The document provides details on designing a wide area network (WAN) to connect the locations of an organization. It recommends using point-to-point radio or leased line connections between sites. To ensure high availability, it also recommends redundant VPN connections over the internet. The document then discusses determining bandwidth requirements for each connection based on the number of users and applications. It provides specifications for routers, switches, firewalls, and cabling to implement the WAN design across the five locations.

1. 1
Running Head: Network Design
3
Network Design
University Affiliation
Course
Date
Professor
Wide Area Network Design
An enterprise network is a diverse and large network connecting
most major points in a company, business or other organization.
An enterprise differs from a WAN in that it is privately owned
and maintained. There are a variety of WAN technologies to
meet the different needs of businesses and many ways to scale
the network. An enterprise must subscribe to a WAN service
provider to use WAN carrier network services (Paquet, 2013).

2. In designing of the WAN portion of the network, the first step is
to understand the specific network characteristics of the various
locations from a Wide Area Network point of view and to then
analyze and decide how to implement WAN connectivity at each
location. The proposed WAN has specified both possible leased
line as well as point to point radio connectivity between sites
(Zhang, 2005). It is recommended that the wide area network
connection between remote offices should be a point to point
radio link. The Plant facility in one location has the capability
of using satellite communications or other leased lines for this
deployment. Also, for high availability it is recommended that
all locations also have site to site redundant links over the
Internet through the use of (virtual private network) VPN
connectivity. VPN technology will enable organization to create
private networks over the public Internet infrastructure that will
maintain security and confidentiality. We will use VPNs to
provide a virtual WAN infrastructure that connects branch
offices to all or portions of their corporate network.
Different applications require varying amounts of network
bandwidth the bandwidth required between these sites is
dependent upon several factors that include amount of traffic
(which varies depending upon the number of users connected to
the network), number of hosts, number of network users,
protocol being used, potential applications deployed on the
network and the network design. For offices with lower
bandwidth requirements the most recommended Frame Relay
connection should provide no less than 768Kbps while locations
with a larger bandwidth requirement will need point to point T1
connections (around 1.54Mbps). To determine which type of
connection is appropriate at each location, a list of the
approximate number of users and hosts at each site along with
the applications they use will be we put in consideration when
coming up with the equation for properly determining
bandwidth requirements for the network. The required
bandwidth in this case will be measured by first determining the
amount of space available to transfer data. So for the T1

3. connections we need to divide 1.54Mbps by 8 to get the number
of bytes per second available on the WAN connection.
Therefore, a T1 connection will support 192 Mbps. Next, we
will determine the amount of bandwidth needed for each
application, which in some cases is available from the vendor
and capture a sample of the network traffic generated by
category of user at specific times of the day and week. Then we
will compare the average the amount of data in Mega Bytes
captured per second multiplied by the number of hosts/users
that will use the link and compare it to the amount of bandwidth
available (such as the 192 Mbps supported by T1 connections).
Bandwidth for wireless links such as satellite can be calculated
using the same formula however their total available bandwidth
changes considerably throughout the day so an additional 35%
bandwidth may be taken into consideration to ensure the
measurements are realistic (Ramasamy, 2007).
Altogether there are five locations for this organization that
must be connected via Wide Area Network links, within these
five locations multiple user and host groups must be identified
and defined to create a virtual network topology. These user and
host groups will then be separated by Virtual LAN’s (VLAN’s).
They are managed by the network devices across the WAN in
order to ensure there is logical separation of devices according
to the network requirements. Then, based upon the bandwidth
calculations, (quality of service) QoS can be implemented for
each WAN link using inter VLAN assignments to assign
bandwidth to each group and ACLs to control each groups flow
of traffic. An ACL is a sequential list of permit or deny
statements that apply to addresses or upper-layer protocols.
Therefore, through the use of combined VLANs, ACLs and
QoS, the wide area networks between locations can be
optimized to perform better by eliminating slow connections
due to congestions. In addition, WAN configuration can be
adjusted on a schedule that will allow higher priority to traffic
within certain periods of time.
A proper firewall device to protect networks from unauthorized

