WebFlicks Is an Online DVD Company That Produces Its Own

question 103

Multiple Choice

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years) : $\begin{array}{ll}\text { Variable costs: }\\\text { Product royalty fees } & \$ 3.30 \text { per DVD } \\\text { DVD production } & \$ 1.20 \text { per DVD } \\\text { Selling and admin costs } & \$ 0.80 \text { per DVD }\\\text { Fixed Costs: }\\\text { Production } & \$ 128,000 \text { per month } \\\text { Selling and administration } & \$ 130,000 \text { per month }\end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is inventory at the end of the month under variable costing?

• A) $72,000
• B) $148,500
• C) $174,900
• D) $84,800

Grasp the components and significance of the cash cycle and operating cycle in financial management.

Identify the types of short-term financing options available to firms and their appropriate utilization.

Learn how the firm's financial policies affect the components of working capital such as accounts receivable, inventory, and accounts payable.

Understand the factors that influence the cash cycle and how changes in policies can impact firm profitability.

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Definitions:

Sales Budget

A financial plan that estimates the revenue from sales for a future period, taking into account factors like historical sales data, market trends, and seasonality.

Master Budget

A comprehensive financial plan made up of several smaller and specific budgets, combining them into one overarching budget.

Individual Budgets

Specific financial plans for departments, projects, or activities within a company, detailing expected revenues and expenses.

Selling Expenses Budget

This refers to a detailed plan that outlines all the expenses associated with the selling activities of a business over a specific period.