Horton Company Produces and Sells Two Products: Round and Square

question 105

Multiple Choice

Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted data for 20x5 direct labour and overhead are:
Direct labour:
Round 4 hours per unit at $6 per hour
Square 6 hours per unit at $8 per hour
Overhead: $4 per direct labour hour
Total budgeted production of tables in 20x5 is:

• A) 12,000 units
• B) 10,000 units
• C) 6,500 units
• D) 14,000 units

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Definitions:

Cost of Capital

The rate of return a business needs to generate in order to meet the demands of its creditors and investors, used in evaluating new projects.

Cash Inflows

Money or other forms of financial assets that come into a company, typically as a result of its business operations or investments.

Cost of Capital

It represents the expense for an organization to fund its operations and investments, typically expressed as a rate of return that the company must achieve to maintain its market value.

Net Cash Flows

The amount of cash generated or lost over a period, considering all cash inflows and outflows.