Answer:
<em>The company should use all of its limited machine hour to produce only product B. This will make it maximize profit</em>
Explanation:
<em>Whenever a company is faced with a limiting factor i.e a resource in short supply, the company should allocate the resource to the product with he highest contribution per unit of the scare resource</em>
Product Cont/unit machine hr /unit cont/hr Ranking
A 6-2 = $4 per unit 2 hours $2 per hour 2nd
B 5-2 = $3 per unit 1 hour $3 per hour 1st
<em>The company should use all of its limited machine hour to produce only product B. This will make it maximize profit</em>
The term that is referred by the description above is RESERVES. The reserve is the amount that is being kept for future periods. This amount is separated to the current period's income, but is part of the next period if this is applicable. The answer is D.
Answer:
a. 6.56%
b. 10.62%
Explanation:
Debt-equity ratio=debt/equity
Hence debt=1.2 equity
Let equity be $x
Debt=$1.2x
Total=$2.2x
WACC=Respective costs*Respective weight
a.
8.7=(x/2.2x*13)+(1.2x/2.2x*Cost of debt)
8.7=5.909+(1.2/2.2*Cost of debt)
Cost of debt=(8.7-5.909)*(2.2/1.2)
=5.1167%(Approx)
Hence pretax cost of debt=Cost of debt/(1-tax rate)
=5.1167/(1-0.22)=6.56%(Approx).
b.
8.7=(x/2.2x*Cost of equity)+(1.2x/2.2x*7.1)
8.7=(1/2.2*Cost of equity)+3.8727
Cost of equity=(8.7-3.8727)*2.2
=10.62%
Answer: Option B
Explanation: Safeguarding inventory refers to keeping proper records of inventory and protecting it from any kind of damage that may result in loss to the organisation.
The main objective behind safeguarding inventory is to minimize loss of the organisation that is keeping it.
In the given case, second option is the purchase return and it could not be considered a default of the purchaser of inventory.
Hence from the above we can conclude that the correct option is B.