4. use it’s ideal. A VLAN allows a network administrator to create
groups of logically networked devices that act as if they are on
their own independent network, even if they share a common
infrastructure with other VLANs. The benefits of VLAN are
providing security to the network, storm mitigation, broadcast,
cost reduction, and improved IT staff efficiency. When VLANs
are implemented on a switch, the transmission of multicast,
Unicast, and broadcast traffic from a host on a particular VLAN
are constrained to the devices that are on the VLAN. The
recommended firewall for each location with a local point of
presence would be the Cisco ASA series7 200 modern series
that supports VPN and VLAN technologies and also high
throughput services.
The proposed routing devices for all distribution locations
would be the Cisco 2850 series router which would include an
internal T1 WAN Interface Card for connectivity directly to the
main office. The 2850 router can also be used as a firewall if
the VPN redundancy option is put in consideration. At each
location where required, there should be at least one layer 3
capable (VLAN capable) switch that can provide at least 1Gbps
link speeds. The proposed VLAN capable switch solution would
be the catalyst 2960-X Cisco switch which provides the ability
to separate different host groups and users as required at each
location for bandwidth conservation and added security
measures. Broadcast dependent protocols that are necessary to
centralize network administration, such as DHCP can still be
managed and maintained centrally using DHCP Helper
configurations on the router at each location. It as a feature that
forwards DHCP broadcasts as unicast traffic to next network
hop or host which ensures that the DHCP protocol will work
properly across WAN connections without consuming a lot of
bandwidth (Comer, 2004).
Implementing Teleworker services in the network it’s also very
important. Teleworkers typically use diverse applications (for
example, e-mail, web-based applications, real-time

5. collaboration, videoconferencing and video) which require a
high-bandwidth connection. The choice of access network
technology and the need to ensure suitable bandwidth are the
first considerations to address when connecting teleworkers.
The switches can be the same in all locations by again using the
Cisco 2960-X, which Provides PoE(power over ethernet)
support with up to 740 W of power ,interface connections to
hosts and other network devices (Cisco,) and serve as a core
switch for the network. However, for the HQ location
specifically, the Cisco 3750 series switch would be the
preferred choice as it provides a high level of extensibility,
including 128 Gbps speeds between switches, which will avoid
the potential bottlenecks that can occur with trunk links, and the
configuration issues and limitations of aggregated uplinks. The
HQ building router must be highly capable, with the specific
ability to support VPN connectivity from multiple locations,
provide firewall services for the company, and also support
multiple T1 connections. If all sites opt to run Cisco routers,
then the proposed routing protocol would be Cisco's proprietary
protocol EIGRP due to it's low bandwidth utilization, low
convergence times and provision for prioritizing network paths.
However, in the event that legacy networks or equipment from
different vendors are proposed for future expansion and
maintenance, the routing protocol of choice to serve as a
fallback would then be the Open Shortest Path First standard
protocol rather than EIGRP.
The Cisco devices specified above can be easily leveraged for
both voice only networks as well as data and data combined
networks. Other options, which are available when purchasing
Cisco switches, include PoE functionality that provides power
to IP phones and other devices through the same Ethernet cable
that provides data and without any additional equipment. In
addition, by using a standard vendor such as Cisco for all sites,
the administrative overhead and total cost of ownership for the
network is greatly reduced as it generally ensures proper
integration and interconnectivity between devices (Medhi,

