XYZ,IncHas Developed a Project Which Results in Additional Accounts Receivable

question 158

Multiple Choice

XYZ,Inc.has developed a project which results in additional accounts receivable of $400,000,additional inventory of $180,000,and additional accounts payable of $70,000.What is the additional investment in net working capital?

• A) $580,000
• B) $510,000
• C) $270,000
• D) $150,000

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Definitions:

Predetermined Overhead Rate

The predetermined overhead rate is a rate used to allocate manufacturing overhead costs to products or job orders, based on estimated overhead costs and activity levels.

Variable Overhead Rate Variance

The difference between the actual variable overhead costs incurred and the standard cost allocated, indicating inefficiencies or cost control issues.

Favorable

A term used in accounting to describe a situation where actual costs are less than the budgeted or standard costs.

Unfavorable

A term used in variance analysis to describe a variance that leads to a decrease in profit compared to budgeted or standard costs.