with constructing ad hoc reports. If management would like to gain insight into their collections processes, then what information would be best to use for this goal?
2. A sample of purchase orders from the shipping department
3. An accounts receivable aging report from the accounting department
4. Customer credit applications obtained from the company’s website
5. Customer feedback from a survey sent out from the customer service department

Ans: B, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data & possible sources and data types that will assist a decision maker as they attempt to achieve certain goals. Choice B is correct because an accounts receivable aging report is the option most likely to provide insight into the company’s collections processes currently in place. The remaining choices are incorrect as they provide other insights.

1. The management for Lyra Corp. has decided to work towards streamlining processes across many of their divisions. Each department chair must collect data relevant to their unique functions and operations to assist management with constructing ad hoc reports. If management would like to gain insight into their customers’ satisfaction, then what information would be best to use for this goal?
2. A lead generation report from the sales and marketing department
3. A report with survey scores received from a customer survey sent out by the customer service department
4. A website user summary report generated by the information and technology department
5. An accounts receivable aging report from the accounting department

Ans: B, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data & possible sources and data types that will assist a decision maker as they attempt to achieve certain goals. Choice B is correct because a report with survey scores received from a customer service survey sent out by the customer service department is the option most likely to provide insight into customers’ satisfaction with the company. The remaining choices are incorrect because they provide other insights.

1. Cynthia has been working at her current job for a little more than two years as a customer service representative. She has expressed interest in obtaining more job responsibilities and is seeking out ways that she could be promoted to a management role. She knows one thing she could do would be to assist with a new marketing campaign. If the campaign targets attracting new customers, then what would her best source of data be?
2. A customer satisfaction survey sent out by the company’s sales department
3. A press release from a competitor about their new line of products for toddlers
4. A production summary from the operations department for the most recent year
5. A search engine optimization report that outlines top user queries for different groups of people

Ans: D, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data & possible sources and data types that would help a decision maker with a new project or campaign. Choice D is correct because a search engine optimization report that can provide some insight into what specific groups of people are looking at would be the most helpful for planning the new marketing campaign. The remaining choices are incorrect as those would be good data for other tasks.

1. Cynthia has been working at her current job for a little more than two years as a customer service representative. She has expressed interest in obtaining more job responsibilities and is seeking out ways that she could be promoted to a management role. She knows one thing she could do would be to assist with a new marketing campaign. If the campaign targets attracting customers who like to use dating apps, then what would her best source of data be?
2. A click ad for a stylist service specializing in those looking for after-work apparel
3. A currently trending hashtag about a data breach from a dating app
4. A news article about the stock prices of social media apps
5. A news article with interviews about modern dating

Ans: D, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data & possible sources and data types that could help a decision maker plan a new project or campaign. Choice D is correct because a news article with interviews from people who are actively dating is the best option listed for gaining insight about people who might want to use a dating app. The remaining choices are incorrect because they provide good data for other tasks.

1. Dan is the Chief Information Officer for Humphrey Company, and he is reviewing security-related policies for the organization. Humphrey Company collects a wide array of data from its employees and understands the importance of it. Which of the following is an example of an appropriate policy or practice based on the principles of proper data usage?
2. Employees disclose any security breach to management within five minutes of its initial discovery.
3. Employees keep passwords documented in an easily accessible place in case they are out of the office and someone else needs to access their accounts.
4. Employees submit their social media passwords to management so the organization can protect its online integrity.
5. Employers get access to personal files on each employee from human resources when they suspect malfeasance.

Ans: A, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the three broad principles of proper data usage and how they guide decision makers’ treatment of sensitive data. Choice A is correct since it is a policy that strives to protect the integrity of the company’s data while keeping reasonable accountability in place. The remaining choices are incorrect because they are not appropriate policies for security purposes and do not adhere to the three principles.

1. Dan is the Chief Information Officer for Humphrey Company, and he is reviewing security-related policies for the organization. Humphrey Company collects a wide array of data from its customers and understands the importance of it. Which of the following is an example of an inappropriate policy or practice in the context of the three principles of proper data usage?
2. Allowing customers to create their own unique login where they can access their account information including their past orders and sensitive personal and credit card information
3. Selling a customer list from the company database for customers that signed a waiver when they came aboard
4. Selling an email distribution list to an outside company for a fair price without users’ prior permission
5. Sharing customer spending trends from the current year with company shareholders

Ans: C, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the three broad principle of proper data usage and how they guide decision makers’ treatment of sensitive data. Choice C is correct because it is a policy that does not strive to protect the integrity of the company’s data. The remaining choices are incorrect because they are appropriate policies and practices for security purposes and do adhere to the three broad principles of proper data usage.

1. Corbin Inc. is a small factory, and they are in the process of evaluating their data storage system. The biggest question management needs to answer is whether their current setup is enough for their needs or if they should invest in a more robust and comprehensive system. Which of the following types of information would be found in the customers module of a data storage system?
2. Credit Status, Method of Payment, Name, and Notes from personnel files
3. Current Employee Pay Rates, Date of Hire, and Credit Status
4. Discounts Redeemed, Name, Address, and Transaction Dates
5. Transaction Dates, Quality Ratings, Percent On-time, and Transportation Arrangements

Ans: C, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data storage systems and how some companies divide their data into different modules within their data storage systems. Choice C is correct as those are likely data types stored in the customers module of a company’s data storage system. The remaining choices are incorrect because each other choice contains a blend of the types of data stored in other modules including human resources, suppliers, and customers’ modules.

1. Corbin Inc. is a small factory, and they are in the process of evaluating their data storage system. The biggest question management needs to answer is whether their current setup is enough to meet their needs or if they should invest in a more robust and comprehensive system. Which of the following types of information would be in the human resources module of a company’s data storage system?
2. Date of Hire, Current Wage, Birth Date, and Transaction Dates
3. Date of Hire, Notes from Personnel File, Current Employee Pay Rates, and Employee Areas of Expertise
4. Discounts Redeemed, Birthday, Title, and Credit Status
5. Quality Rating, Date of Hire, Birthday, and Credit Status

Ans: B, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data storage systems and how some companies might divide their data into different modules within their storage system. Choice B is correct because it shows a list of data that would be stored in the human resources module of a data storage system. The remaining choices are incorrect because each other choice contains a blend of the types of data stored in other modules including human resources, supplier, and customer modules.

1. Decision-making involving data analytics includes a five-step process. Which of the following best represents the correct order for these steps?
2. Make Decisions, Gain Insight, Retrieve and Manipulate, Store, Source
3. Source, Store, Gain Insight, Retrieve and Manipulate, Make Decisions
4. Source, Store, Retrieve and Manipulate, Gain Insight, Make Decisions
5. Store, Gain Insight, Source, Make Decisions, Retrieve and Manipulate

Ans: C, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the five data analytics steps used by decision-makers. Choice C is correct because it accurately lists all five steps. The remaining choices are incorrect as they each contain an incorrect order.

1. To protect consumers from undue harm from entities that would use unfair or deceptive trade practices, the United States created the Federal Trade Commission (FTC) Act. Which of the following is an example of a violation over which the FTC has jurisdiction?
2. Failing to maintain reasonable customer data security measures
3. Failing to provide insufficient security for personal data
4. Making accurate privacy and security disclosures to customers
5. Transferring personal information in a manner consistent with written privacy policy

Ans: A, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data protection, the FTC Act, and the jurisdiction of the FTC. Choice A is correct because it accurately identifies a violation that would be under the purview of the FTC Act. The remaining choices are incorrect either because they are not violations the Act would deal with or are small but incorrect variations on issues that would be violations.

1. To protect consumers from undue harm from entities that would use unfair or deceptive trade practices, the United States created the Federal Trade Commission (FTC) Act. Which of the following is an example of behavior not permitted under this Act?
   • 1. Buffay Corp. learned hackers recently broke through their security and are working to get this resolved immediately.
     2. Le Blanc Company is migrating to a new server and hired additional information technology staff to assist.
     3. Sampson Inc. had a data leak and notified affected users right away per their written protocols in the company policy.
     4. Sunrize Corp. decided to forego installing additional firewalls despite being told in an audit this would be needed to minimally protect users.

Ans: D, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data protection measures and the implications of the FTC Act. Choice D is correct since it accurately identifies a behavior, namely intentionally foregoing needed security measures that are not permitted under the Act. The remaining choices are incorrect because they represent acceptable actions since the companies in those scenarios are transparently attempting to address concerns as soon as possible.

1. As more users engage in online activity, more data circulates and more information is collected by outside entities. In the United States, there are laws that govern the collection of information rather than a single comprehensive policy or agency. Which of the following is an example of a law that governs personal information collection by banks or financial institutions?
   • 1. The Fair Credit Reporting Act
     2. The Federal Deposit Insurance Act
     3. The Gramm-Leach-Bliley Act
     4. The Sarbanes-Oxley Act of 2002

Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with laws used in the United States to govern and protect personal information, specifically information collected by banks and financial institutions. Choice C is correct because this is exactly why the Gramm-Leach-Bliley Act exists. The remaining choices are incorrect because they have other goals or do not exist.

1. As more users engage in online activity, more data circulates and more information is collected by outside entities. In the United States, there are laws that govern the collection of information rather than a single comprehensive policy or agency. Which of the following is an example of a law that oversees the collection and use of credit information?
   • 1. The Freedom of Information and Protection of Privacy Act
     2. The Consumer Data Protection Act
     3. The Fair Credit Reporting Act
     4. The General Data Protection Regulation

Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with laws used in the United States to govern and protect personal information, specifically credit information collection. Choice C is correct because this is what the Fair Credit Reporting Act was created to do. The remaining choices are incorrect because they accomplish similar yet different overall goals.

1. Companies that collect data from their users must do so with great care and consideration before proceeding. Failure to exercise due care can have strongly negative consequences for companies who neglect this responsibility. Which of the following is an example of a company who violated the privacy of its users?
2. Alice’s Tapestries had a data leak that exposed customers’ email addresses for a brief time.
3. Delicious Deserts sent an email about promotions to all customers rather than only to those who opted-in for email announcements.
4. Java Inc. accidentally made its social media page public, including access to all members who had joined.
5. Purple Plastics’ head accountant forgot to close a spreadsheet that listed pay rates of employees on their office computer screen.

Ans: A, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection, privacy, and the ways a company could violate the privacy of its users. Choice A is correct because Alice’s Tapestries had a data leak that exposed private information collected from its users. The remaining choices are incorrect because they do not involve leaks of private information that could be maliciously exploited.

1. Companies that collect data from their users must do so with great care and consideration before proceeding. Failure to exercise due care can have very strong consequences for companies who neglect this responsibility. Which of the following is an example of a consideration made to protect the privacy of collected user data?
   • 1. A company must decide on ways to make user data more easily identifiable to minimize costs.
     2. A company must decide whether it is prudent to adhere to new privacy laws as they are created.
     3. A company must devise a best practices plan for securing and storing user data.
     4. A company must devise a best practices plan to help employees secure their belongings while on company premises.

Ans: C, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection, privacy, and the ways a company could protect the privacy of its users. Choice C is correct because a company devising a best practices plan to secure and store user data is a consideration that would directly protect the privacy of users. The remaining choices are incorrect because they do not specifically or primarily address protecting users’ privacy or leave too many decisions in a state of ambiguity.

1. Monica has been working with her IT department to capture user data from online profiles potential customers create on the company’s website. Monica is working on a project to build internal customer profiles so that they can tailor offers and target emails to unique preferences. After she receives an initial Excel document with data, she notices some of the data appears multiple times. What could cause this?
2. The analyst who collected the data forgot to include columns that Monica needs.
3. The code written for the data collection page had an error.
4. The customer copied and pasted data into the reply form, resulting in multiple entries.
5. The Excel document was saved in the wrong format before being shared with Monica.

Ans: B, LO 2, Bloom: AP, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the data collection process and the process entailed with collected data’s retrieval. Choice B is correct because it provides a logical reason that a file could contain duplicates. An error in the source code would be the most likely cause of the reasons provided for this error. The remaining choices are incorrect because they are not likely to lead to the duplication that Monica is seeing.

1. Monica has been working with her IT department to capture user data from online profiles potential customers create on the company’s website. Monica is working on a project to build internal customer profiles so that they can tailor offers and target emails to unique preferences. After she receives an Excel document, she realizes that there appear to be some erroneous records and duplicate entries and that some required fields are blank. What stage of the data cleaning process will correct these errors?
2. The rinse cycle since these appear to be mid-level errors that will take a medium level of effort to correct.
3. The scrub cycle since these appear to be deeper errors that will necessitate a deeper study and one-at-a-time manual corrections.
4. The steam cycle since these appear to be errors of little concern and therefore can be left alone without impact.
5. The wash cycle since these appear to be obvious errors that will require minimum effort to correct.

Ans: B, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data collection and the processes entailed with its retrieval. Choice B is correct because the errors described within this problem will require the methods involved in the scrub cycle since they would require in-depth correction. The remaining choices are incorrect because they are not proper alignments of parts of the cycle to the difficulty levels or they do not represent the place in the data cleaning cycle that type of error would be addressed.

1. Chelsea’s Candles is a medium-sized factory that produces candles that hold a small trinket in the wax. As the candle burns and the wax melts, eventually the trinket reveals itself. As part of their yearly review, they utilize data analytics to determine what changes they may need to implement in the coming year. Which of the following best represents a step in a higher-order type of analytics they may use?
   1. Meet with the production department to review their outputs during the most recent quarter.
   2. Meet with the sales team to discuss new strategies they would like to implement in the coming year to increase revenues.
   3. Meet with the West region sales team to gain insight into why their sales were not as high as the East’s.
   4. Review order reports, and call a vendor about a delay in recent shipments.

Ans: B, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with how a company uses various types of analytics to make different levels of decisions. Choice B is correct because it describes a way that Chelsea’s Candles could use analytics to make a higher-order decision using prescriptive analytics. The remaining choices are incorrect since they use lower-order types of analytics.

1. Chelsea’s Candles is a medium-sized factory that produces candles that hold a small trinket in the wax. As the candle burns and the wax melts, eventually the trinket reveals itself. As part of their yearly review, they use data analytics to determine what changes they might implement in the coming year. Which of the following actions would most likely be part of the “Make Decisions” step in the decision-making process?
   1. Chelsea tasked the accounting department with gathering data and generating graphs that support their conclusions.
   2. Chelsea tasked the information technology team with explaining how a security breach occurred and outlining their response to the subsequent data leak.
   3. Chelsea tasked the management team with using data collected on employees to conduct performance evaluations.
   4. Chelsea tasked the marketing department with reviewing ad revenues over the past five years to determine the strongest region for returns on advertising.

Ans: C, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with how analytics fit into the larger decision-making process. Choice C is correct because it involves using gathered data to make decisions for the future. The remaining choices are incorrect because they focus on using lower-order analytics or summaries that occur earlier in the decision-making process.

1. A company investigates what types of data it wants to gather and how they plan to collect it. They know a variety of methods can be employed, and each company will select the most cost-effective and secure option that meets their specific needs. If a company would like to purchase data from outside vendors, then which of the following best represents a credible external source a company could use?
2. The Center for Data Integrity
3. The Center for Research in Security Prices
4. The EDGAR Personal Filings Repository
5. The Federal Depository Laboratory Program

Ans: B, LO 2, Bloom: AP, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data sources, security, and their relevance as valid and validated data sources. Choice B is correct because it accurately identifies a credible external source that companies get data from as either one-time purchases or on a subscription basis. The remaining choices are incorrect because they either do not exist or there is something close that exists but with a minor error that invalidates the entity.

1. A company investigates what types of data it wants to gather and how they plan to collect it. They know a variety of methods can be employed, and each company will select the most cost-effective and secure option that meets their specific needs. Which of the following best represents an acceptable storage method a company could use to secure their data?
2. Housing data off-site in a designated room where the data farm’s other customers can also access the servers
3. Housing data on-site in a designated room that all employees can access
4. Purchasing a cloud storage contract with a new unsecured data provider
5. Purchasing a cloud storage contract with a vetted and secured leading data servicer

Ans: D, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data sources and internal and external data security. Choice D is correct because it accurately identifies an acceptable storage method a company could use to store their data. The remaining choices are incorrect because they represent data storage choices that exist but would not be acceptable in this scenario.

