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Accounting Significant investment in plant

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A company that wants to avoid significant investment in plant and equipment will most likely use
a _________ strategy.
a. make
b. buy
c. allocation
Product 1 has a contribution margin per unit of $10.00 and uses 7 lbs. of material. Product 2 has
a contribution margin per unit of $14.00 and uses 10 lbs. of material. Product 3 has a
contribution margin per unit of $4.00 and uses 2 lbs. of material.
The company was only able to acquire 850 lbs. of materials. In what order should the company
accept orders for products?
a. 2-1-3
b. 1-2-3
c. 3-1-2
d. 1-3-2
A company finances most of its assets with an operating line of credit. The interest rate on the
line of credit is 9%. Which of the following is most accurate?
a. The company's cost of capital is zero.
b. The company's cost of capital is at least 9%.
c. The company's cost of capital is less than 9%.

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Most companies use the _________ method when constructing the statement of cash flows for
external reports.
a. operating
b. indirect
c. variable
d. direct
In order to accept a project the projects return should be less than the company's discount rate.
True or False
When comparing a rare book store to Barnes and Noble, which would most likely have a higher
inventory turnover ratio?
a. Barnes and Noble
b. Rare book store
Smith Co. currently makes 10,000 units of widget A each year. At this level of activity the cost
per unit is as follows:
Direct materials - $2.50
Direct labor - $7.25
Overhead allocation - $1.25
Jones Co. offers to sell widget A for $10.00 per unit. If Smith Co. decides to buy from Jones Co.
they can sublease their production space in the plant for $7,500 per year. Should they make or
buy widget A?
a. Buy
b. Make

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A company that wants to avoid significant investment in plant and equipment will most likely use a _________ strategy. a. make b. buy c. allocation Product 1 has a contribution margin per unit of $10.00 and uses 7 lbs. of material. Product 2 has a contribution margin per unit of $14.00 and uses 10 lbs. of material. Product 3 has a contribution margin per unit of $4.00 and uses 2 lbs. of material. The company was only able to acquire 850 lbs. of materials. In what order should the company accept orders for products? a. 2-1-3 b. 1-2-3 c. 3-1-2 d. 1-3-2 A company finances most of its assets with an operating line of credit. The interest rate on the line of credit is 9%. Which of the following is most accurate? a. The company's cost of capital is zero. b. The company's cost of capital is at least 9%. c. The company's cost of capital is less than 9%. Most companies use the _________ method when constructing the statement of cash flows for external reports. a. operating b. indirect c. variable d. direct In order to accept a project the projects return should be less than the company's discount rate. True or False When comparing a rare book store to Barnes and Noble, which would most likely have a higher inventory turnover ratio? a. Barnes and Noble b. Rare book store Smith Co. currently makes 10,000 units of widget A each year. At this level of activity the cost per unit is as follows: Direct materials - ...
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