Explore BrainMass
Share

Multiple choice questions in Finance

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Please see attached. Please provide calculations so I can see where I went wrong/right.

Thank you.

Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 20x7 are as follows:

Month Sales
----- -----
January 10,000
February 14,000
March 13,000

Finished goods inventory at the end of December is 4,000 units. Ending finished goods are equal to 40 percent of next month's sales. April 20x7 sales are expected to total 16,000 units.

3. What will be the number of chests produced in January 20x7?
a. 15,600 chests
b. 14,000 chests
c. 11,600 chests
d. 8,400 chests
e. none of the above

Aspen Inc., manufactures 10,000 computer chips. Currently, the costs per unit are as follows:
Direct materials $ 1.00
Direct labor 10.00
Variable overhead 5.00
Fixed overhead 8.00
Total $24.00
Link, Corp., has contacted Aspen with an offer to sell 10,000 of the chips for $22.00 per chip. If Aspen accepts the proposal, $30,000 of fixed overhead will be eliminated.

4. Should Aspen make or buy the chips? What is the difference between the two alternatives?
a. Buy; savings = $20,000.
b. Buy; savings = $50,000.
c. Make; savings = $30,000.
d. Make; savings = $10,000.
e. none of the above

Cross, Inc., collected the following information:
Cost to buy one unit: $24
Production costs per unit:
Direct materials $ 11
Direct labor 8
Variable overhead 1
Total fixed overhead 180,000

5. If $50,000 of fixed costs can be eliminated, what production level is required for Cross to be indifferent between making or buying the part?
a. 32,500 units.
b. 26,500 units.
c. 12,500 units.
d. 0 units.
e. None of the above

© BrainMass Inc. brainmass.com October 24, 2018, 11:09 pm ad1c9bdddf
https://brainmass.com/business/finance/multiple-choice-questions-in-finance-182933

Attachments

Solution Preview

Please see the attached file for answers/comments in blue

Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 20x7 are as follows:

Month Sales
----- -----
January 10,000
February 14,000
March 13,000

Finished goods inventory at the end of December is 4,000 units. Ending finished goods are equal to 40 percent of next month's sales. April 20x7 sales are expected to total 16,000 units.

3. What will be the number of chests produced in January 20x7?
a. 15,600 chests
b. 14,000 chests
c. 11,600 chests
d. 8,400 ...

Solution Summary

The solution has multiple choice questions and answers relating to make or buy and production budget

$2.19
See Also This Related BrainMass Solution

Finance - Multiple Choice Questions

1. The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions.

1. 1. risk-free rate
2. 2. nominal cost
3. 3. risk premium
4. 4. cost of capital

2. The firm's optimal mix of debt and equity is called its

1. 1. optimal ratio.
2. 2. maximum wealth.
3. 3. target capital structure.
4. 4. maximum book value.

3. If a corporation has an average tax rate of 40 percent, the approximate annual, after-tax cost of debt for a 10-year, 8 percent, $1,000 par value bond selling at $1,150 is

1. 1. 4.8 percent.
2. 2. 3.6 percent.
3. 3. 6 percent.
4. 4. 8 percent.

4. A corporation has concluded that its financial risk premium is too high. In order to decrease this, the firm can

1. 1. decrease the proportion of common stock equity to decrease financial risk.
2. 2. increase short-term debt to decrease the cost of capital.
3. 3. increase the proportion of long-term debt to decrease the cost of capital.
4. 4. increase the proportion of common stock equity to decrease financial risk.

5.________ leverage is concerned with the relationship between sales revenue and earnings per share.

1. 1. Operating
2. 2. Financial
3. 3. Total
4. 4. Variable

6.Breakeven analysis is used by the firm

1. 1. none of these.
2. 2. Both to determine the level of operations necessary to cover all operating costs and to evaluate the profitability associated with various levels of sales.
3. 3. to determine the level of operations necessary to cover all operating costs.
4. 4. to evaluate the profitability associated with various levels of sales.

7.Noncash charges such as depreciation and amortization ________ the firm's breakeven point.

1. 1. understate
2. 2. decrease
3. 3. overstate
4. 4. do not affect

8.If a firm's fixed operating costs decrease, the firm's operating breakeven point will

1. 1. decrease.
2. 2. change in an undetermined direction.
3. 3. increase.
4. 4. remain unchanged.

9.________ is the potential use of fixed operating costs to magnify the effects of changes in sales on earnings before interest and taxes.

1. 1. Ratio analysis
2. 2. Operating leverage
3. 3. Total leverage
4. 4. Financial leverage

View Full Posting Details