The Owner of a Greenhouse and Nursery Is Considering Whether

question 56

Multiple Choice

The owner of a greenhouse and nursery is considering whether to spend $12,000 to acquire the licensing rights to grow a new variety of rose bush,which she could then sell for $8 each.Variable costs would be $5 per rosebush. If her available land has design and effective capacities of 3,000 and 2,000 rose bushes per year respectively,and she plans to grow 1,200 rosebushes each year on this land,what will be the efficiency of her use of this land?

• A)0%
• B)40%
• C)60%
• D)67%
• E)100%

---

Definitions:

Restricted Donations

Contributions given to an organization that are limited in use by the donor to specific projects, purposes, or time frames.

Deferral Method

An accounting practice of postponing the recognition of expenses or revenues to a future period, rather than recording them in the period they occur.

Donated Capital Assets

Assets received as donations by an organization that are used in operations and not resold.

Fair Market Value

The price that an asset would sell for in a transaction between willing participants under no compulsion to buy or sell.