6. 2007).
Cabling Specifications
The delivery of frames across the local media requires the
following Physical layer elements:
1. The physical media and associated connectors
2. A representation of bits on the media
3. Encoding of data and control information
This organization (company) is comprised of several, separate
departments, they are necessary for conducting a company in a
more efficient and reliable manner. Communication between
these departments is required to ensure day to day operations
run accurately. The company will be concerned with security
when designing a strong and reliable network security program.
In the event of program failure, the networking program must
provide network access to the majority of its employees through
segment and sufficient cabling, thus eliminating the possibility
of a decrease of productivity. This network will offer the ability
to share network devices such as scanners, copiers, printers
providing internal and external data, for those in need of access.
The network will have a central storage unit for file sharing,
which will be used by various departments. The system
capabilities will include an authentication for verification
process for all authorized employees and expansion capabilities
for additional network devices when the need arises. The star
topology uses a wide range of different kinds of cabling types.
A few of the types of cable that can be utilized by a star
topology network are; fiber optic cable, twisted pair cable and
coaxial cable (Comer, 2004).
UTP cabling are terminated with RJ-45 connectors, is a common
copper medium for interconnecting network devices. The
twisted pair cables can be found in many types, depending on
performance. The most popularly used to connect to personal
network computers is the Category 6(Cat-6). The company's
network design will use twisted pair cables to connect devices
to the switches using 10base-T (10 Mbps, twisted-pair (two
pairs, Cat-5 or higher) cable. 10base-T cable is used because of

7. its maximum length of 100 meters.
The fiber optic cable can be used to interconnect switches. Prior
to the installation of the network cabling, Network Cabling
Specification Checklist will be created. Information from the
checklist provides proper cable and connectors to be installed at
different floors, Fiber optic cables are used due to transmission
of high-speed voice and data traffic in enterprise and service
provider network. The transmission rate is higher since it uses
light to transmit information.
After network installation, documentation is important since it
entails certification information that show all installed cables
operate properly and that a network test device was used.
Network Cabling Specification Checklist
· Category 6a Cable
· RJ45 UTP socket
· Category 5epatch cable
· RJ45 UTP plugs
· Category 6 cable with maximum lengths of 100 Meters.
· 10Base-T cable
· Fiber optic cable.
· Single-mode lucent connector(LC)
Cable type
Standard
Application
Ethernet Straight through
Both end T568Aor both endT568B
Connecting a network host to a network device such as a switch
or hub
Ethernet Crossover
One end T568A other end T568B
Connecting two network hosts.

8. Connecting two network intermediary devices(switch to switch,
or router to router)
Rollover
Cisco proprietary
Connected a workstation serial port to a router console port,
using an adapter
LAN Topology
When building a LAN that satisfies the needs of a given
company, the plan is more likely to be successful if a
hierarchical design model is used. Since it’s easier to expand
and manage and problems are solved more efficiently. LAN
technologies provide both speed and cost-effective for the
transmission of data and voice in organizations over relatively
medium geographic areas. However, there are other business
needs that require communication among remote sites, including
the following:
· People in the regional or branch offices of an organization
need to be able to communicate and share data with the central
site.
· Organizations often want to share information with other
organizations across large distances. For example, software
manufacturers routinely communicate product and promotion
information to distributors that sell their products to end users.
· Employees who travel on company business frequently need to
access information that resides on their corporate networks.
The optimal choice, all things considered, would be to
implement a star topology network in each or the department
offices. Using a switch as a central device for linking the
computers and other devices on the LAN, this networking set up
will offer the most manageable network. Different devices are
connected to the network with corresponding networking cables.
Expansion is accomplished easily dependent upon how many
ports on the switch are available for use. When selecting a
switch for the access, core layers or distribution consider the
ability of the switch to support the port density, forwarding

