A cereal maker that advertises its products as "the one that will make you smile" is using an exaggerated claim, not puffery
Indicate whether the statement is true or false
FALSE
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The effective interest method of amortization of bond premiums and discounts is superior to the straight-line method because it results in a(n)
a. more variable interest rate. b. uniform rate of interest. c. interest rate that increases or decreases slightly over time. d. interest rate that is close to the market interest rate.
Amber has developed a line of organic lotions and handmade soaps with unique, herb-based scents and a touch of bee balm. She plans to sell these products to the wealthy residents of a nearby resort town. Which level of distribution intensity is probably best for this product?
A. intensive B. selective C. exclusive D. collective E. variable
Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statements-Decrease in Inventory-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:
A) Add to net income to arrive at net cash flows from operating activities. B) Subtract from net income to arrive at net cash flows from operating activities. C) Not used to adjust net income to calculate net cash flows from operating activities.
Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needs to determine if it would be cheaper to produce 5,000 units of its main food ingredient for use in its restaurants or to purchase them from an outside supplier for $12 each. Cost information on internal production includes the following:
Total Cost Unit Cost Direct materials $25,000 $ 5.00 Direct labor 15,000 3.00 Variable manufacturing overhead 7,500 1.50 Variable marketing overhead 10,000 2.00 Fixed plant overhead 30,000 6.00 Total $87,500 $17.50 Fixed overhead will continue whether the ingredient is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price. 1. What are the alternatives for Fresh Foods? 2. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost-effective? 4. Now assume that 20% of the fixed overhead can be avoided if the ingredient is purchased externally. Which alternative is more cost-effective? By how much?