Indicate whether each of the following statements about financial statement analysis is true or false.________ a) Having too little inventory can hurt a company's profitability because of lost sales.________ b) Having too much inventory can hurt a company's profitability because of excess costs.________ c) Generally, a lower inventory turnover indicates that merchandise is being handled more efficiently.________ d) Average days to sell inventory is the number of times, on average, that inventory is replaced during the year.________ e) Values for the inventory turnover ratio vary widely among different industries.
What will be an ideal response?
a) T b) T c) F d) F e) T
a) Having too little inventory can hurt a company's profitability because of lost sales.
b) Having too much inventory can hurt a company's profitability because of excess costs.
c) Generally, a lower inventory turnover indicates that merchandise is being handled less efficiently.
d) Average days to sell inventory is the number of times, on average, that inventory is sold during the year.
e) Values for the inventory turnover ratio vary widely among different industries.
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Answer the following statement true (T) or false (F)
Fiori Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$6.05Direct labor$3.05Variable manufacturing overhead$1.70Fixed manufacturing overhead$3.00Fixed selling expense$0.50Fixed administrative expense$0.40Sales commissions$1.00Variable administrative expense$0.50 The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to:
A. $13.80 B. $10.80 C. $16.20 D. $14.30