What if the cost of placing an order doubles what if

This preview shows page 114 - 118 out of 268 pages.

What if the cost of placing an order doubles? What if the carrying cost per unit is halved?
309.How might the state of the economy affect the credit policy of a firm? 310.How might the U.S. "war on terrorism" affect the level of safety stock a Canadian firmmaintains? 311.The just-in-time inventory method is frequently employed by manufacturing firms. Explain how this system operates and discuss some of the advantages and disadvantages of the method.
Chapter 20 Credit and Inventory Management Key1.The terms of sale establish how the firm proposes to purchase its goods or services. FALSEDifficulty: BasicLearning Objective: 20-01 How firms manage their receivables and the basic components of a firm's credit policies.Ross - Chapter 20 #1Type: Concepts2.One of the most important factors influencing the length of the credit period offered by the seller is the operating cycle of the seller. FALSEDifficulty: BasicLearning Objective: 20-02 The distinct elements of the terms of sale.Ross - Chapter 20 #2Type: Concepts3.All else equal, the credit period offered to a firm's customers is likely to be shorter when (A) the seller operates in a marginally competitive market, and (B) the size of the account is large. FALSEDifficulty: BasicLearning Objective: 20-02 The distinct elements of the terms of sale.Ross - Chapter 20 #3Type: Concepts4.The fact that auto parts stores face shorter credit periods than florists is consistentwith the factors listed as influences on credit period in the text. FALSEDifficulty: BasicLearning Objective: 20-02 The distinct elements of the terms of sale.Ross - Chapter 20 #4Type: Concepts5.Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. In doing so, the firm has lowered the effective annual cost of credit for their customers. TRUEDifficulty: BasicLearning Objective: 20-02 The distinct elements of the terms of sale.Ross - Chapter 20 #5Type: Concepts
6.Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. It is reasonable to assume that the firm's ACP will be increased by this action. TRUEDifficulty: BasicLearning Objective: 20-02 The distinct elements of the terms of sale.Ross - Chapter 20 #6Type: Concepts7.On average, manufacturing firms hold a greater proportion of total assets in the form of inventories than retailers. FALSEDifficulty: BasicLearning Objective: 20-06 How to determine the costs of carrying inventory and the optimal inventory level.Ross - Chapter 20 #7Type: Concepts8.All else equal, a firm that holds safety stocks of inventory will have a lower economic order quantity (EOQ) than a firm that does not. FALSEDifficulty: BasicLearning Objective: 20-06 How to determine the costs of carrying inventory and the optimal inventory level.Ross - Chapter 20 #8Type: Concepts9.All else equal, a firm that holds safety stocks of inventory will have a lower level ofaverage inventory than a firm that does not.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture