By Adding the Number of Days That Inventory Is Held

question 6

Short Answer

By adding the number of days that inventory is held to the number of days that accounts receivable is outstanding an analyst can calculate the number of days of _____________________________________________ the firm requires.

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Definitions:

Machine-Hours

A measure of production output or operation, indicating the total hours machines are running in the manufacturing process.

Markup

The surcharge applied to the original cost of items to compensate for overhead expenses and secure earnings.

Plantwide Predetermined Rate

A single overhead rate calculated using the total estimated overhead costs divided by an estimated allocation base for an entire factory or plant.

Machine-Hours

A measure of the time that a machine is in operation, used in costing and operational analysis.