Stefan Owns a Lumber Yard and Has a R500 000

question 117

Multiple Choice

Stefan owns a lumber yard and has a R500 000 purchase order from a construction company.His cost of goods sold for this order is R300 000.Because his company needs working capital, the most logical loan for the lumberyard would be to use ________.

• A)an equipment-based loan.
• B)factoring.
• C)purchase order financing.
• D)asset-based financing.

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Definitions:

Variable Direct Labor

The portion of labor costs that varies directly with production volume.

Desired Profit

The profit amount that a company aims to earn in a specific period, typically set as a goal in financial planning.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Desired Profit

The target profit a business aims to achieve within a specific period.