9. rates, and bandwidth aggregation requirements of your network.
High port densities allow for better use of space and power
when both are in limited supply. If you have two switches that
each contain 24 ports, you would be able to support up to 46
devices, because you lose at least one port per switch to connect
each switch to the rest of the network. In addition, two power
outlets are required. On the other hand, if you have a single 48-
port switch, 47 devices can be supported, with only one port
used to connect the switch to the rest of the network, and only
one power outlet needed to accommodate the single switch. The
switch ports are configured with the right ip address to ensure
effective switching and routing (Paquet, 2013).
If additional ports are needed on the switches, two switches can
be linked together to provide more connectivity. Providing that
space is available for this type of expansion and one needs to
add more computers, this can be accomplished by easily
connecting the computers to the available port on the hub. An
advantage of a star topology means not having to shut down the
network, causing interference with other devices while the
network is up and running.
Devices can also be connected using wireless media. This will
help to reduce the network traffic. By keeping the network
design as simple as possible, this will allow the company's
maintenance of the network to be done easily and effectively.
With all departments within the organization connected using
the star topology, all will be terminated at individual network
devices housed in the Intermediate Distribution Frame (IDF).
The switch that connects to the network's router is also held in
this closet. Aside from ease of access, the close proximity of
the departments makes this the best layout allowing the system
to be expanded (Zhang, 2005).
IP ADDRESSING
172.17. y.x/24
As we have a full class C network (a Class B address with a
class C mask). The first 3 octets represent the network portion

10. while the last octet represent the host portion of the IP address.
In order to subnet a network extends the natural mask using
some of the bits from the host potion of the address to create a
sub network. In my network design, each floor in a building will
be in a separate sub-network. Thus in each of the five buildings
in different location, we will have 3 subnets. The design is as
follows:
Creating subnets
IP=172.17.1.0/24
Written in binary = 10101100.00010001.00000001.00000000
In this IP address we have 24 network bits and 8 host bits
10101100. 00010001. 00000001.00000000
Network bits host bits
Borrowed bits
11111111.11111111.11111111.11000000
Network bits host bits
With 2 borrowed bits from the host portion it’s possible to
create 4 subnets which satisfy my design requirements of three
subnets (each floor to be in its own subnet).
Using the formula 2n where n number of borrowed bits
22=4 subnets
To get the number of addresses in each subnet we use the
formula 2n-2 where n= number of host bits
26-2= 62 addresses per subnet
Subnet
Network address
Host range
Broadcast address
Subnet mask

11. Location 1 network
Floor 1
172.17.1.0
172.17.1.1 To 172.17.1.62
172.17.1.63
255.255.255.192
Floor 2
172.17.1.64
172.17.1.65 To
172.17.1.126
172.17.1.127
255.255.255.192
Floor 3
172.17.1.128
172.17.1.129
To172.17.1.190
172.17.1.191
255.255.255.192
Reserved
172.17.1.192
172.17.1.193To
172.17.1.254
172.17.1.255
255.255.255.192
Location 2
network
Floor 1
172.17.2.0
172.17.2.1 To
172.17.2.62
172.17.2.63
255.255.255.192

12. Floor 2
172.17.2.64
172.17.2.65To
172.17.2.126
172.17.2.127
255.255.255.192
Floor 3
172.17.2.128
172.17.2.129 To172.17.2.190
172.17.2.191
255.255.255.192
Reserved
172.17.2.192
172.17.2.193 To172.17.2.254
172.17.2.255
255.255.255.192
Location3 network
Floor 1
172.17.3.0
172.17.3.1 To
172.17.3.62
172.17.3.63
255.255.255.192
Floor 2
172.17.3.64
172.17.3.65 To
172.17.3.126
172.17.3.127
255.255.255.192
Floor 3
172.17.3.128

13. 172.17.3.129 To172.17.3.190
172.17.3.191
255.255.255.192
Reserved
172.17.3.192
172.17.3.193To
172.17.3.254
172.17.3.255
255.255.255.192
Location4 network
Floor 1
172.17.4.0
172.17.4.1 To
172.17.1.62
172.17.4.63
255.255.255.192
Floor 2
172.17.4.64
172.17.4.65 To
172.17.4.126
172.17.4.127
255.255.255.192
Floor 3
172.17.4.128
172.17.4.129 To172.17.4.190
172.17.4.191
255.255.255.192
Reserved
172.17.4.192
172.17.4.193 To172.17.4.254
172.17.4.255
255.255.255.192