1. Decision-making involving data analytics includes a five-step process. Which of the following best outlines what happens in the Gain Insight steps?
2. Accessing information and using tools to expand knowledge
3. Examining data for patterns, trends, and relationships
4. Gathering internal/external data
5. Using insights in decision-making and future planning

Ans: B, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the five data analytics steps used by decision makers. Choice B is correct because it accurately identifies parts of gaining insight. The remaining choices are incorrect as they describe parts of at least one of the other four steps.

1. Decision makers have to establish their needs and discover what data will help them to answer their queries. This data can be attained from a variety of sources, but these sources can be divided into the categories of internal or external. Which of the following best represents an example of a source of internal data?
2. A hashtag on Twitter
3. A market forecast generated by an analyst
4. A trade publication
5. Customer service department

Ans: D, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with potential data sources and the way that internal data differs from external data. Choice D is correct because a customer service department is an example of an internal data source. The remaining choices are incorrect since they represent external data sources.

1. As companies expand and work towards better understanding their existing and potential clients, they accumulate virtual profiles of their customers. The information gathered can vary in nature and scope but ultimately creates a snapshot of a typical customer. Which of the following are examples of Activity and History information that could be collected about a customer?
2. Devices used
3. Number of credit card purchases
4. Residential history
5. Status updates/tweets

Ans: D, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with general practices for collecting information about customers. Choice D is correct because status updates/tweets is an example of Activity and History information that a business might gather about its customers. The remaining choices are incorrect because they would provide information about other aspects of a customer.

1. Decision makers have to establish their needs and discover what data will help them to answer their queries. This data can be attained from a variety of sources, but these sources can be divided into the categories of internal or external. Which of the following best represents an example of a source of external data?
2. Click Ads found on Google
3. Human resources
4. Production/operations
5. Sales and Marketing data

Ans: A, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with potential sources of data and the ways that internal data differs from external data. Choice A is correct because Click Ads found on Google is an example of an external data source. The remaining choices are incorrect as they represent internal data sources.

1. As companies expand and work towards better understanding their existing and potential clients, they accumulate virtual profiles of their customers. The information gathered can vary in nature and scope but ultimately creates a snapshot of a typical customer. Which of the following are examples of financial information that may be collected about a customer?
2. Frequent walking routes
3. Properties owned/rented
4. Residential information
5. Social media habits

Ans: B, LO 2, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with general practices for collecting information about customers. Choice B is correct because properties owned/rented is an example of financial information that a business might gather about its customers. The remaining choices are incorrect because they would provide information about other aspects of a customer.

1. Data analytics has four broad categories that range in value and complexity. Each of the four category types strives towards raising questions that assist decision makers in their efforts to gather relevant data. Which of the following is an example of a question answered by descriptive analytics?
2. How would hiring additional staff impact the bonus potential of existing employees?
3. What are the selling price trends of a single product across the United States?
4. Why did the direct material cost increase over the past year?
5. Why have our customers stopped ordering a certain category of products?

Ans: B, LO 3, Bloom: C, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four broad categories that data analytics can be placed in. Choice B is correct because asking what the selling price trends are about a single product is an example of a question that would be answered using descriptive analytics. The remaining choices are incorrect because they represent questions answered by one of the other three categories.

1. Benson Company is a retailer that specializes in the e-commerce sale of small office supplies including decorative file folders, personalized desk calendars, and trendy desk accessories. As part of their annual review, management decided to perform some analysis on trends over the past five years. One manager suggested they use data visualization for this purpose. If management would like to analyze how well the company achieved their sales targets over the past five years, then what type of chart would be the best to use to do this?
   • 1. A bar chart that shows total values between the years.
     2. A pie chart that shows how much of the total sales target materialized each year.
     3. A Tableau or other business intelligence tool chart that shows the data in a trendy and unique way.
     4. A time series graph that shows how the performance each year compared to the target values.

Ans: D, LO 2, Bloom: AP, Difficulty: Easy, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with descriptive analytics and charts generated from the available data. Choice D is correct as a time series graph looks at a performance, sales in this case, over time, and compares it to target values. The remaining choices are incorrect as they would be better suited to display other kinds of information or they are a non-existent choice.

1. Data analytics can be broken into four broad categories. Each category serves a unique purpose and will vary by value and complexity. Which of the following correctly identifies the four categories?
2. Defective, Diagnostic, Predictive, Prescriptive
3. Descriptive, Diagnostic, Predatory, Prescriptive
4. Descriptive, Diagnostic, Predictive, Prescriptive
5. Descriptive, Diagonal, Predictive, Prescriptive

Ans: C, LO 3, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics. Choice C is correct in that it accurately lists all four categories. The remaining choices are incorrect as they contain at least one incorrect category.

1. Benson Company is a retailer that specializes in e-commerce sales of small office supplies including decorative file folders, personalized desk calendars, and trendy desk accessories. As part of their annual review, management decided to perform some analysis on trends over the past five years. One manager suggested they use data visualization for this purpose. Which of the following best represents the correct list and ordering of the data visualization process?
   • 1. Raw Data, Articulated, Sorted, Prepared Visually
     2. Raw Data, Sorted, Arranged, Presented Visually
     3. Rough Data, Arranged, Sorted, Presented Visually
     4. Rough Data, Presented Visually, Sorted, Articulated

Ans: B, LO 3, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with specific descriptive analytics and their visual representation. Choice B is correct because it is the only choice that has the correct list of steps in the correct order. The remaining choices contain either an incorrect order or at least one incorrect element in the list.

1. As companies integrate data analytics and shift their focus towards the future, they will need to utilize predictive analytics. This kind of analytics uses both historical data and statistical models to predict future outcomes. If a company is interested in looking more closely at its sales department, then what is an appropriate question to answer using predictive analytics?
   • 1. How can we correct a budget deficit from last year in the new financial plans?
     2. How would the addition of a 5% bonus impact the compensation expenses for last year?
     3. How would the addition of a 5% bonus impact the net income for the current year?
     4. What is the budget-to-actual comparison for profits for the past two years?

Ans: C, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and more specifically the methodology of predictive analytics. Choice C is correct because it uses existing data to make a prediction about how a change to the current setup would impact something in the future. The remaining choices are incorrect because they describe other types of data analytics, especially focusing on past events and already decided outcomes rather than a predictive future focus.

1. As companies integrate data analytics and shift their focus towards the future, they need to utilize predictive analytics. This kind of analytics uses both historical data and statistical models to predict future outcomes. If a company is interested in looking more closely at its shipping department, then which of the following is a challenge this company might face using predictive analytics?
2. All decision makers are numerate, and they will be able to understand the outcomes presented.
3. The data is available in a variety of formats, all of which are usable.
4. The data is free of biases and errors as promised by the vendor they acquired the data from.
5. There is a high level of uncertainty around a potential situation.

Ans: D, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and more specifically challenges faced when using predictive analytics. Choice D is correct because it accurately represents a challenge a company could face when using predictive analytics. The remaining choices are incorrect because they do not represent challenges that companies will face with most of the statements being false or incomplete.

1. Sampson Inc. is a producer of plastic products including bottles and sandwich bags. Management decided they need to be pre-informed about the financial performance of the organization and will utilize data analytics. As part of their predictive analytics, they are going to use association rules. Which of the following is a potential outcome of using this method?
2. Building a replenishment plan to decide when to send supply to each vendor to adequately meet their demand
3. Determination of a region’s demographics to predict vendor product needs
4. Determination of overtime needed to generate detailed schedules
5. Upselling products from one customer group to another customer group

Ans: B, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and more specifically the methodology of predictive analytics. Choice B is correct as it accurately describes a potential outcome under association rules. If Sampson uses association rules to determine what vendors will need based upon their region’s demographics, then they will be able to better plan their own production. The remaining choices are incorrect since they are ineffective uses of analytics, and they will not produce useful predictions or they contain outcomes not related to predictive analytics.

1. Sampson Inc. is a producer of plastic products including bottles and sandwich bags. Management decided they need to be pre-informed about the financial performance of the organization and will use data analytics. As part of their predictive analytics, they are going to use regression analysis. Which of the following is a potential reason for using this method?
   • 1. Sampson would like to understand if a third quarter decrease in sales is attributable to a one-time decrease in shipping cost.
     2. Sampson would like to understand if a third quarter increase in sales is attributable to a newly implemented sales tactic.
     3. Sampson would like to understand if an increase in the cost of shipping in the North region is attributable to a one-time reduction in selling price.
     4. Sampson would like to understand if an increase in the cost of shipping in the North region is attributable to a newly implemented sales tactic.

Ans: B, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and more specifically the methodology of predictive analytics. Choice B is correct since it accurately describes a potential reason to use regression analysis namely to evaluate outliers from costs or sales data points. Understanding an increase in sales for a specific time and determining if the newly implemented sales tactic is the cause is a valid potential reason for using the regression analysis. The remaining choices are incorrect because they do not accurately represent a valid combination of independent and dependent variables.

1. The management at Gellar Corp. is compiling data for their analytics team. Gellar is a factory that produces candy gummy bears, and they are very interested in what changes in the next few years will reduce costs. Which of the following type of data analytics will be the most useful for this purpose, and why?
   • 1. Descriptive analytics because management wants to look at historical data in precise detail
     2. Diagnostic analytics because management wants to look at historical data in precise detail
     3. Predictive analytics because management wants to use historical data to make changes in the future
     4. Prescriptive analytics because management wants to use historical data to see how changes would impact future performance

Ans: D, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the branches of data analytics and when to use tools from each type. Choice D is correct because it accurately describes the type of analytics that will help management address their concerns along with an accurate description of what it does. The remaining choices are incorrect because these types of analytics are either incorrectly described or do not represent the type of analysis needed to address management’s concerns.

1. Tara oversees materials acquisition at an HVAC company, and she raised some concerns about year-to-year increases in direct materials cost, and she would like to use analytics to help determine why this happened. What can Tara do in order to answer this question?
   • 1. She can look at different attributes of her supplier origins, such as by region or supplier.
     2. She could chart the price in each region and compare.
     3. She could try to obtain bids from new vendors.
     4. She could use a pie chart to demonstrate the region with the largest change.

Ans: A, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with different types of analytics and to recognize that Tara needs to use diagnostic analytics to answer an implied “Why?” question. Choice A is correct because she is investigating different attributes of the data, such as region of origin or supplier. The remaining choices are incorrect because they try to answer questions unrelated to the one Tara is investigating, and in those situations, she might use a different type of analysis.

1. Jessica recently compiled a budget for herself. She believes she needs to do a better job planning her finances and knows establishing a budget could be a step in the right direction. Her take home pay is $2,500. The following information is for the month of May:

From an overall perspective, by what percent is Jessica over or under budget for the month of May?

1. 9.68% over budget
2. 9.68% under budget
3. 10.72% over budget
4. 10.72% under budget

Ans: C, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to calculate percentages. To calculate the over or under budget percentage, first add the values in the Budget Column and then add the values the Actual Column. Place these answers in cells B9 and C9 respectively. The total budgeted amount equals $1,950, and the total actual amount equals $2,159. Then, use the formula: “=(C9 – B9)/B9” typed into a different cell. ($2,159 – $1,950)/$1,950 = 10.72% over budget (Choice C). The remaining choices are incorrect.

1. Jessica recently compiled a budget for herself. She believes she needs to do a better job planning her finances and knows this could be a step in the right direction. Her take home pay is $2,500. The following table shows her budgeted and actual values for the month of May:

Jessica puts any unallocated funds into her savings account. Assume Jessica’s take-home pay increased to $2,750 and use her Actual numbers from May, by what percent would the amount she can put into savings change?

1. 42.30% less into savings
2. 42.30% more into savings
3. 73.31% less into savings
4. 73.31% more into savings

Ans: D, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to calculate percentages. To calculate the percent change, first sum the Actual Column and place the total in row 9. The total actual amount equals $2,159. When you subtract this from the original take-home pay of $2,500, this leaves $341 surplus income for her savings account. When you subtract this from the increased take home pay value $2,750, this leaves $591 in surplus income for saving. Then, you use the formula: (New amount of savings – Old amount of savings)/(Old amount of savings) placed in an unoccupied cell. ($591–$341)/$341 = 73.31% more for savings (Choice D). The remaining choices are incorrect in value, sign, or both.

1. Lauren launched her online boutique at the beginning of last year and would like to review her performance so far. She gathered the following information:

She would like to use data analytics to evaluate her year. What is the highest net income percentage for the months listed?

1. 8.98%
2. 10.15%
3. 64.10%
4. 100.00%

Ans: C, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to calculate percentages. To calculate the net income percentage for January, use the formula: “=(B2 – C2)/B2” placed in cell D2. Then, carry the formula down the column for each month row. Once you complete this, Excel will return percentages for each month. Choice C is correct because it uses the formula correctly, and 64.10% belongs to February. The remaining choices are incorrect because they do not list the correct amounts.

1. Lauren launched her online boutique at the beginning of last year and would like to review her performance so far. She gathered the following information:

Lauren would like to use her data analytics skillset to help with her assessment of the year. Which graph would most accurately depict this data visually in a compelling manner?

1. A bar chart, it compares sales to expenses.
2. A histogram, it groups sales amounts and expenses within preset ranges.
3. A pie chart, it displays the overall amount of sales and expenses allocated to each month.
4. A time series graph, it shows how the sales and expenses change over the course of the year.

Ans: D, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution: This question requires familiarity looking at data and determining the most appropriate graph. Choice D is correct because the purpose of a time series graph is to display how numbers change over a time. The remaining choices are incorrect because they would not depict the data in the way it is needed.

1. The management at Gellar Corp. is compiling data for their data analytics team. Gellar is a factory that produces gummy bear candy, and they are very interested in what changes can be made in the next few years to reduce costs. What specific technique could be utilized to evaluate various scenarios that management may envision happening?
   • 1. Association rules, a prescriptive analytics technique
     2. Regression analysis, a predictive analytics technique
     3. What-if analysis, a predictive analytics technique
     4. What-if analysis, a prescriptive analytics technique

Ans: D, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and more specifically the techniques available under prescriptive analytics. While the question does not specifically identify prescriptive analytics, you must be able to determine the management of Gellar Corp. needs that type to satisfy their needs. Choice D is correct because it both correctly identifies the type of data analysis and a specific technique from that type that would help management evaluate various scenarios. The remaining choices are incorrect because they contain mismatches of a data analysis and corresponding techniques, or the selection would not address the concerns of management.

1. Jordan is an economics student entering their senior year of college, and they are compiling data about their time in school. Jordan requested their transcript and needs to determine the best way to present their academic data. If Jordan wishes to calculate the number of A-grade they received during their time in college, which formula function would be the most appropriate?
   • 1. The COUNTIF function in Microsoft Excel
     2. The MEDIAN function in Microsoft Excel
     3. The MODE function in Microsoft Excel
     4. The What-If Analysis function in Microsoft Excel

Ans: A, LO 3, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analysis and the use of various formulas and functions to solve for different items. Choice A is correct because the COUNTIF function in Microsoft Excel would let Jordan aggregate the number of A-grade they received during their time in college. The remaining choices are incorrect since they would not solve for the intended answer.

1. Jordan is an economics student entering their senior year of college, and they are compiling some data about their time in school. Jordan requested their transcript and needs to determine the best way to present their academic data. If Jordan wishes to calculate their most frequently occurring course GPA earned during their time in college, then what formula function would be the most appropriate?
   • 1. The MEDIAN function in Microsoft Excel
     2. The MEDIAN function in Tableau
     3. The MODE function in Microsoft Excel
     4. The MODE function in Microsoft Word

Ans: C, LO 3, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analysis and the use of various formulas and functions to solve for different items. Choice C is correct because the MODE function in Excel would help Jordan calculate their most frequently occurring course GPA. The remaining choices are incorrect since they either would not solve for the intended answer, do not exist, or are an incorrect pairing of a formula and the program that utilizes it.

