Harris Company Uses 5,000 Units of Part AA1 Each Year

question 90

Multiple Choice

Harris Company uses 5,000 units of part AA1 each year.The cost of manufacturing one unit of part AA1 at this volume is as follows: An outside supplier has offered to sell Harris Company unlimited quantities of part AA1 at a unit cost of $31.00.If Harris Company accepts this offer, it can eliminate 50 percent of the fixed costs assigned to part AA1.Furthermore, the space devoted to the manufacture of part AA1 would be rented to another company for $24,000 per year.If Harris Company accepts the offer of the outside supplier, annual profits will

• A) increase by $29,000.
• B) increase by $14,500.
• C) increase by $22,000.
• D) increase by $2,500.

Identify the impact of credit policies on cash flows and the cash cycle.

Recognize the effects of inventory management on the cash and operating cycles.

Understand the role of different managerial positions in influencing the company's cash flow and financial policies.

Identify the effects of payables management on the company's cash cycle.

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Definitions:

Change Shape Tool

A feature in graphic design and office software that allows users to alter the form or appearance of drawn shapes or objects within a document or presentation.

Orientation Button

A control in software or devices that allows users to change the layout or display mode, such as switching between portrait and landscape orientations.

Layout Tab

In software applications, it is a section within the interface that provides tools and options to adjust the arrangement or layout of elements on a page or screen.

Columns

This term usually refers to vertical sections in a page layout or in a table, used to organize content.