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where the patio furniture is to be displayed is a vacant slab of concrete attached to the
indoor shop. The company originally paid $8000 to put in the slab of concrete three years
ago. It would now cost $13000 to put in the same slab of concrete. Should the company
consider the concrete slab when expanding its outdoor garden shop to include patio
furniture? If yes, which value should it use?Should the company consider the concrete
slab when expanding its outdoor garden shop to include patio furniture? If yes, which
value should it use?
(Select the best response.)
A.
No. The slab is a sunk cost unless there is another use for the slab that could provide cash
flow to Richardses' Tree Farm. The additional cash flow that the slab could provide is the
opportunity cost, not the current replacement cost or the original cost.
B.
Yes, use
$13 comma 000
as the cost.
C.
Yes, use
$8 comma 000
as the cost.
P10-5
Working capital cash flow.
Cool Water, Inc. sells bottled water. The firm keeps in
inventory plastic bottles at 12% of the monthly projected sales. These plastic bottles cost
$0.007 each. The monthly sales for the first four months of the coming year are as
follows:
What is the monthly increase or decrease in cash flow for inventory given that an
increase is a use of cash and a decrease is a source of cash?
Note:
Enter a
decrease as a negative number.
What is the change in working capital for January?
What is the change in working capital for February?
What is the change in working capital for March?
P13-3 (similar to) Average production cycle.
Use the following account information to find the average production cycle for Rian
Company.