1. Trevor is about to enter his third year of a pre-med program and knows the program will continue to become more competitive. He needs to ensure his GPA will be on par with that of his classmates. He has earned the following GPAs in courses to date: 4, 3, 3, 2, 2, 4, 4, 4, 4, 3, 3, 3, 3, 4, 2, 2, 3, 4, 4, and 3. Using Excel, determine the Mode and the Median for his GPAs thus far.
   • 1. GPA Mode is 3, and GPA Median is 4.
     2. GPA Mode is 3.2, and GPA Median is 4.
     3. GPA Mode is 4, and GPA Median is 3.
     4. GPA Mode is 4, and GPA Median is 3.2.

Ans: C, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analysis and the use of Excel as a tool to calculate various items. The first task would be to copy the data into Excel. Next, to calculate the Mode, you would enter =MODE(number1, [number2], …) which returns an answer of 4. Lastly, to calculate the Median, you would enter =MEDIAN(number1, [number2], …) which returns an answer of 3. This makes choice C the correct choice. The remaining choices are incorrect because each contains at least one incorrect number, either switching the Mode or the Median or using the GPA Mean instead.

1. Trevor is about to enter his third year of a pre-med program and knows the program will continue to become more competitive. He needs to ensure that his GPA will be on par with that of his classmates. He has earned the following GPAs in his courses to date: 4, 3, 3, 2, 2, 4, 4, 4, 4, 3, 3, 3, 3, 4, 2, 2, 3, 4, 4, and 3. The average GPA for pre-med students is 3.75. Using Excel, determine how close Trevor’s GPA is to that average. (Round intermediate calculations to two decimal places.)
2. 14.67% higher than the average
3. 14.67% lower than the average
4. 17.19% higher than the average
5. 17.19% lower than the average

Ans: B, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analysis and the use of Excel as a tool to calculate various items. The first task would be to copy the data into Excel. Next, you would calculate the average with =AVERAGE(number1, [number2], …) which returns an answer of 3.2. To determine the difference, use the following formula: (Trevor’s Average GPA – Average GPA of a pre-med student) / (Average GPA of pre-med student) = (3.2 – 3.75)/3.75 = –0.14666667 or 14.67% lower than the average of a pre-med student (Choice B).

1. Data analytics can be broken into four broad categories. Each category serves a unique purpose and will vary by value and complexity. Which of the following would be a question answered by using diagnostic data analysis?
2. What happened?
3. What is likely to happen?
4. What should we do about it?
5. Why did it happen?

Ans: D, LO 3, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics. Choice D is correct because it accurately identifies what question is answered by diagnostic data analysis. The remaining choices are incorrect as they align with one of the other three categories.

1. Data analytics has four broad categories that range in value and complexity. Each of the four category types strives towards answering questions that assist decision makers in their efforts to gather relevant data. Which of the following is an example of a question answered by diagnostic data analytics?
2. What is the change in the company’s profitability across regions?
3. What is the expected volume of production for the next year?
4. What is the number of five-star reviews for the company online?
5. Why did the Western region have a decrease in profits when the East did not?

Ans: D, LO 3, Bloom: C, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four broad categories that data analytics can be placed in. Choice D is correct because answering the question of why a particular region experienced a change but another did not is an example of a question that would be answered using diagnostic data analytics. The remaining choices are incorrect because they represent questions answered by one of the other three categories.

1. Houz Inc. is a regional furniture manufacturer who specializes in new midcentury replicas at affordable prices. The management and decision makers at Houz gathered data from past years and are performing some analysis. If the company wants to address the change in raw materials costs over the past five years, then what type of data analysis would be most appropriate for that, and why?
2. Descriptive: they need to know what happened to price over the past five years
3. Diagnostic: they need to know what caused price changes over the past five years
4. Predictive: they need to know what is likely going to happen moving forward
5. Prescriptive: they need to plan what they can do about these changes

Ans: B, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each type. Choice B is correct because Houz needs to know what caused price changes over the last five years. The remaining choices are incorrect because they focus on other analyses.

1. Houz Inc. is a regional furniture manufacturer who specializes in new midcentury replicas at affordable prices. The management and decision makers at Houz gathered data from past years and are performing some analysis. If the company wants to address why their southern region recently experienced a decrease in customer orders, then what type of data analysis would be most appropriate for this, and why?
2. Descriptive: they need to know what happened to the number of customer orders in the Southern region
3. Diagnostic: they need to know why there was a decrease in customer orders in the Southern region
4. Predictive: they need to know what is most likely to happen to customer orders in the Southern region moving forward
5. Prescriptive: they need to plan what to do about the decrease in customer orders in the Southern region moving forward

Ans: B, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each type. Choice B is correct because Houz needs to know why there was a decrease in their Southern region, and diagnostic analytics focuses on possible reasons for past performance. The remaining choices are incorrect because they focus on other analyses.

1. Data analytics has been increasing in popularity as businesses realized these techniques provide unique insights that they would otherwise be unlikely to see. There are four main categories of data analytics each with its own benefits, complexities, and corresponding levels of insight provided to users. Which of the following is the most likely reason a company would choose to use diagnostic analytics?
2. They need to examine past results and observe trend for a specific outcome.
3. They need to know what they can do about a situation to achieve a desired outcome in the future.
4. They need to look at past data and gain an understanding of why something occurred.
5. They would like to have a better understanding of something that is likely to occur at some point in the future.

Ans: C, LO 3, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each. Choice C is correct because it represents an accurate reason that a company would use diagnostic analytics to address a specific concern. The remaining choices are incorrect because they each deal with one of the other three categories of analytics.

1. Data analytics has been increasing in popularity as businesses realized these techniques provide unique insights that they would otherwise be unlikely to see. There are four main categories of data analytics each with its own benefits, complexities, and corresponding levels of insight provided to users. Which of the following is the most likely reason a company would choose to use predictive analytics?
2. A butcher wants to know why the cost of his products has been increasing lately.
3. A dog groomer wants to know what steps to take to grow their sales over the next two years.
4. A law firm wants to know how giving a year-end bonus would impact their profit.
5. A lawn care business wants to know how many likes their recent social media post received.

Ans: C, LO 3, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each. Choice C is correct because it represents an accurate reason a law firm would utilize predictive analytics to address a specific need or concern. The remaining choices are incorrect because they each deal with one of the other three categories of analytics.

1. Carson is the marketing manager at a local travel publication. He is working with department heads to get some data to help him in his efforts to attract new clients and investigate aspects of their existing clientele. Why would Carson choose to use descriptive analytics?
2. Management would like Carson to analyze the change in revenue per existing customer over the past two years.
3. Management would like Carson to analyze what steps to take to reduce the time it takes to fully onboard a client.
4. Management would like Carson to analyze what the expected increase in new clients will be over the next year.
5. Management would like Carson to analyze why the south end of town has higher sales than other areas.

Ans: A, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each. Choice A is correct because it represents an accurate reason for Carson to choose descriptive analytics to address their concerns about attracting new clients while also looking into aspects of existing clients. The remaining choices are incorrect because they each deal with one of the other three categories of analytics.

1. Carson is the marketing manager at a local travel publication. He is working with department heads to get some data to help him in his efforts to attract new clients while also investigating aspects of their existing clientele. Why would Carson choose to use prescriptive analytics?
2. Carson wants to know how to increase sales to new customers over the next three years.
3. Carson wants to know what market uncertainties may exist in the next year that might impact the acquisition of new customers
4. Carson wants to know why the business had an easier time attracting a younger demographic last year than it did in the three years before that one.
5. Carson wants to understand what caused customers to leave the company in the past two years

Ans: A, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the four categories of data analytics and when and how to use each. Choice A is correct because it represents an accurate reason Carson would choose prescriptive analytics to address their concerns about attracting new clients while looking into aspects of existing clients. The remaining choices are incorrect because they each deal with one of the other three categories of analytics.

1. Tara oversees materials acquisition for an HVAC company, and she has raised concerns about their year-to-year increases in direct materials cost, and they would like to use analytics to help determine why this happened. What question could Tara ask first to help her start the analysis?
2. Was there a difference in costs between the different vendors we have used?
3. What can we do to prevent this from happening moving forward?
4. What do we expect the vendors we use to charge next year?
5. What was the overall difference in prices year-to-year?

Ans: A, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with different types of analytics and to recognize that Tara would need to use diagnostic analytics to answer this “Why…?” question. Choice A is correct because investigating if there was a difference in costs between the vendors used may help answer why the increase occurred. The remaining choices are incorrect because they each investigate issues other than the one Tara is investigating and may require a different type of analytics.

1. Data analytics has become an increasingly in-demand skill across business world since its inception. As employers focus on what they are looking for in potential employees, data analytics has become a desirable skill for accountants. Which of the following is an example of a skill that entry-level accountants should hone?
2. Being an ineffective communicator.
3. Being curious and improving critical thinking skills.
4. Being uncomfortable with failure.
5. Focusing on developing accounting skills only with no regard for technical skills.

Ans: B, LO 4, Bloom: C, Difficulty: Easy, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with skills that entry-level accountants should have to be prepared for employment in a world of data analytics. Choice B is correct because being curious and working to improve critical thinking skills would be a skill that entry-level accountants should hone. The remaining choices are incorrect because they represent skills accountants should not hone and/or avoid.

1. As practitioners increase their knowledge in data analytics, some companies have moved towards collecting information in new and different ways. Additionally, decision makers have taken their newly collected data and devised ways that it can benefit the organization the most. Which of the following is an example of a way that organizations use data analytics in cost accounting decisions?
2. Addressing Supply Chain Problems
3. Eliminating Value-Added Activities
4. Performance Evaluation
5. Strategy Deformation

Ans: C, LO 4, Bloom: C, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with ways data analytics can assist with cost accounting decisions. Choice C is correct because performance evaluation is an accurate example of a way data analytics assist with cost accounting decisions. The remaining choices are incorrect because they are all incorrect variations of accurate ways that this can be accomplished.

1. As more practitioners acquire data analytics skills, organizations have made a concerted effort to collect more data and find new ways to make use of that data. A positive byproduct of this is that decision making has improved, and organizations have used these techniques to improve insights gleaned from the data. According to a 2019 survey from the Society of Actuaries, what types of analytics experienced major growth?
2. Descriptive and Diagnostic
3. Descriptive and Prescriptive
4. Diagnostic and Predictive
5. Predictive and Prescriptive

Ans: D, LO 4, Bloom: K, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the way that companies are using data analytics to engage in specific activities. Choice D is correct because the main text noted that Predictive and Prescriptive analytics had experienced the most growth according to the Society of Actuaries’ 2019 survey. The remaining choices are incorrect since each contains at least one type of analytics not noted as having major growth according to the survey.

1. As practitioners increase their knowledge in data analytics, some companies have moved towards collecting information in new and different ways. Additionally, decision makers have taken their newly collected data and devised ways that it can benefit the organization the most. Which of the following is an example of a way that organizations use data analytics in performance evaluation?
2. Providing near real-time feedback to an employee after a sales pitch with a client.
3. Providing real-time feedback about shipping times to communicate with suppliers.
4. Using algorithms to predict how likely a customer is to default on an invoice.
5. Using customer survey responses to improve dining experiences at a restaurant.

Ans: A, LO 4, Bloom: C, Difficulty: Easy, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with ways data analytics can assist with performance evaluations. Choice A is correct because providing near real-time feedback to an employee about their performance is an example of using data analytics in performance evaluation. The remaining choices are incorrect because they are all examples of ways that data analytics can be used in areas other than performance evaluation.

1. As more practitioners acquire data analytics skills, organizations have made a concerted effort to collect data to analyze and to find new ways to use that analysis. A positive byproduct of this is that decision-making options have improved, and organizations have used these techniques to improve the insights arrived at. Which of the following is a way that a healthcare organization could use data analytics to eliminate non-value-added activities?
2. To determine the most cost-efficient way to check-in patients when they arrive
3. To determine what employees arrived late and caused delays in seeing patients
4. To determine what patients are at greatest risk for needing readmission
5. To distribute and collect a patient survey to determine what departments are not performing well

Ans: A, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the way that companies use data analytics to engage in specific activities. Choice A is correct because using data to determine what may happen in the future to create meaningful changes to achieve a specific goal is a viable way to eliminate non-value-added activities.

1. An area of business that uses data analytics to improve operations is supply chain management. Managers are constantly looking for ways to make their operations more efficient and cost-effective. Which of the following represents an area of supply chain management that could be improved using data analytics?
2. The check-in system for patients at a local dentist’s office
3. The inventory management of the tennis ball division of a sporting goods company
4. The order approval system for a construction company
5. The performance evaluation of the production team at a trucking company

Ans: B, LO 4, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and its impact on the supply chain management functions of an organization. Choice B is correct because the inventory management of a sporting goods company is an area that could be improved using data analytics. The remaining choices are incorrect because they are areas outside of supply chain management that could be improved using data analytics.

1. An area of business that uses data analytics to improve operations is supply chain management. Managers are constantly looking for ways to make their operations more efficient and cost-effective. Which of the following is a way that a light bulb manufacturer could use data analytics to improve its supply chain management?
2. Use the data collected on production wages to determine why the LED division went over budget
3. Use the data collected to create a demand forecast for a new LED bulb
4. Use the data collected to determine what the change in glass costs were year-to-year
5. Use the data collected to determine why the costs of copper from their copper supplier increased

Ans: B, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and its impact on supply chain management functions for an organization. Choice B is correct because creating a demand forecast for a specific product or product line is a way that data analytics could improve supply chain management for a light bulb manufacturer. The remaining choices are incorrect because they evaluate past events and do not focus on possible improvements, or they contain analyses that may improve other areas of the organization.

1. An organizational area that often needs attention but may be overlooked is Performance Evaluation. Having a well-developed and thorough performance evaluation system helps a company have successful and productive employees. Which of the following represents a way data analytics could improve the performance evaluation process?
2. To generate feedback in real time but not allow employees to review it until their annual review
3. To provide feedback in real time so employees are quickly reprimanded for errors
4. To provide feedback in real time so employees can determine how to take advantage of the company’s flexible sick time policy
5. To provide feedback in real time so employees can optimize their performance

Ans: D, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and its impact on the Performance Evaluation processes of an organization. Choice D is correct because employees receiving feedback in real time and being able to adjust their performance accordingly is a way that data analytics could improve this area. The remaining choices are incorrect because they are not ways to improve Performance Evaluation or describe a negative impact.

1. An organizational area that often needs attention but may be overlooked is Performance Evaluation. Having a well-developed and thorough performance evaluation system helps a company have successful and productive employees. Which of the following is an appropriate rationale for using data analytics to improve performance evaluation?
2. Management does not want to increase the time they have to make constructive contact with their employees.
3. Management hopes to move away from annual performance review and to provide employees with more frequent reviews.
4. Management wants to allow their systems to provide real-time feedback eliminating this as their task.
5. Management would like to continue their current process of only providing employee feedback annually.

Ans: B, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and its impact on the Performance Evaluation processes for an organization. Choice B is correct because management’s desire to move away from an annual review and to provide more frequent reviews is a way that data analytics could improve this area. The remaining choices are incorrect because they are not rationales for using data analytics for Performance Evaluation or describe a negative impact.

1. One of the areas where data analytics helps organizations with is Strategy Formation. Companies will typically spend significant time, energy, and resources in this area as they lay out plans for the future. What type of data analytics is best suited to help in this area, and why?
2. Descriptive analytics since it helps pinpoint trends in the past so the organization can plan for the future
3. Diagnostic analytics since it looks at past data to determine a cause that they can then mitigate in the future
4. Predictive analytics since it uses models to predict what will happen in the future
5. Prescriptive analytics since that is the type of analytics that provides information about what a company should do to achieve a desired outcome

Ans: D, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and how it applies to strategy formation. Choice D is correct because creating future plans is exactly the goal of prescriptive analytics. It is the category that focuses on the future. The remaining choices are incorrect because they would not be the best suited for strategy formation since they either focus on the past or make estimates of what will happen as opposed to providing guidance for planning.

1. One of the areas where data analytics helps organizations with is Strategy Formation. Companies will typically spend significant time, energy, and resources in this area as they lay out plans for the future. Which of the following is the best example of a company using data analytics for strategy formation?
2. A clothing store collects real-time data about employee clock-in times to determine who has been late in the past week.
3. A clothing store collects real-time data about what items are being sold so they can improve the inventory they have on hand.
4. A restaurant collects real-time survey data from customers to determine how to not attract customers who are unhappy.
5. A restaurant collects real-time survey data from customers to improve future customers’ dining experiences.

