Comfy Inc Uses Five Yards of Wool in Each Blanket It

question 53

Multiple Choice

Comfy Inc. uses five yards of wool in each blanket it produces. Comfy's production budget next year is 30,000 blankets. The anticipated wool inventory at January 1 is 40,000 yards, but the company desires to reduce the inventory to 20,000 yards by the end of the year. Each yard of wool costs $10. How many yards of wool should Comfy purchase?

• A)190,000 yards
• B)130,000 yards
• C)170,000 yards
• D)1,300,000 yards

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Definitions:

Property, Plant, Equipment

Tangible assets that are used in the operations of a business, have a longer life, and are not intended for sale, including buildings, machinery, and vehicles.

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its principal (face value), reflecting superior credit quality or lower market interest rates.

Common Stock Dividend

Payments made to shareholders from a company's earnings, reflecting a share of the profit allocated to each share of common stock.

Bonds Payable

Represents the amount owed to bondholders by the issuer, typically a long-term liability on the company’s balance sheet.