FNAN 522 #7 Questions and Answers.
A company has a holding cost per unit of $5. Each order has a fixed cost of $8 and the annual
demand quantity is 150,000 units. What is the company's optimal order quantity? - Answer c.
693 units Correct
A company that manufactures 4th of July decorations is looking to improve its inventory
management. Which of the following should it consider as it redesigns its inventory system? -
Answer a. It should review its past sales data to determine the pattern of demand for its
goods.
b. It should analyze its cash flow so it has enough cash to purchase its stock.
c. All of these answers. Correct
d. It should calculate the lag time in its supply chain.
Correct: All of the above
A company values its inventory by assuming that the most recently produced items are sold
first. This inventory valuation method is known as ___. - Answer LIFO
A customer has 45 days from the date of invoice to pay a bill in full, but if he pays within 15 days
of the invoice, he gets a 10% discount. Which of the following describes these terms of trade? -
Answer a. 10/15, net 45. Correct
If a company has yet to receive payment for its goods, which of the following describes a
situation when it can recognize revenue from the sale? - Answer b. When the goods have
been delivered and the title has been transferred to the buyer. Correct
Which of the following is a reason a company would hold marketable securities? - Answer a.
All of these answers. Correct
Which of the following is an acceptable strategy for managing a company's disbursements? -
Answer c. A company should distribute payroll after the point when banks will clear checks for
that week. Correct
Which of the following is not a component included in a cash budget? - Answer a.
Depreciation expense. Correct
A company has a holding cost per unit of $5. Each order has a fixed cost of $8 and the annual
demand quantity is 150,000 units. What is the company's optimal order quantity? - Answer c.
693 units Correct
A company that manufactures 4th of July decorations is looking to improve its inventory
management. Which of the following should it consider as it redesigns its inventory system? -
Answer a. It should review its past sales data to determine the pattern of demand for its
goods.
b. It should analyze its cash flow so it has enough cash to purchase its stock.
c. All of these answers. Correct
d. It should calculate the lag time in its supply chain.
Correct: All of the above
A company values its inventory by assuming that the most recently produced items are sold
first. This inventory valuation method is known as ___. - Answer LIFO
A customer has 45 days from the date of invoice to pay a bill in full, but if he pays within 15 days
of the invoice, he gets a 10% discount. Which of the following describes these terms of trade? -
Answer a. 10/15, net 45. Correct
If a company has yet to receive payment for its goods, which of the following describes a
situation when it can recognize revenue from the sale? - Answer b. When the goods have
been delivered and the title has been transferred to the buyer. Correct
Which of the following is a reason a company would hold marketable securities? - Answer a.
All of these answers. Correct
Which of the following is an acceptable strategy for managing a company's disbursements? -
Answer c. A company should distribute payroll after the point when banks will clear checks for
that week. Correct
Which of the following is not a component included in a cash budget? - Answer a.
Depreciation expense. Correct
