A company estimates the following expenditures: preferred dividends paid of $22,200; wages paid to workers of $49,600; overhead costs of $24,300; raw materials of $45,000; shipping costs of $12,100. What are the total production costs? A) $131,000 B) $134,500 C) $142,100 D) $153,200 ANSWER Answer: A Explanation: A) Production costs include, among other […]
Buckeye Inc. uses the sales forecast to plan production. The company produces a glow-in-the-dark cup called “Lights-Out” one month in advance of the forecasted sale. The January sales forecast of 20 units of these cups will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can differ, and […]
Bandamere Lighting Inc. uses the sales forecast to plan production. The company produces the magnetic light bulb called “Bright-1” one month in advance of the forecasted sale. The January sales forecast of 38 units of these bulbs will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can […]
According to the traditional approach to capital structure, the value of a firm will be maximized when ________. A) the financial leverage is maximized B) the cost of debt is minimized C) the weighted average cost of capital is minimized D) the dividend payout is maximized ANSWER C
Sales from a company’s products and services are the only source of cash inflow. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Although sales from a company’s products and services will usually be the main source of cash inflow, other activities can generate cash receipts. For example, companies can […]
The sales for October, November, and December are $2,000, $6,000 and $10,000, respectively. For any particular month of sales, the following percentages are received over time in cash for any given month: 20% in cash from that same month of sales; 50% in cash from the previous month’s sales; and 30% in cash from the […]
Sales made and actual cash received may differ for any particular month. However, sales and cash received must be equal for a calendar year. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: There is no need nor expectation that these two values be the same in any particular year.
Poor capital structure decisions can result in ________ the cost of capital, resulting in ________ acceptable investments. A) increasing; fewer B) decreasing; more C) increasing; more D) decreasing; fewer ANSWER A
Under conservative funding strategy, short-term financing is used only to finance an emergency, an unexpected outflow of funds, and the variable portion of a firm’s current assets. Indicate whether the statement is true or false ANSWER FALSE
In _, an issuing firm solicits bids from among several investment banks for the job of underwriting a bond issue. a. competitive bidding b. negotiated underwriting c. aggressive bidding d. bargain bidding ANSWER A
