Which of the Following Will Decrease the Additional Funds Needed

question 41

Multiple Choice

Which of the following will decrease the additional funds needed from external sources?

• A) The firm's profit margin decreases.
• B) The firm's retention ratio is decreased.
• C) The firm becomes less capital intensive.
• D) The firm reduces its usage of trade credit.

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Definitions:

Underapplied Overhead

Occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred.

Direct Labour Cost

The total cost of all the labor force that is directly involved in the manufacturing of a product or the provision of a service.

Predetermined Overhead Rate

An estimated overhead rate calculated before the manufacturing process begins, used to assign overhead costs to products.

Direct Materials Cost

The expenditure on raw materials that can be directly attributed to the production of a specific product.