14. Location 5 network
Floor 1
172.17.5.0
172.17.4.1 To
172.17.4.62
172.17.5.63
255.255.255.192
Floor 2
172.17.5.64
172.17.4.65 To
172.17.4.126
172.17.5.127
255.255.255.192
Reserved
172.17.5.128
172.17.4.129 To172.17.4.190
172.17.5.191
255.255.255.192
T1 Link networks
1
96.68.111.1
2
96.68.111.2

15. 3
96.68.111.3
4
96.68.111.4
5
96.68.111.5
References
Comer, D. (2004). Computer networks and internets: With
Internet applications (4th ed.). Upper Saddle River, N.J.:
Pearson/Prentice Hall.
Medhi, D., & Ramasamy, K. (2007). Network routing
algorithms, protocols, and architectures. Amsterdam:
Elsevier/Morgan Kaufmann.
Paquet, C. (2013). Implementing Cisco IOS network security:
(IINS 640-554) foundation learning guide (Second ed.).
Indianapolis, Indiana, USA: Cisco Press.
Zhang, L. (2005). Network design. New York, NY: Springer.
1. Given the following Year 12 balance sheet data for a
footwear company:
Balance Sheet Data

16. Cash on Hand
2,000
Total Current Assets
78,000
Total Assets
315,000
Overdraft Loan Payable
4,000
1-Year Bank Loan Payable
8,000
Current Portion of Long-Term Loans
13,000
Total Current Liabilities
48,000
Long-Term Bank Loans Outstanding
105,000
Shareholder Equity:

17. Year 11 Balance
Year 12 Change
Common Stock
10,000
0
10,000
Additional Capital
100,000
0
100,000
Retained Earnings
30,000
22,000
52,000
Total Shareholder Equity
140,000
+22,000
162,000
Based on the above figures and the formula for calculating the
debt-assets ratio found on the Help screen for p. 5 of the
Footwear Industry Report, the company’s debt-assets ratio
(where debt is defined to include both short-term and long-term
debt) is
None of these.
37.5%.
40.0%.

18. 33.3%.
41.3%.
2. In supplying private-label footwear to chain retailers, the
sizes of a company's margins over direct costs should be viewed
as
how much the company received from private-label sales over
and above materials costs and direct labor costs—these dollars
can be used to help cover the company's income taxes and
dividend payments.
the net profit a company earns on private-label sales.
how much the company received from private-label sales over
and above materials costs and direct labor costs— these dollars
thus represent a “cash contribution” that can be used to pay
down any loans outstanding or to add to the company's retained
earnings account.
how many dollars the company had available from private-label
sales to help cover the company's administrative expenses and
interest costs and contribute to the company's bottom line (if the
company's margins on branded footwear were sufficient to cover
administrative expenses and all interest costs, then the margins
over direct costs represent pre-tax profit).
free cash flow, which management can use for any purpose it
sees fit.

19. 3. Assume a company has 10 million shares of stock outstanding
and that its Income Statement for Year 12 is as follows:
Income Statement Data
Year 12
(in 000s)
Net Revenues from Footwear Sales
$ 290,000
Cost of Pairs Sold
180,000
Warehouse Expenses
16,000
Marketing Expenses
42,000
Administrative Expenses
8,000
Operating Profit (Loss)
44,000
Interest Income (expenses)
(10,000)
Pre-tax Profit (Loss)
34,000
Income Taxes
10,200
Net Profit (Loss)
$ 23,800
Based on the above income statement data, the company's
operating profit margin and EPS are
None of the above.
15.2% and $2.38.

