Brenda's Bar and Grill Has Total Assets of $17 Million

question 4

Multiple Choice

Brenda's Bar and Grill has total assets of $17 million of which $5 million are current assets. Cash makes up 12 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brenda's gross plant and equipment has a cost value of $12 million and other long-term assets have a cost value of $1,000,000. Using this information, what are the balance of inventory and the balance of depreciation on Brenda's Bar and Grill's balance sheet?

• A) $2.4 million; $1 million
• B) $3.4 million; $2 million
• C) $1.4 million; $1 million
• D) $0.4 million; $3 million

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Definitions:

Production Labor

The workforce involved in the manufacturing process, whose wages are considered a direct labor cost affecting the cost of goods sold.

Direct Cost

Expenses that can be directly linked to the production of specific goods or services.

Indirect Cost

Costs that are not directly traceable to a specific product or activity, such as overhead, administration, and salaries for management.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services and are considered a variable cost.