If a Firm Has a Cash Cycle of 75 Days

question 37

Multiple Choice

If a firm has a cash cycle of 75 days and an operating cycle of 120 days, what is its payables turnover?

• A) 8.11
• B) 7.19
• C) 5.97
• D) 6.73

Identify when a variance is considered material and the impact on cost control.

Compute and record material price and quantity variances.

Explain the balanced scorecard approach and its perspectives.

Distinguish between actual cost reporting and standard cost reporting in financial statements.

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Definitions:

Shut Down

This term refers to a short-term decision made by a firm to cease operations when the market price falls below the minimum average variable cost.

Scale of Production

Refers to the level at which production activities are aggregated or expanded, affecting the unit costs and capability of the production process.

Lower

To decrease in position, value, or condition.

Average Total Cost

The total cost of production divided by the number of units produced, encompassing both fixed and variable costs.