Ans: D, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and how it is used in strategy formation. Choice D is correct because using real-time data to create an improvement for the group the data is collected from would be a proper use in strategy formation. The remaining choices are incorrect as they are not proper uses of data analytics or present scenarios best served by another category of data analytics.

1. Data analytics has become a very high-demand skill for employees regardless of their industry. The goal of decision makers continues to gravitate towards increasing data accessibility and usability with an overall goal of making more data-informed decisions. Within the cost accounting sphere, outcomes achieved are divided into four areas. Which of the following a correct list of those areas?
2. Eliminating non-value-added activities, managing supply chain, escalating performance, forming strategies
3. Eliminating non-value-added activities, managing supply chain, evaluating performance, forming strategies
4. Eliminating non-value-added activities, managing supply link, evaluating performance, forming strategies
5. Eliminating value-added activities, managing supply chain, evaluating performance, forming strategies

Ans: B, LO 4, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and the four areas that businesses may use data analytics in. Choice B is correct because it is a correct list of all four areas without any modifications. The remaining choices are incorrect because each contains at least one incorrect modification.

1. Data analytics has become a very high-demand skill for employees regardless of their industry. The goal of decision makers gravitates towards the increase of data accessibility and usability with an overall goal of making more data-informed decisions. Within the cost accounting sphere, outcomes achieved are divided into four areas. Which of the following is an accurate description of one of these four areas?
2. Eliminating non-value-added activities: Use data analytics to create a plan to shut down one of the company’s factories next year.
3. Performance evaluation: Use data analytics to gain insight into why a specific employee was absent last month.
4. Performance evaluation: Use data analytics to improve production forecasting.
5. Strategy formation: Use prescriptive analytics to create a plan for the future.

Ans: D, LO 4, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with data analytics and the four areas that businesses might use data analytics in. Choice D is correct because it is a correct description of one of the four areas and the way that data analytics would be used. The remaining choices are incorrect because each contains at least one incorrect description as to how data analytics would be applied to that area.

1. Accountants are the traditional stewards of accounting information and are in-tune with the financial health of an organization. As data analytics becomes a more prevalent force within the business world, accountants acquire new skills in this area. In doing so, they have become strategic business partners with decision makers. Which of the following is an example of why accountants are well-suited for data analytics?
2. Accountants are critical thinkers that look for problems in everything they work with so that they have something to fix.
3. Accountants are curious by nature and are often willing to dig into anything that might be of interest, regardless of the information’s source.
4. Accountants are typically detail-oriented and adept at finding patterns that are not always obvious to others.
5. Accountants work well in teams and are generally effective communicators who also possess soft skills in addition to their accounting acumen.

Ans: C, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with some qualities accountants possess that make them well-suited to work in business and more specifically in data analytics. Choice C is correct because accountants are detail-oriented and adept at finding patterns, and this skillset lends itself well to data analytics. The remaining choices are incorrect because they contain examples of behaviors that are not attributable to accountants or they do not explain why accountants are well-suited for data analytics.

1. Accountants are the traditional stewards of accounting information and are in-tune with the financial health of an organization. As data analytics becomes a more prevalent force within the business world, accountants acquire new skills in this area. In doing so, they have become strategic business partners with decision makers. Which of the following is an example of a non-accounting skill expected of modern accountants by management?
2. Management expects accountants to be able to utilize professional non-technical soft skills.
3. Management expects accountants to utilize advanced math-specific skills like calculus.
4. Management expects accountants to utilize professional technical accounting hard skills.
5. Management expects accountants to utilize their knowledge of financial statements to make better journal entries.

Ans: A, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with qualities accountants possess that make them well-suited to work in business. Choice A is correct because utilizing professional soft skills is a non-accounting skill expected of modern accountants by management. The remaining choices are incorrect because they either contain non-accounting skills not expected of accountants or list specific accounting skills.

1. As students prepare for a life beyond the classroom, they must anticipate what skills will best translate into the business world. Employers created lists of their most in-demand skills for entry-level accountants. Which of the following is an example of one of the top five skills from these lists?
2. Be a data scientist
3. Be curious and work to improve critical-thinking skills
4. Develop decision making skills
5. Get comfortable with always having to win, no matter the cost

Ans: B, LO 4, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with skills employers currently seek for in entry-level accounting hires. Choice B is correct because being curious and working to improve critical-thinking skills is one of those top-five skills on many lists. The remaining choices are incorrect because they contain skills that are not correct representations of any of the top-five skills from most lists.

1. As students prepare for a life beyond the classroom, they must anticipate what skills will best translate into the business world. Employers created lists of their most in-demand skills for entry-level accountants. Which of the following is an example of how an entry-level accountant could use one of these top-ranked skills?
2. Receiving data, analyzing it, and writing a highly technical report with as many industry-specific terms as possible so everyone will know that you understand the material
3. Receiving data, analyzing it, but not reporting any patterns that was found within the datasets to avoid creating extra work for your coworkers
4. Spending time with your coworkers to review the company’s policies, its position within the industry, and information about their competitors to help fix an issue
5. Spending time with your coworkers to review the company’s policies, its position within the industry, and information about competitors so you can boast about an issue you can fix without fixing it

Ans: C, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the skills employers seek in entry-level accounting hires. Choice C is correct because spending time with coworkers and asking them questions to help the team fix an issue is a great example of how to use these in-demand skills appropriately. The remaining choices are incorrect because they contain skills not useful to an organization or in opposition to what the organization needs.

1. Courtney is preparing to graduate in a few months with a degree in accounting. She has been working diligently on mastering the material she is learning in her classes as well learning about what potential employers seek in a job candidate. Aside from technical accounting knowledge, which of the following is the best example of a skill Courtney should ensure she has?
2. Being able to manage a team effectively with minimal oversight
3. Being an effective communicator who can tell the story of the data
4. Being uncomfortable with ambiguity as a sign of weakness
5. Having strong basic math skills: as addition, subtraction, multiplication, and division

Ans: B, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with skills employers seek in entry-level accounting hires. Choice B is correct because being an effective communicator who can tell a story with data is a data analyst-specific skill that is desirable. The remaining choices are incorrect because they contain skills not useful to Courtney or describe a skill that would be counterproductive.

1. Courtney is preparing to graduate in a few months with a degree in accounting. She has been working diligently on mastering the material she is learning in her classes as well learning about what potential employers seek in a job candidate. In addition to accounting and business knowledge, which of the following could be a potential skill sought after by an employer?
2. Being curious and willing to ask a manager for guidance rather than conducting self-directed research
3. Being curious and willing to solve a problem
4. Being resistant to acquiring new technical skills since accounting should be an accountant’s focus
5. Being willing to acquire new tax-related skills to assist the company at tax time

Ans: B, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with skills employers seek in entry-level accounting hires. Choice B is correct because curiosity and a willingness to ask questions to solve a problem are desirable skills in a potential employee. The remaining choices are incorrect because they contain skills not useful to Courtney or describe a skill that would be either counterproductive or too specific.

1. At the cross-section of descriptive and diagnostic analytics, there lies a place where analysts create a whole picture. The two types of data analytics accomplish different objectives but can also work together to create better analyses. Which of the following is an appropriate suggestion for improving your ability to communicate what your data is saying using data visualizations?
2. Do not leave blank or white spaces since this can make the graphics appear incomplete.
3. Make the data challenging to read so users will feel a sense of accomplishment if they comprehend it.
4. Use black and white only because color can make the visualizations overwhelming and difficult to decipher.
5. Use simple visualization tools like graphs or charts to help users orient themselves in the data.

Ans: D, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the communicating and storytelling aspects of data analytics and how to use data visualizations as effective tools. Choice D is correct because visualization tools like graphs or charts can help users follow the narrative of the data and improve communication and storytelling. The remaining choices are incorrect because they contain suggestions that are inaccurate or would not improve communication and storytelling.

1. At the cross-section of descriptive and diagnostic analytics, there lies a place where analysts create a whole picture. The two types of data analytics accomplish different objectives but can also work together to create better analyses. Which of the following explains how the two types of data analytics are interrelated?
2. Effective communication using descriptive techniques will cause decision-makers to dig in to hear the reasons behind the results using diagnostic data analytics.
3. Effective communication using descriptive techniques will prevent decision-makers from digging in to hear the reasons behind the results using diagnostic data analytics.
4. Effective communication using diagnostics techniques will cause decision-makers to dig in to hear the reasons behind the results using descriptive data analytics.
5. Effective communication using diagnostics techniques will prevent decision-makers from digging in to hear the reasons behind the results using descriptive data analytics.

Ans: A, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the descriptive and diagnostic techniques from data analytics. Choice A is correct because having effective communication from descriptive analytics will encourage decision-makers to dig in to hear the reasons behind the results. The remaining choices are incorrect because they contain suggestions that are inaccurate and do not explain how descriptive and diagnostic analytics are interrelated.

1. Sarah works for a mid-size law firm as a staff accountant. Sarah wants to develop her skills into something more valuable to her organization and more marketable in general. She knows data analytics is an incredibly popular new area for high-demand skills. What are some ways that Sarah can add some data analytics perspective to support her goals?
2. Conferences, Training Courses, Coding and Programming Courses, and Website Reviews
3. Data Analytics Degree, Social Media Tools, and Literature Reviews
4. Data Analytics Degree, Wikipedia Review, Conferences, and Training Courses
5. YouTube Videos, Website Reviews, Conferences, and Training Courses

Ans: B, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with acquiring marketable data analytic skills from reputable sources. Choice B is correct because all the items on that list are effective ways to develop data analytics skills. The remaining choices are incorrect because they contain at least one inaccurate suggestion.

1. Sarah works for a mid-size law firm as a staff accountant. Sarah wants to develop her skills into something more valuable to her organization and more marketable in general. She knows that data analytics is an incredibly popular new area for high-demand skills. What routes could Sarah pursue to become more numerate?
2. Complete an online company-sponsored software certification program to demonstrate proficiency in a commonly used non-analytical office software program.
3. Complete an online tutorial for a popular data visualization or business intelligence tool.
4. Complete free CPE courses from non-accredited online sources covering certification topics
5. Read publications from fields like engineering to become well-versed in a variety of data

Ans: B, LO 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with how and where to develop data analytic-specific skills. Choice B is correct because completing an online tutorial for a data visualization tool or business intelligence tool would help Sarah become more numerate in data analytics-specific ways. The remaining choices are incorrect because they would not be from a reliable source, relevant to data analytics, or result specifically in being more numerate.

1. The field of data analytics has become an increasingly in-demand skill across business world since its inception. As employers focus on what they are looking for in potential employees, data analytics has become a desirable skill for accountants. Which of the following is an example of why accountants are well-suited for data analytics?
2. Accountants are typically loners and do not work well in teams.
3. Accountants typically do not have the best oral or written skills.
4. Accountants typically have insights to add value as it pertains to the use of data.
5. Accountants typically lack intuition for cause-and-effect.

Ans: C, LO 1, 4, Bloom: C, Difficulty: Easy, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with skills that make accountants well-suited for data analytics. Choice C is correct because accountants typically have insights to add value when the topic pertains to the use of data. The remaining choices are incorrect because they represent examples that are opposed to skills that accountants should possess.

1. Fancy Footwear is a premier designer and manufacturer of designer shoes for women. Over the past two years, they have concerted a lot of effort into both their boots and heels divisions. The results of their efforts are shown here:

Management is interested in analyzing this data. What is the percent change in gross profit for both the Boots and Heels divisions from Year 1 to year 2? (Use parentheses around a number to indicate a negative value or loss.)

1. Boots: (29.15%), Heels: (26.75%)
2. Boots: (26.75%), Heels: (29.15%)
3. Boots: 36.52%, Heels: 41.13%
4. Boots: 41.13%, Heels: 36.52%

Ans: D, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with manipulating data in Excel. To calculate the change in gross profit, you must first calculate the Gross Profits for Years 1 and 2. Create a new column with rows for Boots and Heels, and in the cells to the right of those columns, you will calculate the gross profit for Boots for Year 1. Use the following formula: “Year 1 Sales – Year 1 Cost of Goods Sold (COGS)”, or =B2–B6 for a result of $38,009. Now, do the same for Year 2 in a new cell using the following formula: “Year 2 Sales – Year 2 COGS”, or =C2–C6 for a result of $53,644. To calculate the percent change in gross profit for Boots, use the following formula: “(Year 2 Gross Profit – Year 1 Gross Profit)/Year 1 Gross Profit” that should give an answer of 41.13% increase in Year 2. Repeat this process for Heels, and you should get an answer of 36.52% increase in Year 2 (Choice D).

1. Fancy Footwear is a premier designer and manufacturer of designer shoes for women. Over the past two years, they have concerted a lot of effort into both their Boots and Heels divisions. The results of these efforts are shown here:

Management is interested in analyzing this data. What is the percent change in Net Income for both the Boots and Heels divisions from Year 1 to year 2? (Use parentheses around a number to indicate a negative value or loss.)

1. Boots: 28.12%, Heels: 31.38%
2. Boots: 31.38%, Heels: 28.12%
3. Boots: 39.12%, Heels: 45.73%
4. Boots: 45.73%, Heels: 39.12%

Ans: D, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with manipulating data in Excel. To calculate the change in net income, you must first calculate the Net Incomes for Years 1 and 2. Create new rows for Boots and Heels, and in the column to the right of that, calculate the net income on Boots for Year 1. Use the following formula: “Year 1 Sales – Year 1 Cost of Goods Sold (COGS) – Year 1 Expenses”, or =B2–B6–B10 that should return an answer of $17,307. Now, do the same for Year 2 in a new cell using the following formula: “Year 2 Sales – Year 2 COGS – Year 2 Expenses”, or C2–C6–C10 that should return a value of $25,221. To calculate the percent change in net income for Boots, use the following formula: (Year 2 Net Income – Year 1 Net Income)/(Year 1 Net Income) that should give a result of 45.73%. Repeat this process for Heels, and the answer should be 39.12% (Choice D).

1. Fancy Footwear is a premier designer and manufacturer of designer shoes for women. Over the past two years, they have concerted a lot of effort into both their Boots and Heels divisions. The results of their efforts are as follows:

Management is interested in analyzing this data. Find out whether Boots or Heels had a greater percent change in the cost of goods sold (COGS) from Year 1 to year 2?

1. Boots did, they have a 20.29% change in cost of goods sold over that span.
2. Boots did, they have a 27.37% change in cost of goods sold over that span.
3. Heels did, they had a 20.29% change in cost of goods sold over that span.
4. Heels did, they have a 9.93% change in cost of goods sold over that span.

Ans: A, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: To calculate the percent change in Cost of Goods Sold for Boots from Year 1 to year 2, use the following formula: “(COGS for Year 2 – COGS for Year 1)/(COGS for Year 1)” that should return an answer of 20.29%. Repeat this process for Heels, and you should get a value of 9.93%. Hence, you can say that Boots have a higher percentage change value of 20.29% in COGS from year 1 to year 2 compared to 9.93% for Heels. (Choice A).

1. Joseph is a business student at a local university. He is looking over his transcripts to determine how his performance looks so far. He pulled the following report from his profile on the University’s Student Information section:

At his University, A = 4, B = 3, C = 2, D = 1, and F = 0. What are the average value, mode, and median for Joseph’s GPA values so far?

1. Average = 2.90; Mode = 3; and Median = 4
2. Average = 2.90; Mode = 4; and Median = 3
3. Average = 2.95; Mode = 3; and Median = 4
4. Average = 2.95; Mode = 4; and Median = 3

Ans: D, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to calculate key statistics. To solve for each, you will need to use an appropriate function on the values in cells C2 through C21. The functions to calculate each of the desired outcomes are: =AVERAGE(C2:C21) that returns 2.95; =MODE(C2:C21) that returns 4; and =Median(C2:C21) that returns 3 (Choice D).

1. Joseph is a business student at a local university. He is looking over his transcripts to determine how his performance looks so far. He pulled the following report from his profile on the University’s Student Information section:

At this University, A = 4, B = 3, C = 2, D = 1, and F = 0. How many of each of the possible letter grades did Joseph receive?

