In the lease-versus-buy decision, leasing is often preferable
A. because it has no effect on the firm's ability to borrow to make other investments.
B. because a down payment is generally not required and there are no indirect interest costs.
C. because lease obligations do not affect the firm's risk as seen by investors.
D. because the lessee owns the property at the end of the lease term.
E. because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset.
Answer: E
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Producers often shift some functions to intermediaries. Which of the following is the most significant benefit of doing this?
A) It increases customer loyalty. B) It provides the producer with greater control over operations. C) It reduces the amount of direct customer interaction. D) It lowers the producer's costs and prices. E) It ensures greater information security.
Some companies have moved to JIT without changing the substance of their accounting systems. Relying on the former accounting system may present problems for management because
a. traditional accounting systems are designed to track items (labor efficiency, purchase price, overhead absorption) that are no longer primary concerns of management. b. control of cost drivers will be lost. c. managers do not understand the new manufacturing environment. d. traditional accounting systems discourage the creation of large inventories that are necessary to ensure uninterrupted production runs.
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