When Financial Managers Take Action to Minimize the Carrying Costs

question 91

Multiple Choice

When financial managers take action to minimize the carrying costs of current assets, they:

• A) are likely to maximize profits.
• B) also decrease unnecessary trading costs.
• C) may increase costs due to shortages.
• D)engage in the matching of maturities.

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Definitions:

Units Sold

The total quantity of a product that has been sold during a particular period, a key measure of business performance.

Absorption Costing

An accounting method that includes all the costs associated with manufacturing a product, including direct, indirect, fixed, and variable costs.

Break-Even Point

The financial point at which total revenues equal total costs, resulting in no net profit or loss.

Variable Costs

Charges that directly correlate with the volume of production or sales, such as direct labor and materials required for production.