1. A: 6; B: 7; C: 5; D: 1; F: 1
2. A: 7; B: 6; C: 4; D: 2; F: 0
3. A: 7; B: 7; C: 4; D: 2; F: 0
4. A: 7; B: 7; C: 5; D: 2; F: 0

Ans: C, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to do some simple data manipulation. This question requires the use of the Excel COUNTIF function. First, create a column with a list of all the letter grades. To the right of each letter, use the COUNTIF function to count the number of times that value occurs in the grades list. This will appear as follows: for a grade of A, use “=COUNTIF(C2:C21,4)” that should return the count of 7. Repeat this for each letter, and Excel should return the following counts: B = 7, C = 4, D = 2, and F = 0 (Choice C).

1. Joseph is a business student at a local university. He is looking over his transcripts to determine how his performance looks so far. He pulled the following report from his profile on the University’s Student Information section:

At this University, A = 4, B = 3, C = 2, D = 1, and F = 0. Select the graphs that Joseph should use to display his course GPA data and the total number of each letter grade earned over his years of school?

Ans: A, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution: This question requires familiarity with various graphs and when it is appropriate to use each type for displaying this data. For displaying his GPA over a period, a line or time-series graph is best. To display the number of each letter grade earned, Joseph could use a Bar Chart (Choice A).

1. Sophia owns a salon that provides an array of services for her customers. She has been collecting data for the past 2 years. The sales revenues from her five most-common services are as follows:

Which service had the largest magnitude of change in sales revenue from Year 1 to year 2 (up or down)?

1. Color: 23.00% Decrease
2. Cut: 23.62% Increase
3. Pedicure: 27.37% Decrease
4. Pedicure: 27.37% Increase

Ans: D, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with using Excel for simple calculations. To solve for the change in sales revenue for each row, calculate the percent difference in sales revenue for Year 1 and Year 2. For Cut: (Year 2 Sales – Year 1 Sales)/(Year 1 Sales), or =(C2–B2)/B2 that should return a percent increase of 23.62%. Repeat the process for the remaining services, and the values returned for each row should be: Color: 23.00% increase; Perm: 21.66% decrease; Manicure: 22.99% increase; and Pedicure: 27.37% increase. Pedicure had the biggest change with an increase of 27.37% (Choice D).

1. Sophia owns a salon that provides an array of services for her customers. She has been collecting data for the past 2 years. The sales revenue from her five most-common services are shown below:

Determine the average amount of two years’ sales revenue for the service that makes up the largest percentage of the total average revenue.

1. Color: 29.20%, $90,307
2. Color: 58.41%, $180,613
3. Cut: 29.22%, $90,318
4. Cut: 52.45%, $162,172

Ans: A, LO 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to do some basic calculations. First, average the sales revenue of two years for each service. For Cut, use the formula: “=AVERAGE(B2:C2)” and the value returned should be $81,086. Repeat this process for the remaining services, and these should be the results: Color = $90,307; Perm = $21,312; Manicure = $65,723; and Pedicure = $50,790. Next, calculate the percentage of two years’ total average revenue made up by each type of service. For Cut, use the formula: “(Average Revenue from Cut)/(Two Years’ Total Average Revenue for All Services)” to get a value of 26.22%. Repeat the process for the remaining services, and the returned values should look like this: Color = 29.20%; Perm = 6.89%; Manicure = 21.25%; and Pedicure = 16.43%. Color is the largest contributor to the total average revenues for Year 1 and Year 2 (Choice A).

1. Rhoades Corp. is a law firm. They continue to bring on new associates because they continue to attract new clients and cases. Their accounting department has compiled the following information for the three years they have been in operation:

What is the percent change in net income from Year 1 to year 3?

1. 11.51% decrease
2. 11.51% increase
3. 29.87% increase
4. 75.03% increase

Ans: D, LO 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity doing calculations using Excel. To calculate the change in net income from Year 1 to year 3, first calculate the net income for Year 1 and for Year 3. Year 1: In a cell B4 enter formula “= B2 – B3” that should return a value of $37,277. Repeat this process for Year 3 to find the value of $65,247. Finally, to calculate the percentage change, use the following formula (Year 3 Net Income – Year 1 Net Income)/(Year 1 Net Income) = ($65,247 – $37,277)/$37,277 or 75.03% increase (Choice D).

1. Rhoades Corp. is a law firm. They continue to bring on new associates because they continue to attract new clients and cases. Their accounting department compiled the following information for the three years they have been in operation:

What is the percent change in service revenue from Year 1 to year 2?

1. 18.64% decrease
2. 18.64% increase
3. 22.90% decrease
4. 22.90% increase

Ans: D, LO 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to make calculations. To calculate the change in service revenue from Year 1 to year 2, use the following formula (Year 2 Service Revenue – Year 1 Service Revenue)/(Year 1 Service Revenue) = ($298,532 – $242,900)/$242,900 = 0.22903252 or 22.90% increase (Choice D).

1. Rhoades Corp. is a law firm. They continue to bring on new associates because they continue to attract new clients and cases. Their accounting department compiled the following information for the three years they have been in operation:

What is the average revenue for Years 1 to 3?

1. $48,413
2. $250,119
3. $298,532
4. $305,877

Ans: D, LO 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity using Excel to calculate certain numbers. To calculate this value for each year, you need to use the AVERAGE function in Excel. In cell E2, enter “=AVERAGE(B2:D2)” to get a value of $305,877 (Choice D). The remaining choices are incorrect.

1. Windows R Us is a nationwide producer and wholesaler of residential windows. They are in the process of analyzing financial data from their most recent year and compiled the following information:

Their accountant is putting together a presentation to demonstrate their performance during the year. Which quarter produced the highest average Net Income and what was that value?

1. Quarter 1: $237,455.00
2. Quarter 2: $234,170.50
3. Quarter 3: $228,854.67
4. Quarter 4: $239,486.33

Ans: D, LO 2, 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with calculating values in Excel and using the AVERAGE function. To solve this problem in the most efficient manner, first solve for Net Income for each month in the appropriate row. The formula for January is: “=B2–C2” placed in cell D2, and it returns an answer of $288,170.00 in that cell. Next, carry the formula down the column for each month, and the results will appear in cells D3–D13. Now, use the AVERAGE function to determine the average net income for each quarter. To calculate the value for quarter 1, use any empty cell and type in the formula “=AVERAGE(D2:D4)” to calculate the average for January through March. The returned value should be $228,735.33. Repeat this for the other 3 quarters. Once you have completed this, you should have the following results: Quarter 2: $192,706.00; Quarter 3: $228,854.67; and Quarter 4: $239,486.33. Quarter 4 has the highest average Net Income (Choice D).

1. Windows R Us is a nationwide producer and wholesaler of residential windows. They are analyzing some financial data from their most recent year and compiled the information in this table:

Their accountant is putting together a presentation to demonstrate their performance during the year. Which single month showed the largest magnitude of change in Net Income (up or down)?

1. February: Decrease of 35.20%
2. February: Increase of 54.32%
3. September: Decrease of 41.08%
4. September: Increase of 41.08%

Ans: D, LO 2, 3, 4, Bloom: AP, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with calculating items in Excel, including Net Income and the increase or decrease in that value between months. To solve this problem in the most efficient manner, first solve for Net Income for each month in the appropriate row. The formula for January would be as follows: “=B2–C2,” and you would place this in Cell D2. This should return a value of $288,170.00. You can now carry the formula down the column for each month row and the result will appear in cells D3–D13. Now, determine the change in Net Income between months using the following formula: (Current Month – Previous Month)/(Previous Month). Locate an empty cell next to D3, and calculate the change seen in February using this formula: “=(D3–D2)/D2” that returns a value of –35.20%. You can then carry the formula down the column into the additional cells. After doing so, you will see that the highest change happened in September with an Increase of 41.08% (Choice D).

Short Answers

1. What is big data and how does it compare to data analytics? What are structured and unstructured data, and how do they relate to big data?

Ans: NA, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Data analytics is the art and science of analyzing data while big data is an umbrella term for the collection of massive datasets. Data analytics cannot exist without the collection of data itself, so the field of data analytics is dependent upon big data to provide the data it needs. Big data can contain both structured and unstructured data. Structured data uses a predefined format that is easy to use and manipulate. Unstructured data, by comparison, exists in a freer form with no predefined format or definition and includes items such as image files. Big data is the collection of data, whether structured or unstructured, while data analytics will help users take that data and make useful observations.

1. Although the field of data analytics is not perfect, it contains useful tools for management. What are three challenges and three opportunities for the use of data analytics?

Ans: NA, LO 1, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Three challenges for using data analytics could include:

• Defining a business problem that will need to be answered and selecting data that is appropriate to analyze and address the problem.
• Being able to successfully use data analytics, employees at various levels, such as staff, analyst, and manager must have enough skills to work with the data they have access to.
• Using data analytics requires a technical terminology that needs to be woven into the language used within business and executive contexts to enhance data-informed decision making.

Three opportunities for using data analytics could include:

• Accountants could be natural choices to teach data analytics to since they have many existing skills that lend themselves well to the field including an innate understanding of cause-and-effect and the ability to be able to see how a decision can impact other people or areas.
• Accountants are generally good team players who are adept at working with a diversified team and are often in leadership roles that could create an excellent opportunity to have them act as liaisons between technical teams and leadership teams.
• Accountants possess insights that add value to companies as it pertains to the use of data analytics and how management can take full advantage of it.

1. In data analytics, decision makers will express a variety of needs for the data gathered. How do hard data and soft data factor into their decision making? What about internal data and external data?

Ans: NA, LO 2, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Data exists in a variety of forms each with its own purpose and usefulness for decision makers. Hard data is based on quantifiable data that is verifiable and acquired from reliable sources. Soft data includes qualitative inputs such as ratings or surveys. Some decision makers prefer a blend of both so they can make the most data-informed decision possible after evaluating data from multiple angles. Internal data is data generated by a company’s existing internal processes and sources include customer service, accounting and finance, and sales and marketing. External data includes data of interest to a company and its stakeholders that is not generated internally and could be sourced from outside platforms such as Google Analytics or Twitter. Decision makers can pull both internal and external data to ensure they are addressing concerns and interests of all parties that have a vested interest in the organization.

1. What are the four broad categories of analytics? How are they different from one another, and what kind of information can each assist in addressing?

Ans: NA, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: The four broad categories of analytics include (in order of least complex to most complex) descriptive, diagnostic, predictive, and prescriptive. Descriptive uses hindsight to answer questions about what happened while diagnostic uses a blend of hindsight and insight to ask why something happened. Predictive uses a blend of insight and foresight to ask what is likely to happen while prescriptive uses foresight to ask what should be done about something. Aside from the spectrum of complexity, descriptive and diagnostic focus on the past and have a different, yet significant value for making future decisions than predictive and prescriptive, which focus on the future. All types can be of value to an organization, and the actions of the past, along with a data-informed understanding of them, can help shape future decisions.

1. More accountants continue to train in the area of data analytics and are using this new knowledge to help businesses look at data in new ways. What are a few ways companies can use data analytics in their cost accounting decisions?

Ans: NA, LO 4, Bloom: C, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Data analytics can be used in the following ways as it pertains to cost accounting decisions:

• Eliminating non-value-added activities: Companies can utilize data gathered to analyze various aspects of their business and determine whether they are adding value and efficiency or if their removal would better benefit the company.
• Supply chain management: By gathering data on the supply chain functions of an organization, managers may be able to identify weaknesses or inefficiencies.
• Performance evaluation: An annual review can be a useful tool for management, but there is often a notable lag between the time data is gathered and when the review is conducted. Having real-time feedback could help improve employee performance and morale.
• Strategy formation: Companies can use data analytics to gather pertinent data to help them analyze future states of operations. By gathering timely and relevant data, management can strive to create policies, procedures, and plans to take the company in a desirable direction.

1. Entry-level accountants continue to be in demand in almost every industry. What are some of the top skills employers seek in entry-level accountants? What is an ideal skillset for accountants at this level?

Ans: NA, LO 4, Bloom: K, Difficulty: Medium, AACSB: Knowledge, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Some of the top skills that employers seek include the following:

• The ability to use business and accounting skills to understand the business you work for: Having this understanding will allow you to be a better team player and problem solver.
• Curiosity and perpetual honing of critical-thinking skills: Those who are curious and ask questions strive to gain a new and unique understanding of various issues.
• Effective communication skills: In addition to evaluating data, the ability to communicate findings well and effectively is a valuable skill.
• Comfort with ambiguity and/or failure: Life and plans sometimes go in unplanned directions, but being able to navigate these changes and persevere will help make someone a better professional.
• Development of technical/data analytical skills: Continually working to acquire new technical skills like proficiency with statistics or database management could help the employee become a better analyst and accountant.

An ideal skillset for an accountant would also include a well-balanced overlap of business and accounting knowledge, soft skills, and data/technical skills.

Brief Exercises

1. Truman Corp. is a factory that produces plastic containers for food companies. Management has growing concerns that their performance is suffering and that they have lost control over certain processes due to higher than usual employee turnover. They would like to spend some time narrowing down what areas of production are most inefficient, but they are not entirely sure how to go about doing that. If you were working at Truman, then what approach would you suggest? Please, name a few examples of how your solution could directly impact and improve their operations.

Ans: NA, LO 1, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with ways a company can address questions about suspected inefficiencies in production. To begin investigating whether certain processes are inefficient, I would recommend the use of data analytics. By using data analytics, we can gather data about various production processes and identify what improvements, if any, would help. Truman could use data analytics to investigate what the current turnover rate is for each production area and compare it to past years. Truman could use data analytics to look at product waste or to rework numbers for the current year and compare it to previous years’ totals. Truman could also look at the complete cycle from beginning to finished product during this current production cycle and compare it to past cycles. Each of these analyses could provide some financial data to draw conclusions about what led to the various outcomes. This can have a very positive impact on the organization as they may be able to implement meaningful changes based on what they see in their analyses.

1. Rachel is a cost accountant for a local architect, and she knows this company needs to adopt data analytics to improve operations and become more efficient. Previous departments have attempted to use data analytics but ultimately abandoned the process. What challenges and opportunities can you identify for Rachel as she attempts to reintroduce data analytics to the organization?

Ans: NA, LO 1, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with the challenges and opportunities presented when implementing data analytics for cost accounting.

Rachel may encounter the following challenges:

• She needs to determine definitions for current problems and questions to investigate. This will require discussions with management and all departments to determine the needs of the business as a whole.
• She needs a baseline of understanding of the technical skills involved in the data analytics process, and she needs to find ways to help others acquire these as needed.
• Rachel will likely have to spend time working with others to bring them up to speed with basic technical skills while ensuring they are aware of any potential biases that may exist.
• She will have to help coworkers learn the language and technical terms needed for data analytics to facilitate business decision-making processes.

Rachel may encounter the following opportunities:

• As an accountant, Rachel is likely to have the required good oral and written skills and an intuition for cause-and-effect. This means that she will be in a position to integrate data analytics into the work they already complete.
• As an accountant, Rachel is likely comfortable working with diverse teams of people, and she probably has some foundational management skills.
• As an accountant, Rachel is likely to have insights to add value to the company regarding the use of data analytics for strategy formation and execution.

1. Sarah is a manager of a regional bakery chain in the Midwest, and she is helping the corporate office evaluate the data they have been collecting. As decision makers for this organization evaluate the state of their data usage and framework, they will need to gather all relevant information and locate the correct data. Those occupying these positions will have to determine which sources of data are best and for what purposes. What are some of the questions that Sarah may ask to determine which sources of data are best and what purpose might they serve?

Ans: NA, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: As Sarah begins evaluating which sources of data are best to focus on in the information-collecting process, she may ask some of the following questions:

• Are we asking the right questions? While it may be appealing or tempting to amass as much data as is possible, this does not always work optimally to serve an organization. A decision maker will want to spend time refining their search to find the best information to complete the larger task at hand.
• Does our data tell a story? The form that data arrives in can vary from whole and complete to fragmented, and it is in the best interest of managers to make it as useful as possible. In order to be most useful, the data must be rearranged into a logical story or narrative and requires both the insight and experience of managers to fill in any missing pieces.
• Does our data help us look ahead rather than look back? Decision makers will need to ensure that their focus is forward-thinking in nature rather than focusing on what has already transpired in the past. In doing so, they have a greater chance of gathering meaningful data.
• Do we have a good mix of quantitative and qualitative data? For data to paint a complete picture of a business, it cannot rely solely on quantitative or qualitative data. Having a mix of both data types gives the business insight not only into numerical data but the causes of outcomes as well.

