Waldron Inc

question 124

Multiple Choice

Waldron Inc.is considering selling to a group of new customers that will bring in sales of $15,000 with a return on sales of 5%.The only new investment will be in accounts receivable.Waldron has a turnover ratio of 5 to 1 between sales and accounts receivable.What is the return on investment?

• A) 3%
• B) 25%
• C) 5%
• D) 40%

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Definitions:

Curvilinear Costs

Costs that change with the level of output but at a non-constant rate, displaying a curved relationship between cost and output.

Nonconstant Rate

Refers to a rate that changes over time, as opposed to a constant or fixed rate which remains the same.

Mixed Cost

Expenses that contain both fixed and variable components, changing in total with the level of activity but not proportionately.

Cost-Volume-Profit Analysis

An accounting method used to determine the effects on company profits of different levels of sales volume and costs.