The Current Assets and Current Liabilities for Kolbie Company and Newton

question 47

Essay

The current assets and current liabilities for Kolbie Company and Newton Company are as follows:​ *These represent prepaid expenses and other non-quick current assets.
(a) Determine the quick ratio for both companies. Round to two decimal places.
(b) Interpret the quick ratio difference between the two companies.​

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product’s cost.

Direct Labour

The wages of workers or employees who are directly involved in the production of goods or the delivery of services.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead based on the efficient usage of manufacturing resources.

Direct Material Used

The raw materials that are directly included in the finished product, easily traceable to specific goods or batches of goods.