Chipper's Golf Resort Plans to Use Famous Kauri Wood from New

question 206

Multiple Choice

Chipper's Golf Resort plans to use famous Kauri wood from New Zealand for parts of the interior of the magnificent club house at its new golf resort near Portland, OR. According to the importer, each ten-foot slab will cost Chipper's approximately $5,000. Looking at the exchange rates, Chipper's finance director noted that $500 US dollars = $738 NZ dollars. The importer will order directly from his source in New Zealand. Chipper's finance director has determined that:

• A) it's not a good time to buy the wood.
• B) it's a good time to buy the wood.
• C) there will be a shortage of the wood.
• D) it will cost less when the exchange rate of U.S. dollars to NZ dollars is just about equal.

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Definitions:

Conversion Costs

The total cost of converting raw materials into finished goods, including both direct labor and manufacturing overhead.

Work in Process

Inventory that is in the production process and is not yet completed.

Equivalent Units

Equivalent units are a concept used in cost accounting to express the amount of work done on partially finished goods in terms of fully completed units.

Bottling Department

A segment of a manufacturing facility where products, typically liquids, are placed into bottles for distribution.