The Management of Jahns Corporation Is Considering Introducing a New

question 40

Multiple Choice

The management of Jahns Corporation is considering introducing a new product-a compact barbecue. At a selling price of $59 per unit, management projects sales of 30,000 units. Launching the barbecue as a new product would require an investment of $500,000. The desired return on investment is 19%. The target cost per barbecue is closest to:

• A) $66.44
• B) $59.00
• C) $70.21
• D) $55.83

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Definitions:

Cash Ratio

A liquidity metric that measures a company’s ability to cover its short-term liabilities with its cash and cash equivalents.

Current Ratio

A measure of a business's capability to settle short-term debts, calculated as the ratio of current assets to current liabilities.

Cash Equivalents

Liquid assets that can be quickly turned into a specific amount of cash and have initial maturity times of no more than three months.

Cash Ratio

A financial ratio indicating how well a company can cover its short-term obligations using its liquid assets.