Which of the Following Is Probably Not a Good Reason

question 41

Multiple Choice

Which of the following is probably not a good reason for leasing instead of buying?

• A) Leasing may provide off-balance sheet financing
• B) Leasing may reduce administrative and transaction costs
• C) Tax shields can be used
• D) All of the above are good reasons

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Definitions:

Direct Labor Hours

Total count of hours devoted by employees in the direct creation of goods or offering of services.

Special Order

A special order involves a one-time or exceptional purchase of goods or services made to customer specifications that may differ from standard offerings.

Variable Costs

Outlays that adjust in response to the volume of production or sales figures.

Fixed Manufacturing Overhead

Represents the production costs that do not change with the level of manufacturing activity, such as salaries of managerial staff and rent of the factory.