Use the Following to Calculate the Acid-Test Ratio

question 63

Multiple Choice

Use the following to calculate the acid-test ratio.(Round your answer to two decimal places. )

• A)0.75
• B)8.24
• C)0.92
• D)0.51

---

Definitions:

Fixed Overhead

Expenses that remain constant for a certain level of production or period of time, such as rent, salaries, and insurance, not directly tied to the level of production.

Work In Process

Inventory that includes goods partially through the production process but not yet complete.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as rent, utilities, and salaries of managers.

Cost Of Goods Sold

The expenses directly related to the manufacturing of products a company sells, encompassing both materials and labor costs.