20. 11.7% and $3.40.
15.2% and $4.40.
15.2% and $3.40.
4. If a company pays a production worker a base wage of $2,800
and a piecework incentive of $0.30 per pair, if a production
worker's annual productivity is 2,500 pairs per year, and if a
plant's reject rate averages 4%, then the average annual
compensation of production workers would be
$3,520 (because workers do not receive a piecework incentive
on pair rejected due to defects).
$2,950.
None of the above.
$3,550.
$3,050.
5. The accounts payable entry on the company's balance sheet
represents
25% of the year's materials costs incurred in making branded

21. and private-label footwear that are owed to suppliers and that
will be paid for in the first quarter of the upcoming year
(payments for materials delivered by suppliers are not due and
payable for 90 days following delivery).
the amounts due for interest on loans outstanding that becomes
due in the first quarter of the upcoming year.
the amounts due to production workers for incentive bonuses.
the amounts due shareholders for dividends declared the prior-
year and payable in the current year.
the amounts due for income taxes on prior-year profit.
6. Based on information on the Help Screen for the Plant
Operations Report (see the Plant Investment section), if a
company adds new plant capacity at a cost of $30 million, then
its annual depreciation costs will rise by
$1,500,000.
$1,200,000.
$120,000.
$150,000.

22. None of these.
7. Assume a company's Income Statement for Year 12 is as
follows:
Income Statement Data
Year 12
(in 000s)
Net Revenues from Footwear Sales
$ 320,000
Cost of Pairs Sold
200,000
Warehouse Expenses
17,000
Marketing Expenses
45,000
Administrative Expenses
8,000
Operating Profit (Loss)
50,000
Interest Income (expenses)
(10,000)
Pre-tax Profit (Loss)
40,000
Income Taxes
12,000
Net Profit (Loss)
$ 28,000
Based on the above income statement data (assume interest
income is zero) and the formula for calculating the coverage
ratio presented on the Help screen for p. 5 of the Footwear
Industry Report, the company’s interest coverage ratio is

23. None of the above.
2.80.
320.0.
4.00.
5.00.
8. Assume a company's Income Statement for Year 12 is as
follows:
Income Statement Data
Year 12
(in 000s)
Net Revenues from Footwear Sales
$ 290,000
Cost of Pairs Sold
180,000
Warehouse Expenses
16,000
Marketing Expenses
42,000
Administrative Expenses
8,000
Operating Profit (Loss)
44,000
Interest Income (expenses)
(10,000)
Pre-tax Profit (Loss)

24. 34,000
Income Taxes
10,200
Net Profit (Loss)
$ 23,800
Based on the above data, which of the following statements is
false?
Interest expenses are 3.4% of net revenues.
Marketing costs are 14.5% of net revenues.
Administrative expenses are 2.8% of net revenues.
Cost of pairs sold are 65.3% of net revenues.
Warehouse expenses are 5.5% of net revenues.
9. As is explained on both the Help screens for the Branded
Sales Report and the Private-Label Sales Report, an exchange
rate shift that causes the Sing$ to be stronger versus the
Brazilian real - signaled by apositive percentage number for the
Exchange Rate Impact on Cost of Pairs shipped from an Asian-
Pacific plant to Latin America (R per Sing$) in the Exchange
Rate box on your Corporate Lobby screen
·
weakens the cost-competitiveness of footwear made in Asia-
Pacific plants and exported to Latin American distribution
centers for sale to footwear customers in Latin America.
· should be interpreted as meaning the footwear produced in

25. Latin American plants is less profitable per pair than footwear
produced in Europe-Africa plants.
· should be interpreted as meaning that footwear produced in
Latin American plants is more profitable per pair than footwear
produced in Asia-Pacific plants.
· has the effect of lowering the costs of all footwear that is
made in Asia-Pacific plants and then exported to Latin
American distribution centers for sale to footwear customers in
Latin America.
· immediately increases the cash flows a company receives
when it ships pairs made in Asia-Pacific plant to its distribution
center in Latin America.
10. According to the cost allocation procedures discussed on the
Help screens for the Private Label Sales Report and the
Marketing and Admin Report, which one of the following
is not included as part of a company’s production costs for
private-label footwear?
Expenditures for styling/features for newly-produced models
Plant supervision costs
Administrative expenses
Production run set-up costs
Expenditures for best practices training
11. According to the cost allocation principles used in the
company’s accounting systems (that are explained on the Help
screen for the Marketing and Admin Report), if a company

