Jim Smith Runs a Company That Sells Encyclopedia Sets for $200

question 26

Multiple Choice

Jim Smith runs a company that sells encyclopedia sets for $200 each. When he employs 5 workers, they can sell 20 sets per week, while only 17 sets are sold when 4 workers are employed. If the wage of workers in this skill category is $500 per week, should the fifth worker be hired?

• A) No, because the MRP of the fifth worker is less than $500 per week.
• B) No, because the MRP of the fifth worker is more than $500 per week.
• C) Yes, because the MRP of the fifth worker is less than $500 per week.
• D) Yes, because the MRP of the fifth worker is more than $500 per week.

Understand the computation and significance of the acid-test (quick) ratio.

Calculate and interpret accounts receivable turnover.

Understand the calculation of average sale and collection periods.

Calculate and differentiate between various liquidity and efficiency ratios.