Sierra Company Has Cash of $33,000; Net Accounts Receivable of $41,000;

question 77

Multiple Choice

Sierra Company has cash of $33,000; net accounts receivable of $41,000; short-term investments of $15,000; and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term liabilities. The quick ratio for Sierra Company is:

• A) 1.78.
• B) 2.97.
• C) 3.30.
• D) 3.80.
• E) 2.99.

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Definitions:

Variable Overhead

Costs of overhead that vary with the level of production activity, such as utilities for machinery or materials handling expenses.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production based on a certain activity base.

Variable Component

The part of a cost or expense that varies directly with the level of activity or production volume, in contrast to fixed costs.

Electrical Motor

An electromechanical device that converts electrical energy into mechanical energy, commonly used in various appliances, machinery, and vehicles.