1. Eagle Inc. has been collecting data over the past year in a variety of areas for their business, both internally and externally. Management is eager to utilize this data and to analyze their findings, but they were advised to postpone this until the data is properly cleaned. What does it mean for data to be cleaned, and what does the cleaning process entail?

Ans: NA, LO 2, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Before a company uses data to generate any insights, the data should be cleaned. Cleaning data entails retrieving, examining, and manipulating the data to prepare it for use. Data cleaning strives to ensure that data is formatted correctly and in the manner that makes it most usable. The process entails three steps: Rinse, Wash, and Scrub. The Rinse step includes replacing any obvious errors with missing value labels or correcting the missing points if they are easy to do. The second step, Wash, is considered the middle section, and it entails tasks like removing duplicates entries. The third step is Scrub, and this step requires the most detail and time. This step involves a deep study of the data where corrections are made one at a time, by hand, and where every piece of data is heavily scrutinized. The overall goal of this process is to make the data organized, complete, and clean.

1. Oren has been tasked to compile a list of information about their customers he feels his company, Legacy LL, should begin collecting. Legacy LL is a manufacturer of sports-themed apparel that is determined to not only retain existing customers but to attract new ones in coming years. What are the categories of data that Oren may consider for collection? What are some examples of the types of data collected within each category?

Ans: NA, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: As Oren determines what data to collect, he may want to consider some of the following types:

• Financial: This area includes customer information about pertinent financial information that may impact customer behavior. Examples include income, loans, number of credit card purchases in the last year, and employment status.
• Activity and history: This area focuses on personal and social behaviors of a customer. Examples include calendar events attended, social media habits, and personal internet search history.
• Health and fitness: This area focuses on the health, fitness, and exercise behaviors of a customer. Examples might include heart rate, hours slept, club or gym memberships, and steps taken per day.
• Interests: This area focuses on the personal interests, likes, and dislikes of a given customer. Examples include vacations taken and travel history, music streamed, political views, and devices used.
• Personal: This area focuses on personal information about a customer. Examples include their home address, age, number of children, relationship status, ethnicity, gender, facial recognition data, contacts, and residential history.

Oren will want to take his time and select the data most likely to assist him in achieving the goals of the organization. While this data is available, not all of it may useful for the task at hand.

1. Martha is a manager for a florist. The company’s owner has recently been talking about data analytics. Martha has heard the term before but is largely unfamiliar with it, so she asks for assistance from the accounting department. Assume you are the accounting manager, and you need to explain data analytics to Martha. What information would you share with her, and what would she need to know to be ready to do data analytics?

Ans: NA, LO 1, 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: This question requires familiarity with what data analytics is and how it is useful to a business trying to reach its operational goals. I would tell Martha a definition of data analytics: the art and science of analyzing data to draw conclusions and make inferences from collected data. To begin data analytics, first outline the problem to investigate and figure out any related unknown quantities. Then, decide if the analysis will be quantitative, qualitative, or a blend of both, and figure out what the data collection needs are. Next, collect the data, and then begin analytics on that data. Martha would also want to make sure she enlists help from managers of various areas and departments while she tries to address questions that impact that area or department. Overall data analytics can be incredibly useful when implemented efficiently, correctly, and with buy-in from across the organization.

1. Alec is a manager for Baldwin Inc., and he is in charge of compiling data and producing analysis for various aspects of the business. Alec’s most recent undertaking involves looking into what to expect in the upcoming year. Alec would like to focus on what their expected production volume may be for next year. Which type of analytics would Alec want to use, and what are some challenges and constraints to consider?

Ans: NA, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Since Alec’s focus is on what can be expected in the future, he would want to utilize predictive analytics that use historical data and statistical models to predict the future. Descriptive and diagnostic analytics are used to explain what has happened in the past and why, while prescriptive analytics look at the future and give a specific recommendation. Since Alec’s inquiry is forward-focused on what is to come rather what has transpired or how to achieve something, that makes predictive analytics the best option. Although it can provide incredible insights, predictive analytics is not without its challenges and constraints. These can include the quality of the data available, the degree of uncertainty around the situation, the degree of statistical training needed to increase the reliability of the model, the potential biases and errors, and the ability to communicate results effectively to key decision makers.

1. The decision makers for Tangerine Corp. decided that they want to be more attuned to examining their operations from a more analytical perspective. They have asked Susanna, a department manager to spearhead this effort and to determine what she may need to get the company on the right path. Susanna needs to explore her current analytics options and identify when they may be useful. What are the four types of data analytics? When is each useful, and how do they differ from one another? Would Susanna be better off selecting just one type of data analytics?

Ans: NA, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Susanna will have the choice of four data analytics categories: descriptive, diagnostic, predictive, and prescriptive. Descriptive analytics are less complex and focus on hindsight and past activity, so they are most useful for examining what transpired. Diagnostic analytics are more insightful than descriptive, but they also remain focused on past events and are most useful when analyzing why something happened. Predictive analytics are more complex than descriptive and diagnostic, focus on the future, and are most useful to analyze what is likely to happen moving forward. Prescriptive analytics are the most complex of the types of data analytics, focused wholly on the future, and they are best used to determine what to do about something, often using modeling, optimization, or what-if scenarios. Susanna may find she is better off using one of the four categories more than the others, but only after she determines what question(s) she is trying to answer. She may find all four types to be incredibly helpful for answering different questions that may arise during her analysis.

1. Fey Company is a small factory that produces fashionable hats it sells on its website and to other wholesale vendors. Fey’s managers have been reviewing their financial statements and are growing concerned that their profit margins have continued shrinking year after year. Management has begun the process of collecting data and would like to employ data analytics to determine the causes of these changes in profit margins and create a plan to implement meaningful changes moving forward. What type of data analytics should management employ to satisfy their needs, and why?

Ans: NA, LO 3, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Fey Company would be best served by considering all of the options for analytics before picking a method. To perform analysis and best answer the question of what caused a change or why a change occurred, such as their change in profit margins, Fey should consider the use of diagnostic data analytics. Through this type of analytics, they will be able to gather data and drill down in more detail pertaining to different factors that may have impacted the margin such as suppliers, wages, and product costs. To create a plan to implement meaningful changes, this will involve looking into the future. The most impactful data analysis would be prescriptive. Under this category, Fey could utilize machine learning tools and simulations to help design and articulate their plan. The combination of these two types of data analytics should provide the best opportunities to fully satisfy the needs to management.

1. With the advent of analytical technology, organizations have been striving to incorporate more data analytics into their operations. This could result in hiring employees who have the skills necessary to assist the company in achieving these goals or an organization may choose to pay for training its existing employees so they can acquire these valuable skills. As it pertains to cost accounting, data analytical skills are immensely helpful and can be achieved in a number of ways. How can a person who is still in school obtain the data analytic skills that could help them to be an asset to a potential future employer?

Ans: NA, LO 4, Bloom: E, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Data analytic skills are obtained in a variety of ways and from a variety of sources. Those who strive to learn these skills will find themselves with a number of options on how they can obtain these skills. For those who are currently in school and thinking about making themselves more relevant to a future employer, data analytic skills could be obtained in the following ways:

• Take extra analytics or statistics courses.
• Pursue a data analytics certificate from the educational institution.
• Gain a certification in a useful data-related tool to demonstrate proficiency in a specific program.
• Read industry-specific publications that focus on data analytics and their applications to a particular industry.
• Complete free online tutorials that teach topics like data visualization and how to use tools that work with data analytics techniques.

The list above is not comprehensive but illustrates a few ways that a current student could obtain data analytics skills that will be useful for a future employer.

1. Data analytics serve a number of purposes for an organization, and each type of analytics provides an opportunity for an organization to make evaluations of a given situation. While the questions raised and answered by analytics can vary from organization to organization, the overall goals of making a business the best version of itself remain true. As it pertains to cost accounting, in what contexts have organizations used data analytics, and is it pertinent to use analytics in all four contexts discussed in the chapter?

Ans: NA, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: The outcomes experienced by organizations that use data analytics occur in the following contexts: eliminating non-value-added activities, improving supply chain management, performance evaluation, and strategy formation. Eliminating non-value-added activities involves evaluating existing systems using data analytics with the goal of reducing inefficiencies that should lead to more appealing results for an organization. Improving supply chain management involves using data analytics to evaluate everything in the supply chain from production/demand forecasting to manufacturing to inventory management and creating more efficient and effective systems. Performance evaluation improves with data analytics by ensuring that data used to provide feedback to employees is provided in near real time, and that provides a better opportunity for an employee to adjust their performance as opposed to waiting for an annual review. Strategy formation uses prescriptive analytics to help decision makers gain insights into various issues in organization and formulate plans. It is pertinent to use analytics to produce the desired results within each context, but an organization may find varying degrees of usefulness for each context depending on the industry and aspects of the organization itself.

1. Being career-ready has become a major objective for many accounting students as they prepare to graduate from college. It is not enough to just obtain a degree since employers now look for additional skills outside of hard technical skills. What are the top skills required for entry-level accountants, and why are they so important?

Ans: NA, LO 4, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution: Entry-level accountants are expected to have a multitude of skills now in addition to hard technical skills they acquire from their accounting coursework. The top skills for entry-level accountants include:

• Understanding the business your organization conducts.
• Being curious and honing your critical-thinking skills.
• Being an effective communicator.
• Getting comfortable with ambiguity and/or failure.
• Developing technical data analytics skills.

The field of accounting has grown to include many useful skills that go beyond financial statements and journal entries. Today’s accountants have to be constant problem- and puzzle-solvers who feel comfortable navigating not only data but the tools that help analyze that data as well. These skills are imperative to being a successful accountant in the modern business world.

Exercises

1. Artemis Inc. is a major producer of high-end designer dog collars and other accessories. Over the past few years, their goals have focused on increasing sales and expanding into new territories. Management feels that they do not have a good handle on what their current year looks like compared to the past several years. They would like to use data analytics to fix this issue because they realize the relevance and importance these analyses have in a modern business landscape. With this information in mind, please answer the following questions.
2. After considering what management hopes to investigate, will data analytics be useful in their decision-making? Please support your answer.
3. If the company were to use data analytics, then what kinds of questions could they ask and answer using these analyses?
4. Are there any additional considerations that pertain to their use of data analytics? Does a potential for error or misuse exist?

Ans: NA, LO 1, 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution:

1. After considering what management hopes to investigate, data analytics could assist with decision-making. Data analytics is the art and science of analyzing data with a focus on insights and patterns gathered from those analyses. Management is interested in growing sales and expanding into new territories, and to do so, they will need to take a deep look into their performance over recent years.
2. When using data analytics, it is crucial to first identify what issues or business questions you would like to address. The company may find a variety of questions it could ask and answer using data analytics. Some examples might include:

• What was the overall sales percentage year-to-year for the past few fiscal cycles?
• Are there territories where competitors are succeeding and Artemis does not currently have a presence?
• Have Artemis’s supplier’s prices increased year-to-year?
• Are some current territories more successful than others?
• How have any increases in costs impacted overall profit margins?
• What products are most popular, and is there a particular size, style, or color that performs better?

The above list of potential questions is only a beginning, and there could be many more questions raised that data analytics help answer.

1. Data analytics is a useful tool, but only when used properly and with an appropriate amount of planning. Mistakes happen when someone does not take the time to determine what questions they would like to answer before diving in to their analyses. Another consideration would be that while it is important to integrate data analytics and the respective terminology into everyday events, failure to do so could lead to misunderstandings and frustration. Mistakes can also occur when an analyst does not set the correct parameters or misunderstands what is being asked for. A potential for misuse exists when people might choose to take existing data and manipulate it in a way that demonstrates that it proves or supports something that it does not in fact support.
2. Tara is a cost accountant for Jameson’s Flavored Sparkling Water, and she is in the process of implementing a data analytics program. Management currently feels overwhelmed by the prospect of integrating a brand-new system of any kind, especially when they do not fully understand what that means for the company. Tara decided to create some documentation to put their minds at ease. With this goal in mind, please answer the following questions so Tara can complete her documentation.
3. What are hard and soft data, where does each of these come from, and how much effort does this require? Can Tara exclusively use only one type or the other?
4. What are internal and external data, and can you list several examples of sources for each?
5. What are some of the categories of data a company may try to collect about its customers, and can you list several examples of items that fall within each category?

Ans: NA, LO 2, Bloom: AN, Difficulty: Medium, AACSB: Analytic, AICPA: AC: Research, IMA: Technology & Analytics: Data Analytics, Solution:

1. Hard data is data that is verifiable and comes from reliable sources. Examples of hard data include information from statistics and numerical summations or aggregations. The amount of time and effort needed to collect this kind of information varies by both the type and the scope of the data collected. Additional effort and consideration must happen to verify the data sources for approval. Soft data is data based on qualitative inputs, and examples could include results from surveys or customer ratings. The amount of time and effort needed to collect this kind of information will also vary by the kind of collection tool needed. For example, if a survey is performed, then its distribution channel or channels will impact the time needed. Tara can choose to exclusively use one or the other or she could use combination of both types if she feels this route would best support her efforts to analyze a problem the business faces.
2. Internal data is data generated through internal processes a company already has in place. Data could come from multiple organizational systems or areas including:

• Customers
• Accounting and finance
• Information and technology
• Suppliers
• Sales and marketing
• Human resources
• Production
• Customer service

External data is data not generated internally but that may be interesting or useful to the organization or its stakeholders. These data sets inform companies about the users they serve and their preferences or can contain socioeconomic feedback. Sources for external data could include the following:

• Hashtags that trend on social media
• Google Analytics
• Online ads click logs
• Online surveys
• User profiles set up on company websites

While internal and external data come from different places, both can help a company better address their organizational needs.

1. Companies may wish to gather information about users and to compile it into a neater and more usable customer profile. In doing so, the company will have a complete and more well-rounded picture of what their users need and want. With this increased knowledge, a company can determine how they will provide a service or product to help these users satisfy their wants to achieve company goals. Some of the areas of information they may try to collect about their customers include the following:

• Personal: This area could include information about the customer including their address, age, gender, residential history, contacts, number of children, ethnicity, and relationship status.
• Financial: This area could include information about the customer including their loans, educational level or background, income, employment history, number of credit cards, credit rating, and properties owned.
• Activity and history: This area could include information about the customer’s search history, browsing history, calendar events, social media habits, and chat conversations.
• Health/fitness: This area could include information about the customer’s average steps taken in a day, hours slept, frequent walking routes, heart rate, and gym or club memberships.
• Interests: This area could include information about the customer’s choices in music streamed, hobbies, devices used, vacations taken, political views, and events attended.

While each area of a person’s data can provide some insight into their wants and needs, having information in multiple areas helps a company develop a more nuanced understanding of their customer’s needs.

1. Samantha is a Human Resource Associate for a small factory, and management asked her department to evaluate current wage trends. Ultimately, management has expressed concerns about the turnover the factory experienced over the past couple of years, and they hope to use analytics to determine possible causes. The company experienced a lot of turnover that has caused a lot of change in the rates paid to different hourly workers. The accounting department gathered the following data about 10 factory workers employed during the two-year period:

Samantha needs to use data analytics to assist in the investigation into possible causes for this turnover. With this information in mind, please answer the following questions. Use Excel or a similar spreadsheet program as appropriate.

1. Samantha would like to determine what the average hourly wage is. Using horizontal analysis, what is the percent change in the average hourly wage between this year and last year?
2. Samantha determines the market average wage rate for similar positions is $14.54 per hour. According to the data used in part a), is the factory competitive? What course of action could management take to ensure they either become or remain competitive?
3. Samantha would like to create a visual depiction of the average wages for the current and previous year compared to the average wages mentioned in b). Create an appropriate graph or visual, and explain why you selected that type of graph or visual.

Ans: NA, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Average Hourly Wages: Current Year is $14.20; Previous Year is $14.06; 0.97% increase from the previous year.

