If Intel Moves First and Makes a Large Investment in a Chip

question 46

Multiple Choice

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits, Intel has made ________ and Bolivia ________.

• A)a tactical error; will nationalize the plant
• B)a specific investment; will create the tax credit
• C)a specific investment; has a hostage
• D)a general investment; no longer has to grant the tax credits

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Definitions:

Direct Materials Costs

The expenses incurred for raw materials that are directly involved in the manufacturing of products.

FIFO Method

A stock rotation system where the oldest stock (first in) is used or sold first (first out).

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, computed by assessing the work done as a fraction of the completed goods.

First-In, First-Out Method

An inventory valuation method that assumes the first items placed in inventory are the first sold; useful in managing and valuing inventory.