The Data Above Shows the Net Working Capital Requirements for Blunderstone

question 40

Multiple Choice

The data above shows the net working capital requirements for Blunderstone Shoes, a company that makes waterproof boots. All figures are in thousands of dollars. What can be considered the firm's permanent working capital?

• A) $2,700,000
• B) $3,300,000
• C) $4,100,000
• D) $4,450,000

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Definitions:

Unit Product Cost

The total cost associated with producing a unit of product, including both fixed and variable costs, divided by the total number of units produced.

Net Operating Income

A financial metric that represents the profit a company generates from its operations, excluding expenses from interest and taxes.

Absorption Costing

A method of accounting for the total cost of production, including fixed and variable costs, to value inventory.

Variable Costing

A method of accounting that exclusively accounts for variable production expenses—direct materials, labor directly assigned to production, and variable manufacturing overhead—when calculating the cost of products.