To calculate this average, you could calculate it manually by adding the wages in each respective year and dividing by the total number of employees. Alternatively, Excel or a similar spreadsheet program could also do the calculation using the following formulas:

Average Hourly Wages (Current Year) = AVERAGE(number1, [number2], …), which returns the value of $14.20.

Average Hourly Wages (Previous Year) = AVERAGE(number1, [number2], …), which returns the value of $14.06.

To calculate the percentage change, use the following formula:

(Average Hourly Wages (Current Year) – Average Hourly Wages (Previous Year)) / (Average Hourly Wages (Previous Year)) =
($14.20 – $14.06)/$14.06 = 0.97% increase from the previous year.

1. If the average pay for similar positions at other companies is currently $14.54, then this would indicate that Samantha’s company is not currently competitive with the average hourly wage of $14.20. For the company to become competitive, they would need to increase the average hourly wage offered to their employees. Failure to do so could result in the increased turnover they have noticed since employees may leave to seek higher-paying opportunities. Samantha could also consider showing what additional benefits other companies offer, including health insurance and amount of vacation time, to increase the value of what her factory offers current employees.
2. To depict the information visually, Samantha will need to use Excel or another data analytics tool. In these tools, she should generate a bar graph to visually depict the differences in pay. It might look like this:

A bar graph is the most appropriate choice here since it displays the differences in pay at the company for each year alongside the market average.

1. Phoebe started her first job out of college, and she decided that creating a budget is incredibly important. After her first month on the job, she brought home a net sum of $1,853 in take-home pay, and she currently has savings of $500. She has constructed a chart to summarize her budgeted and actual financial amounts.

Phoebe knows living within her means is very important and is open to the possibility of obtaining additional income when needed. With all of this information in mind, please answer the following questions. Use Excel where appropriate.

1. Create a chart that shows both the budgeted and actual amounts for each expense category (a form of descriptive analytics), and comment on any observations you have.
2. Are there any external data sets Phoebe could use to determine whether her budgeted amounts are appropriate and realistic? What actions could she take to better align her budgeted values with the results of this external data?
3. Phoebe is debating whether she should accept a part-time baking job on weekends where she could net an extra $200 per week. What are the pros and cons of Phoebe taking on this extra work? How could Phoebe utilize what-if analysis (prescriptive analytics) to consider different scenarios?

Ans: NA, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Phoebe should select a bar graph because it will do the most efficient job of visually displaying the differences between budgeted and actual amounts. The graph should look like this:

Based on this graph, Phoebe will need to pay close attention to what is spent on Food and Utilities in coming months since she went over her budgeted amounts in both categories. She did a much better job of staying under her budget on Gas and Entertainment.

1. Part of the budgeting process should entail that budget expectations are realistic, and Phoebe should evaluate her budgeted numbers regularly. External sources might include a website that displays apartment rents in her area, apps and websites showing the prices of groceries for nearby grocery stores, her utilities provider’s website for utilities rate information, and various websites to determine if what she budgets for entertainment is a good approximation of what she pays. If she discovers any discrepancies from these external data sources, then she could update her budget with a more accurate number. She could also consider adding roommates to offset some of the costs with her current place of residence. Additionally, she could use the data she collects to reduce some of her current expenses, such as determining if she should clip coupons for groceries.
2. A what-if analysis is a form of scenario analysis that allows a user to create hypothetical situations and evaluate the various outcomes for differing incomes. Phoebe earning additional money from a part time job would definitely be a great scenario to run through a what-if analysis. Phoebe may want to determine how quickly she could save for a specific goal, or if it could help her in maintaining her current spending without making changes. Some pros for accepting additional work include an increased cash flow, increased spending power, and the ability to better meet her current financial needs. Some cons for accepting additional work include having less free time, a potential for increased stress, and a decrease in flexibility as it pertains to travel and general mobility. Overall, this additional work could result in benefits that could help Phoebe achieve new goals in addition to ones currently budgeted for.
3. Larry is the owner and operator of Larry’s Pool Services, and he is performing his yearly financial review for the past year. The first step in the process is to look at his sales performance before evaluating any other metrics.

Larry decided to use data analytics for the first time. He recently took a course covering basic data analytics and how to apply the methodologies. With all of this in mind, please answer the following questions.

1. Larry believes a pie chart will best display his data for evaluation. Do you agree with this assessment? Why or why not? If you disagree, then please explain what graph you would recommend.
2. Using Excel or a similar spreadsheet program, create the graph from part a). What observations can you make looking at this graph?
3. Based upon your assessment from part b), what recommendations would you have for Larry for next year? Do you believe Larry has done an efficient job of budgeting for his business? What reasons could explain the drastic changes in revenues from June – August?

Ans: NA, LO 2, 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. A pie chart would not be the best choice for effectively displaying the data Larry collected. If Larry instead wanted to demonstrate how much of the overall budgeted revenue was allocated to each month, then a pie chart would be an appropriate choice. Larry should create a time series graph to display the actual and budgeted amounts across the span of the whole year for comparison.
2. To create a time series graph, you need to first enter the data into Excel. Then, highlight Cells A1:C13, select “Insert”, select “Chart”, and select “Line Graph” from the choices provided. After doing this, your graph should look like this:

Based on this graph, there are many possible observations. The business was under their budget in the beginning of the year, surpassed it in the middle of the year, and was very close to its goal from September to December.

1. Larry has done an efficient job of managing his budgeting, but he may want to reevaluate whether to reallocate some of the budget to the summer months when revenues were higher than normal. As a pool service business, the cyclical nature of the business could help explain the peak in the summer months and the decline in the traditionally colder months. Without additional information about the geographic location of the business or specific weather patterns for that area during that year, more specifics cannot be determined. You should also recommend that Larry try to incorporate weather predictions into his budgeting if he is not yet doing so. If the following year will be warmer, then they may be able to anticipate periods of higher sales or periods of lower sales should it be colder.
2. Jeweltopia is a trendy online jewelry boutique that completed its first year of operations. Management would like to conduct some data analysis to take a detailed look at various business activities. Jill, the sales head, is concerned that their sales have not met their budgeted sales every month. Analysts collected the following data:

Jill decided to analyze his data and create some visuals to assist during the presentation of her findings to management. With all this in mind, please answer the following questions.

1. Using Excel, determine sales variances for each month. Also, determine if the Jeweltopia had favorable or unfavorable sales variance for the year as a whole.
2. Jill would like to create visual aids to depict this data in a way. What kind of graph would you create for Jill and why? Using Excel, create this graph.
3. Based on your answers to parts a) and b), do you believe Jill’s concerns are warranted? What would you recommend Jill do about their budgeting or current sales figures?

Ans: NA, LO 2, 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. To complete this task, re-enter this information into Excel. To calculate the variance, you will use the following formula: (Actual Sales – Budgeted Sales) or enter the following into Excel: =(C2–B2). Repeat this action for each row to determine each variance’s idealized return for each month. The results will appear as follows:

To determine the overall variance, first total the budgeted sales and actual sales columns. Then, use the same formula you did for the previous data above.

According to the data, Jeweltopia had unfavorable sales variance for the year as a whole.

1. To display the information in a visually useful way, Jill will want to use a time series graph. This type of graph allows data to be displayed chronologically while comparing budgeted and actual sales amounts. To create a time series graph, first re-enter the data set into Excel. Then, highlight Cells A1:C13, select “Insert,” select “Chart,” and select “Line Graph” from the choices provided. After doing this, your graph should look like this:

Based on the answers from parts a) and b), Jill’s concerns seem warranted. Jeweltopia managed to be close to or surpass their budgeted sales projections for four months while missing their budgeted sales projections over the remaining 8 months. Jill and the management team should consider looking into January, June, and November in particular as unfavorable variance for these three months was much higher than other months. They could also look into March and July to see why they were able to surpass the budget compared to other months. It would also be prudent to know if any other market conditions impacted sales of their products. Overall, Jeweltopia was not able to meet their budgeted sales for the year, so they definitely need to determine how they can do a more efficient job of budgeting and/or increasing sales.

1. Wally’s Window Emporium is a leading producer and provider of residential windows across the United States. They just completed their second year of operations and compiled the following data:

Management feels overwhelmed when they look at the data in this format, and they do not feel comfortable making decisions for the upcoming year until the data is easier to understand. The analytics team needs to present this information in a more user-friendly fashion so management can make data-informed decisions. With this information in mind, please answer the following questions.

1. What was the Gross Profit Percentage for each region for Year 2? What was the Net Income Percentage for each region for Year 2? (Round your answers to two decimal places.)
2. Which region had the largest percentage increase between years for Sales, Cost of Goods Sold (COGS), and Expenses? (Round your answers to two decimal places.)
3. What kind of graph would be most useful to display a comparison of net incomes for each region for Year 2? Create this graph.

Ans: NA, LO 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Gross Profit Percentage:

North = 58.26%

East = 60.20%

South = 46.35%

West = 47.24%

Net Income Percentage:

North = 15.32%

East = 15.77%

South = 12.55%

West = 12.95%

To calculate the Gross Profit Percentage, you need to create new cells with each region’s name. In the cell to the right of the cell North, use the following formula: (Sales – COGS)/Sales, or = (C2–C8)/C2, which returns an answer of 58.26%. Repeat this for each region, and this results in: East = 60.20%, South = 46.35%, and West = 47.24%.

To calculate the Net Income Percentage, you need to create new cells with each region’s name. In the cell to the right of the name for North, use the following formula: (Sales – COGS – Expenses)/Sales, or = (C2–C8–C14)/C2, which returns an answer of 15.32%. Repeat this for each region, and this results in: East = 15.77%, South = 12.55%, and West = 12.95%.

1. Largest Percentage Increase: For Sales, North at 4.42%, for Cost of Goods Sold, West at 6.17%, and for Expenses, North at 5.96%.

To calculate increases or decreases in sales, use the cell next to each region’s name in Column D. Use the following formula: (Year 2 Sales – Year 1 Sales)/Year 1 Sales or, (C2–B2)/B2, which returns an answer of 4.42%. Repeat this for each region and this results in: East = –2.25%, South = 2.79%, and West = 0.93%. North had the largest percentage increase in Sales.

To calculate increases or decreases in COGS, use the cell next to each region’s name in Column D. Use the following formula: (Year 2 COGS – Year 1 COGS)/Year 1 COGS, or (C8–B8)/B8, which returns an answer of 5.15%. Repeat this for each region and this results in: East = –6.80%, South = 6.17%, and West = 4.36%. So, West has the largest percentage increase in COGS.

To calculate increases or decreases in Expenses, use the cell next to each region’s name in Column D. Use the following formula: (Year 2 Expenses – Year 1 Expenses)/Year 1 Expenses, or (C14–B14)/B14, which returns an answer of 5.96%. Repeat this for each region and this results in: East = –4.75%, South = –5.75%, and West = –5.47%. So, North has the largest percentage increase in Expenses.

1. The best graph to display a comparison of net incomes for each region in Year 2 would be a bar chart. Bar charts are useful when comparing total values between groups. To create a bar chart, enter the name of each region vertically. In the cell to the right of each name, you will need to calculate net income for that region for Year 2. Use the following formula: (Sales – COGS – Expenses). Repeat this for each region. Once you have finished, select the name of each region along with its Net Income. Select Insert, then Chart, and then Bar. The resulting chart should look like this:
2. Wally’s Window Emporium is a leading producer and provider of residential windows across the United States. They just completed their second year of operations and compiled the following data:

Management feels overwhelmed when they look at the data in this format, and management does not feel comfortable making decisions for the upcoming year until the data is easier to understand. The analytics team needs to present this information in a more user-friendly fashion so management can make data-informed decisions for the coming year. With this information in mind, please answer the following questions.

1. What are the average sales, average cost of goods sold (COGS), and average expenses for each region across both years?
2. Which region had the largest increase in gross profit from Year 1 to Year 2, and which region showed the largest increase in net income from Year 1 to Year 2?
3. What kind of graph would be the most useful to display the division of sales revenues for the South region in Year 1?

Ans: NA, LO 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Average Sales:

North = $740,312

East= $780,262

West = $821,702

South = $808,978

Average COGS:

North = $307,941

East = $318,232

West = $433,921

South = $419,845

Average Expenses:

North = $315,649

East = $351,245

West = $290,143

South = $286,723

To calculate the average Sales, create a new range with each region’s name. In the next cell in the “North” row, use the AVERAGE function, or “=AVERAGE(B2:C2),” which returns an answer of $740,312. Repeat this for each region, and these values should result: East = $780,262, West = $821,702, and South = $808,978.

To calculate the average COGS, create a new range with each region’s name. In the next cell in the “North” row, use the AVERAGE function, or “=AVERAGE(B8:C8),” which returns an answer of $307,941. Repeat this for each region, and these values should result: East= $318,232, West = $433,921, and South = $419,845.

To calculate the average Expenses, create a new range with each region’s name. In the next cell in the “North” row, use the AVERAGE function, or “=AVERAGE(B14:C14)” which returns an answer of $315,649. Repeat this for each region, and these values should result: East = $351,245, West = $290,143, and South = $286,723.

1. Largest Increase in Gross Profit from Year 1 to Year 2 occurs in the North region at 3.91%; and, the Largest Increase in Net Income from Year 1 to Year 2 occurs in the East region at 21.78%

To calculate the increases in gross profit for each region, calculate the Gross Profit in Years 1 and 2. Create a new list of the regions, and in the cells to the right of this list, calculate the gross profit for Year 1 for each region in its row. Use the following formula: “Year 1 Sales – Year 1 COGS” or B2–B8 and that should return an answer of $424,090 (for the North region). Now, do the same for Year 2 in a new column of cells using the following formula: “Year 2 Sales – Year 2 COGS” or C2–C8 and that should return an answer of $440,652 (for the North region). To calculate the increase, use the following formula: “(Year 2 Gross Profit – Year 1 Gross Profit)/Year 1 Gross Profit”, and that should return an answer of 3.91% (for the North region). Repeat this for each region, and the following values should result: East = 1.02%; West = –0.87%; and South = –2.65%. The North region is the region with the largest increase in gross profit.

To calculate increases or decreases in net income, calculate the Net Income in Years 1 and 2. Create a new list of regions, and in the column to the right of that list, calculate the net income for Year 1 for the North region. Use the following formula: “Year 1 Sales – Year 1 COGS – Year 1 Expenses”, or B2–B8–B14, and that should return an answer of $117,580. Now, do the same for Year 2 in the next column using the following formula: “Year 2 Sales – Year 2 COGS – Year 1 Expenses”, or C2 – C8 – C14, and that should return an answer of $115,864 for the North region. To calculate the increase, use the following formula: “(Year 2 Net Income – Year 1 Net Income)/Year 1 Net Income,” and that returns value of –1.46%. Repeat this for each region, and these values should result: East = 21.78%; West = 15.23%; and South = 5.69%. The East region is the region with the largest increase in Net Income.

1. To display the division and allocation of sales revenue for the South region in Year 1, a pie chart would be the most appropriate chart to use. This type of chart demonstrates how components of a total sum distribute between different subgroups. To create a chart, type a list of categories: COGS, Expenses, and Net Income, in a new area. Then, copy the values of the subtotals for those fields for Year 1 for the South region. Once you have finished, select the name of each item and its total. Select Insert, Chart, and then Pie. The result should look something like this (after formatting and adding titles and labels):
2. Chocolate Delights Company manufactures gourmet chocolate candy that it sells online. Chocolate Delights takes customer service very seriously and asks customers if they would like to complete a survey after each purchase. The company has been in business for 5 years and have had a good response rate on the surveys sent so far. The company needs to decide whether to add 4^th of July-themed candy to its current offerings, so they solicited feedback from 20 randomly selected customers to rate the idea on a scale from 1 to 10, along with other questions. Here are some results from those 20 randomly selected individuals:

On their customer survey scores, the following ranges exist:

1. How many of each converted letter scores (column B) did Chocolate Designs receive from this survey?
2. What is the overall average score from these 20 results? What is the median score? And what is the mode score?
3. If you were going to create a graph to display results of the survey (from part a), then what kind of graph would you create, and why? Create the graph you just mentioned.

