Consider the Following Passage

question 3

Multiple Choice

Consider the following passage:
Julia sells exotic birds. She has placed four orders with wholesale bird supplier Papagayo Co., and all of them have been filled with healthy birds. Lately, however, some wholesale competitors have been trying to get her to order from them. But, when it's time to make the next order, she decides she's better off with Papagayo because she's pretty sure she'll get healthy birds. (Do not assume that you know anything about birds or the bird business.)
If Julia had placed seven orders with Papagayo with the same result, her argument would be

• A)stronger.
• B)weaker.
• C)neither stronger nor weaker.

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Definitions:

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.

Selling Price

The sum of money that a purchaser spends to acquire a good or service.

Absorption Costing

A strategy for calculating product costs that includes every aspect of manufacturing expenses: direct materials, direct labor, and all overhead costs, both variable and fixed.

Markup

The amount added to the cost of goods to cover overhead and profit; a percentage of cost.