26. spends $5 million on advertising in a given geographic region,
sells 600,000 branded pairs online in the region, and sells 2.4
million branded pairs to footwear retailers in the region, then
advertising costs per pair sold online would be $1.00.
25% of the company's advertising expenditures would be
allocated to Internet marketing.
advertising costs per branded pair sold to retailers would be
$0.80.
20% of the company's advertising expenditures would be
allocated to Internet marketing and advertising costs per online
pair sold would be $1.67.
advertising costs per online pair sold would be $1.50.
12. Given the following Year 12 Financial Statement data for a
footwear company:
Income Statement Data
Year 12
(in 000s)
Net Revenues from Footwear Sales
$ 300,000
Operating Profit (Loss)

27. 50,000
Net Profit (Loss)
$ 28,000
Balance Sheet Data
Cash on Hand
10,000
Total Current Assets
70,000
Total Assets
313,000
Overdraft Loan Payable
5,000
1-Year Bank Loan Payable
10,000
Current Portion of Long-term Loans

28. 17,000
Total Current Liabilities
48,000
Long-Term Bank Loans Outstanding
90,000
Shareholder Equity:
Year 11 Balance
Year 12 Change
Common Stock
10,000
0
10,000
Additional Capital
123,000
0
123,000
Retained Earnings
29,000
13,000
42,000
Total Shareholder Equity
162,000
+13,000
175,000
Other Financial Data

29. Depreciation
$11,650
Dividend payments
$15,000
Based on the above figures and the formula for calculating the
default-risk ratio found on the Help screen for p. 5 of the
Footwear Industry Report and p. 28 of the Player’s Guide, the
company’s default-risk ratio in Year 12 was
None of these.
0.77.
1.20.
1.38.
0.87.

30. 13. If a company wants to enhance the profitability of
differentiating its branded product offering from rivals by
offering say 500 models, then it should seek to reduce the costs
associated with producing 500 models at its plants by
cutting the percentage use of superior materials and conserving
on expenditures for TQM/Six Sigma quality controls.
instituting plant upgrade option B and perhaps consolidating the
production of branded footwear in just one plant (to only incur
the payment of production run setup costs one time).
instituting plant upgrade options C and D at each of the plants
where 500 models are being produced.
instituting plant upgrade option C and also building plants in all
four geographic regions.
instituting plant upgrade options A and D.
14. Based on information on the Help screen for the Marketing
and Admin Report (see the section on Administration
Expenses), which of the following statements regarding your
company's administrative costs is false?
Administrative costs are allocated between branded production
and private-label production according to their respective
percentages of total revenue generated.thus, if 90% of the

31. company.s revenues come from branded sales then 90% of
annual administrative costs are allocated to branded footwear.
Administrative expenses are allocated to each region based on
each region's percentage of total companywide branded sales;
thus, if 18% of the company's branded sales are in Latin
America, then Latin America is allocated 18% of companywide
administrative expenses.
The “Other Corporate Overhead” category of administrative
costs always averages $1 per pair of plant capacity (not
including overtime); other Corporate Overhead changes by $1
per pair in the same year as any new plant capacity comes
online (new or used) and in the same year that any capacity is
sold off to the merchants of used footwear-making equipment.
No administrative expenses are allocated to private-label
footwear; the company's accounting system allocates all
administrative expenses to branded footwear.
General administrative expenses increase at the rate of 3%
annually.
15. Given the following Year 12 Financial Statement data for a
footwear company:
Income Statement Data
Year 12

32. (in 000s)
Net Revenues from Footwear Sales
$ 340,000
Operating Profit (Loss)
80,000
Net Profit (Loss)
$ 49,000
Balance Sheet Data
Cash on Hand
3,000
Total Current Assets
70,000
Total Assets
310,000
Overdraft Loan Payable

33. 1,000
1-Year Bank Loan Payable
16,000
Current Portion of Long-term Loans
10,000
Total Current Liabilities
51,000
Long-Term Bank Loans Outstanding
70,000
Shareholder Equity:
Year 11 Balance
Year 12 Change
Common Stock
10,000
0
10,000
Additional Capital
120,000
0
120,000
Retained Earnings
30,000
29,000
59,000
Total Shareholder Equity
160,000
+29,000

