Thomas Metal Works Produces Specialty Products Which Are Sold to One-Time

question 303

Multiple Choice

Thomas Metal Works produces specialty products which are sold to one-time customers. The variable cost per unit is $776 and the sales price per unit is $949. The monthly interest rate is 1 percent. Management believes that 10 percent of any credit sales will be uncollectible. The firm _____ grant credit because the net present value of a sale is _____.

• A) should; $70
• B) should; $84
• C) should not; -$136
• D) should not; -$89
• E) should not; -$47

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Definitions:

Hypnotized Person

An individual who is in a state of hypnosis, characterized by increased suggestibility, relaxation, and altered consciousness.

Mind

The aspect of an individual that enables them to be aware of the world and their experiences, to think, and to feel; the faculty of consciousness and thought.

Hypnosis

A trance-like state of focused attention and heightened suggestibility, often used for therapeutic purposes.

Anesthetizing

The process of administering drugs to induce a state of temporary insensitivity to pain.