Barry CoManufactures Leather Briefcases and Carryalls

question 191

Multiple Choice

Barry Co.manufactures leather briefcases and carryalls.Barry's production manager has provided the following production budget.Each briefcase or carryall requires 1.2 yards of leather fabric and Barry maintains an ending inventory of leather fabric equal to 25% of the next month's production needs. If each yard of leather fabric costs $6.40, how much should Barry budget for purchases of fabric in February?

• A)$468,480
• B)$372,480
• C)$310,400
• D)$384,000

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Definitions:

Factoring

The financial transaction where a business sells its accounts receivable (invoices) to a third party (factor) at a discount, in order to raise immediate capital.

Note Maturity

Note maturity refers to the date on which a debt instrument, such as a bond or promissory note, reaches its due date and the principal is to be paid to investors.

Quarterly Interest

Interest calculated or paid every three months on loans, investments, or deposits.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.