Ans: NA, LO 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. A⁺: 1; A: 4; B⁺:12; B:3; C:0

To solve this question, utilize the COUNTIF function in Excel. First, create a list for each potential grade. In the cell next to converted letter score “A⁺,” use a formula containing the COUNTIF function as follows: =COUNTIF(B2:B21,”>=9”) that returns value of 1. In the cell next to converted letter score “A,” use a formula containing the COUNTIF function as follows: =COUNTIF($B$2:$B$21,">=7")–COUNTIF($B$2:$B$21,">=9") that should return the value of 4. Repeat this process for the other converted letter score ranges, and the following values result: B⁺: 12; B: 3; and C: 0.

1. Overall Converted Letter Score (Average): B⁺; Median Score: B⁺; and Mode Score: B⁺

To solve this question, use the AVERAGE, MEDIAN, and MODE functions in Excel. The average numeric score is =AVERAGE(B2:B21), and that is 6.225. The median numeric score is =MEDIAN(B2:B21) and that is 6. The numeric mode is: =MODE(B2:B21), and that is 5.75.

Converting these numeric values using the given scale:

1. The best graph to use would be a bar graph. A bar graph displays overall (or stacked) totals to compare between distinct mutually exclusive groups. In this case, the different groups are the letter scores converted from the numeric ratings received on the original scale of 1 to 10. The graph should look like this after formatting and some customizations:
2. Chocolate Delights Company manufactures gourmet chocolate candy that it sells online. Chocolate Delights takes customer service very seriously and asks customers if they would like to complete a survey after each purchase. They have been in business for 5 years and experienced a good response when measured in terms of sales revenue. In their first year of operations, they successfully sold 1,050,000 boxes of chocolate containing different flavors at $20.00 per box. In subsequent years, the sales price per box remained constant at $20.00, but year-by-year, the company experienced a 6%, 5%, 8%, and 8% growth in the number of boxes sold per year compared to each previous year.

Based on the information above, answer the following: (If necessary, round the number of units sold to whole units since they do not sell fractional chocolates.)

• 1. What is the average sales amount (in dollars) over the company’s 5-year lifetime? What is their median sales value over the same span?
  2. What year made up their largest percentage of the overall sales compared to every other year? Disregarding Year 1, what might explain that increase in sales?
  3. If you were going to create a graph to display the results of their sales over the company’s 5-year history, then what kind of graph would you create, and why? Create a version of the graph you just mentioned.

Ans: NA, LO 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Average sales were $23,827,624; and, the median sales value was: $23,373,000

First, find out the dollar amounts of sales and the numbers of units sold for each of the five years of the company’s operations. Based on the information given and the value for Year 1, subsequent sales figures for other years will be as follows:

To find the average annual sales amount, use the AVERAGE function in Excel over the relevant range “=AVERAGE(E2:E6)“ to get a value of $23,827,624. To solve for the median, use the MEDIAN function in Excel over the same range “=MEDIAN(E2:E6)” to get a value of $23,373,000.

1. Year 5 had the largest percentage of the overall sales for all years.

To determine what year made up the largest percentage of the overall sales for all years, calculate the total sales for all five years. You can calculate this by using the following formula “=SUM(D2:D6)“ to get a value of $119,138,120. Next, divide each year of sales by the total sales to find the percentage of sales made in that year. For Year 1, enter =D2/D7 to get a value of 17.63% after appropriate formatting. Repeat this process for the other years to get these values: Year 2 = 18.68%; Year 3 = 19.62%; Year 4 = 21.19%; and Year 5 = 22.88%. Therefore, Year 5comprises the largest percentage of the total sales.

There could be many possible explanations for such an increase including increased volume of boxes, success in marketing campaigns, new product offerings, website redesign, customer loyalty incentives, shipping discounts, or promotional discounts that increased sales overall.

1. To display data that changes over time, such as the sales data from Chocolate Delights, a line or time series graph is best. This type of chart will display each sales point along a path of connected points demonstrating the value’s changes over time. This data’s graph should look similar to this after appropriate formatting and customizations:

Problem

1. Starling Corporation completed their fifth year of operations as a manufacturer of chalkboard paint. Starling has seen growth in sales. But they have concerns about whether their spending is higher than they would like it to be. As part of their annual review process, management would like to put together some data and analyze it to create some visuals that better illustrate their performance over the year. The accounting department compiled the following data for the previous five years:

Management asked the analysts to help in this year’s review and will need the information compiled within the next week. With all of this in mind, please assist Starling by answering the following questions. Use Excel where appropriate.

1. What is the average value for Sales over those five years? What is the average Cost of Goods Sold for five years? What were the average Expenses for five years? (Round your answers to whole number.)
2. What is the Gross Profit percentage for each year? What are the Net Income percentages for each year?
3. To visually depict this information, Starling would like to create a graph. Which type of graph is most appropriate, and why? Create the graph you just mentioned.
4. Based on the analysis and graph you provided so far, what observations can you make about Starling Corporation? Is there any advice you would like to give management to help them move forward?

Ans: NA, LO 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

1. Average Sales per year: $148,049; Average Cost of Goods Sold per year: $72,605; and Average Expenses per year: $63,394

To calculate the average value for each item, use the AVERAGE function in Excel. Starting in cell G2, you will enter =AVERAGE(B2:F2), and that should return an answer of $148,049 for Sales. Next, in cell G3, you could enter =AVERAGE(B3:F3), that returns an answer of $72,605 of Cost of Goods Sold. Next, in cell G4, enter =AVERAGE(B4:F4) and that returns an answer of $63,394 of Expenses.

1. Gross Profit Percentage: Year 1, 57.63%; Year 2, 58.42%; Year 3, 58.67%; Year 4, 44.92%; and Year 5: 43.86%. Also, Net Income Percentage: Year 1, 7.52%; Year 2, 11.82%; Year 3, 7.18%; Year 4, 8.27%; Year 5, 6.93%

To calculate the gross profit percentage, calculate the gross profit, and divide by sales for each year. For Year 1: =(B2–B3)/B2 = 57.63%, For Year 2: =(C2–C3)/C2 = 58.42%, For Year 3: =(D2–D3)/D2 = 58.67%, for Year 4: =(E2–E3)/E2 = 44.92%, and for Year5: =(F2–F3)/F2 = 43.86%.

To calculate the net income percentage, calculate the net income, and divide by sales per year for each year. For Year 1: =(B2–B3–B4)/B2 = 7.52%, For Year 2: =(C2–C3–C4)/C2 = 11.82%, For Year 3: =(D2–D3–D4)/D2 = 7.18%, Year 4: =(E2–E3–E4)/E2 = 8.27%, and Year 5: =(F2–F3–F4)/F2 = 6.93%.

1. Starling should create a time series graph or line graph that depicts sales, cost of goods sold, and expenses over the course of the five-year period provided. Displaying your data in this way will allow you to see how each of the variables displayed has changed over course of five years.

To create a line graph in Excel, highlight the Sales, Cost of Goods Sold, Expenses, and its data points. Next, click the Insert tab, then Chart, then line. The graph should look like the following:

1. Based on the analysis and graph given, Starling had a steady increase in Sales as well as their Cost of Goods Sold and Expenses. Both gross profit percentages and net income percentages are positive, indicating that management did a sufficient job to date at the management level of their operations. They need to be mindful that there has been a decline in gross profit percentage every year since year 3 and that year 5’s net income percentage also experienced a decrease compared to Year 4. I would encourage them to use this historical data to budget for future years so they can then measure their performance against their budgeted numbers. They could also run some what-if analysis to determine how different scenarios may have impacted life on business. Doing so would also help management focus on specific outcomes rather than a single measure.
2. Simon recently completed the third year of his four-year college and is trying to decide what he would like to do after graduation. Simon decided to pursue a one-year graduate degree in Accounting with a minor in Finance. Simon also accepted an internship for the coming summer at a local accounting firm where he is hoping to gain insight into what his life would look like if he went into an accounting-specific position after 4^th year. Simon’s grades and GPA for the first three years of his college look as follows:

In order to be accepted into the graduate program, Simon needs a minimum GPA of 3.5. He believes he would be offered a starting salary of $48,000 if he went straight into working as opposed to attending graduate school. After graduate school, he expects a starting salary of $58,000, assuming he does complete his graduation. With all of this in mind, please help Simon evaluate his past three year’s performances by answering the following questions.

1. Use Excel to calculate the following totals for Simon’s GPA: Average, Median, and Mode. What does each of these figures tell you?
2. Based on data calculated in part a), is Simon’s GPA on track for what will be needed to get into graduate school? Is there any additional advice to give Simon about his senior year?
3. Simon would like to know how many As he has earned compared to Bs and Cs. Create a Count Data chart that summarizes this data.
4. Using Excel, create a graph that displays the information you collected in part c). Why did you select the graph you did, and why is it the best way to represent this data?
5. Assume Simon’s GPA is sufficient and does not change much. He is accepted into a graduate program, so how many years would it take him after entering his profession to make up the lost year of income from extending his time in school? Please ignore inflation, and please explain how you arrived at your answer.

Ans: NA, LO 1, 2, 3, Bloom: AP, Difficulty: Medium, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution: To best use the data, re-enter it into Excel as a column or set of columns that look like this:

1. AVERAGE = 3.57, MEDIAN = 4, MODE = 4

To calculate each figure in a given row, you need to use a different Excel-based formula as follows:

Average: The average is the overall GPA of the courses listed.

=AVERAGE(D2:31) returns an answer of 3.57.

Median: This is the midpoint of his GPA.

=MEDIAN(D2:31) returns an answer of 4.

Mode: This statistic gives information about the most frequently occurring GPA of the courses listed.

=MODE(D2:31), which returns an answer of 4.

1. According to data calculated in part a), Simon’s average GPA is 3.57 and a minimum of 3.5 is needed to be considered for the graduate program. He currently has more than the required GPA of 3.5. Simon needs to be mindful that he still has one year left of classes and receiving more Bs and Cs might drag his average GPA below the required 3.5. He will want to make sure he monitors his grades so he does not ruin his chances of being accepted.
2. In order to calculate the number of letter grades earned, Simon will want to utilize a formula with the COUNTIF function in Excel. He would input the formulas as follows:

For As =COUNTIF(D2:D31,4), and that returns an answer of 19

For Bs =COUNTIF(D2:D31,3), and that returns an answer of 9

For Cs =COUNTIF(D2:D31,2), and that returns an answer of 2

Now, assemble a Count Data chart that should look like the following:

According to the chart, Simon earned 19 As compared to 9 Bs and 2 Cs.

1. A bar chart is an appropriate graph to fully represent the data, when Simon is comparing total values between different grades earned. To create a bar chart in Excel, first highlight the cells in the Count Data chart (in part c). Next, click the Insert tab, then Chart, then column. A graph should appear as follows:
2. Simon is missing out on $48,000 of income if he passes up the available job. When Simon graduates from the one-year graduate-level program, he will earn $58,000. This is an additional $10,000 of income per year. To determine how many years it would take to make up that year of missed income, divide the $48,000 of missed income by the extra $10,000 of income earned by finishing graduate school. $48,000/$10,000 = 4.8 years to recoup the missed income using the additional income. This does not account for any potential raises Simon received at either position that would have impacted this time as well.
3. Archer is a sales associate at a music equipment store. He worked for this store for while finishing a degree at a local university. Archer is debating whether he should stay and accept a promoted role of manager in his current music store or accept a management position at a different store once he finishes his schooling. He determined that as a manager, his take home pay for both jobs will be $4,000 per month, and he constructed a following budget for each scenario:

Each job has different benefits. The new job pays for a larger portion of health insurance premiums, provides company-paid internet, and is closer to Archer’s house, while the current job provides onsite lunches frequently resulting in a lower overall food budget. These different benefits result in differing amounts in the budget. Archer decided that any unspent funds will go to a savings account. With this information in mind, please answer the following questions. Use Excel or a similar spreadsheet where appropriate.

1. Under each budget, how much will Archer be able to put in his savings account? What is the percent difference in savings that Archer can amass per month? How many months would it take in each scenario to save enough money to afford a down payment of $22,500 towards a new house?
2. Create a chart for each job’s budget to visualize the proportion of Archer’s budget needed for each category in each scenario. What chart is appropriate for this, and why is it the best option? What type of data analytics is this an example of?
3. Assume Archer decides to stay at his current job and accept the management role. He did a good job in his first month of the new role but he did go over budget in a few areas. His actual spending was $340 on food, $71 on phone, and $191 on household supplies. Create a chart to show the budgeted and actual amounts for each category. To add some diagnostic analysis, provide at least three plausible explanations for the overages.
4. Now, assume Archer decides to accept the management position in a different store, and his actual spending was $502 on food, $89 on gas, $71 on phone, and $199 on household supplies. Create a chart to show the budgeted and actual amounts for each category. To add some diagnostic analysis, provide at least three plausible explanations for the overages.
5. Archer has come to you for guidance and help deciding what job to take based on the available information gathered in parts a-d. Which job would you advise him take, and why? How could Archer use what-if analysis, a form of prescriptive analytics, to help with this decision? What is a potential scenario that Archer should investigate?

Ans: NA, LO 1, 2, 3, 4, Bloom: S, Difficulty: Hard, AACSB: Data Analytics, AICPA: AC: Technology and Tools, IMA: Technology & Analytics: Visualization, Solution:

• 1. Under each budget, Archer would be able to save the following amounts:

Current store = Take home pay – Total expenses

= $4,000 – $3,070 = $930 for Savings

New store = Take home pay – current expenses

= $4,000 – $3,009 = $991 for Savings

To determine the percent change between savings generated in each scenario, you can take the higher savings minus lower savings and divide by the lower savings amount. ($991 – $930)/$930 = 0.06559 or 6.6% higher savings with the job at new store.

To save up for a down payment on the house would take the following times:

Job at the current store = $22,500/$930 = 24.19 months, so 25 months to save at least the down payment amount

Job at the new store = $22,500/$991 = 22.70 months, so 23 months to save at least the down payment amount

• 1. The chart most appropriate to demonstrate the allocation of a budget to different areas would be a pie chart. As shown in the pie charts created for each job, the pie divides the $4,000 take home pay and shows the budgeted proportions using a color-coded radial slice. In the budget for current store job, rent is the largest expense and uses a major part of the budget. Savings is the next largest item followed by health insurance. In the job for the new store, rent is still the largest expense, using the largest part of the budget. Savings is the next item, followed by food. These pie charts are examples of descriptive analytics since they display what has already transpired.
  2. When you compare his budgeted expenditures to his actual expenditures, the numbers are as follows:

Using Excel, you can generate a bar chart that will visually display budget versus actual. This bar chart will do an effective job of demonstrating the differences in budgeted and actual amounts.

Archer could give many reasons to explain the overages including the following:

• Archer got home from the office later than usual and decided to get takeout which increased his food amount.
• Archer ended up using more data than usual on his phone which accounts for the increase in phone bill.
• Archer had to restock household supplies which increased what he spent in that area.
• The increase in spending led to a decrease in what Archer was able to put into savings.
  1. When you compare his budgeted expenditures to actual expenditures, the numbers are as follows:

Using Excel, you can generate a bar chart that will visually display budget versus actual. This bar chart will do an effective job of demonstrating the differences in budgeted and actual amounts.

Archer could give many reasons to explain the overages including the following:

• Archer got home from the office later than usual and decided to get takeout which increased his food amount.
• Archer ended up using more data than usual on his phone which accounts for the increase in phone bill.
• Archer had to drive home a few days during his lunch period which increased the amount of gas used.
• Archer had to restock household supplies which increased what he spent in that area.
• The increase in spending led to a decrease in what Archer was able to put into savings.
  1. Based upon the information gathered in parts a-d, Archer may be best off by accepting the job at the new store if he is willing and able to reduce some of his actual expenses incurred. If he can stick to his budget, then this will allow him to save more per month and achieve his goal of saving for a down payment faster than he could do at his current job. If he does not believe he can stick to the initial budget he laid out, then he would be better off accepting the manager position at his current store since it affords him the ability to save more per month.

Archer can use what-if analysis to determine multiple scenarios moving forward that could ultimately help him decide what option is most sensible for him. Based on the data we have; Archer could conduct a what-if analysis to determine how much he would need to cut in spending at the new job to break even with his current job. He could also use this form of analysis to estimate the extra number of months needed to save for the down payment assuming parts or all of his spending were to change. Overall, what-if analysis is an excellent tool for gaining insight into future possibilities.