34. 189,000
Based on the above figures and the formula for calculating
return on average equity found on p. 30 of the Player’s Guide,
the company’s Return on Average Equity (the definition of ROE
used in scoring company performance) in Year 12
None of these.
28.1%.
25.9%.
42.3%.
14.0%.
16. As explained on the Help screen for the Cash Flow
Statement, if a company generates revenues of $240 million in
Year 11, revenues of $280 million in Year 12, and revenues of
$300 million in Year 13, then its cash receipts from footwear
sales will be
one-third of Year 12 revenues and two-thirds of Year 13
revenues for a total cash inflow of $280 million in Year 14.

35. 25% of Year 12 revenues and 75% of Year 13 revenues for a
total cash inflow of $295 million in Year 13.
$820 million in Year 14.
$200 million in Year 12, $240 million in Year 13, and $260
million in Year 14.
50% of Year 12 revenues and 50% of Year 13 revenues for a
total cash inflow of $290 million in Year 14.
17. Given the following exchange rate changes:
Year 1
Year 2
Euros (€) per US$
0.8210
0.8155
Sing$ per Brazilian real
0.5760
0.5710
Brazilian real per euro (€)
3.7050
3.7250
US$ per Sing$
0.5935
0.5980
Then, as explained on the Help screen for the Branded Sales
Report, it follows that:

36. The US$ has grown stronger versus the Sing$.
The Sing$ has grown weaker against the Brazilian real.
The Brazilian real has grown weaker versus the euro.
The euro has grown weaker versus the US$.
The Brazilian real has grown stronger against the Sing$.
18. Which one of the following actions is certain not to result in
lower production costs per branded pair at one of your
company's plants?
A lower percentage use of superior materials
The installation of plant upgrade option C
Reducing expenditures for TQM/Six Sigma quality control
The installation of plant upgrade option B
A 3% increase in the annual base wage that is accompanied by a
2.0% increase in worker productivity
19. As is explained on both the Help screens for the Branded
Sales Report and the Private-Label Sales Report, when

37. exchange rate shifts result in a weaker US$ and a stronger euro,
then the euros collected on footwear sales in Europe-Africa,
when converted into US$, result in
foreign exchange gains that have the effect of enhancing
company revenues and profits.
foreign exchange gains that have the effect of reducing
company revenues and profits.
None of the above is accurate.
foreign exchange losses that have the effect of reducing
company revenues and profits.
foreign exchange losses that have the effect of enhancing
company revenues and profits.
20. Based on information on both the Help screens for the Plant
Operations Report and the Private-Label Sales Report, which of
the following statements regarding how plant costs are allocated
between branded and private-label footwear is false?
Annual depreciation costs are allocated between branded
production and private-label production according to their
respective percentages of total pairs produced—thus, if 85% of
the total pairs produced at a plant are branded then 85% of
annual depreciation costs are allocated to branded production.

38. The total amount the company spends for production-run set-up
is allocated between branded production and private-label
production according to their respective percentages of total
pairs produced—thus, if 80% of the total pairs produced at a
plant are branded then 80% of total production run set-up costs
are allocated to branded production.
Total plant maintenance costs are allocated between branded
production and private-label production according to their
respective percentages of total pairs produced—thus, if 90% of
the total pairs produced at a plant are branded then 90% of total
plant maintenance costs are allocated to branded production.
The total amount the company spends for best practices training
is allocated between branded production and private-label
production according to their respective percentages of total
pairs produced—thus, if 88% of the total pairs produced at a
plant are branded then 88% of best practices training costs are
allocated to branded production.
Annual plant supervision costs are allocated between branded
production and private-label production according to their
respective percentages of total pairs produced—thus, if 95% of
the total pairs produced at a plant are branded then 95% of
annual plant supervision costs are allocated to branded
production.