Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Detroit. Because of the specialized manufacturing process employed, considerable work-in-process and raw material inventories are created
The average inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is:
A) less than 2.0.
B) greater than 2.0 but less than 2.5.
C) greater than 2.5 but less than 3.0.
D) greater than 3.0.
D
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The state of Illinois has passed a law requiring that every automobile be inspected at least once a year for pollution control. Anfang Enterprises is considering entering into this type of business. After extensive studies, Joseph Anfang has developed the following set of projected annual data on which to make his decision: Direct service labor $363,000.00 Variable service overhead costs
270,000.00 Fixed service overhead costs 280,000.00 Marketing expenses 120,000.00 General and administrative expenses 170,000.00 Minimum profit 90,000.00 Cost of assets employed 500,000.00 Anfang believes that his company will inspect 100,000 automobiles per year. The company earns an average of 18.75 percent return on its assets. The price to be charged for inspecting each automobile using the return on assets pricing method would be calculated as follows: a. ($913,000.00 ÷ 100,000) + {($913,000.00 ÷ 100,000) ? [($90,000 + $290,000) ÷ $913,000.00]} b. ($1,203,000.00 ÷ 100,000) + [($1,203,000.00 ÷ 100,000) ? ($90,000 ÷ $1,203,000.00)] c. ($1,203,000.00 ÷ 100,000) + [($500,000 ÷ 100,000) ? 0.1875] d. None of these
What are the three inventories used by manufacturing businesses?
a. Materials inventory, work in process inventory and finished goods inventory b. Materials inventory, work in process inventory and supplies inventory c. Supplies inventory, work in process inventory and finished goods inventory d. Cost of goods sold, work in process inventory and finished goods inventory e. Materials inventory, work in process inventory and overhead inventory
All of the following are standards of comparison for financial performance measurement except:
a. rule-of-thumb measures. b. industry norms. c. assessment of risk. d. past performance.
If the firm was to shift $3,000 of current assets to fixed assets, the firm's net working capital would ________, and the risk of insolvency would ________, respectively. (See Table 14.2)
A) increase; increase B) decrease; decrease C) increase; decrease D) decrease; increase