A Finance Manager Has to Select One of the Four

question 17

Multiple Choice

A finance manager has to select one of the four different suppliers of raw materials. The total cost functions under the four options are given below. Assume the quality of the raw material to be the same, which of the following is preferred by the finance manager?

• A) y = 600 + 4.96X
• B) y = 600 + 5.49X
• C) y = 600 + 4.41X
• D) y = 600 + 4.67X

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Definitions:

Net Income

The net income of a company following the deduction of all costs, taxes, and expenses from the gross revenue.

Idle Cash

Idle cash refers to money that is not currently invested, spent, or utilized in any way, meaning it does not earn interest or contribute to the financial goals of an individual or company.

Money-Market Securities

Short-term financial instruments, typically with high liquidity and low risk, used for borrowing and lending in the money market.

Current Assets

Assets likely to be converted into cash, sold, or consumed within one year or the business cycle, whichever is longer.