7. The three primary policy variables to consider when extending credit include all of the following except:

a- Credit standards.

b- Terms of trade.

c- Collection policy.

d- Level of inflation.

e- None of the above.

8. Which of the following is true regarding the contribution margin ratio of a single-product company?

a- As fixed expenses decrease, the contribution margin ratio increases.

b- The contribution margin ratio multiplied by the variable expenses per unit equals the contribution margin per unit.

c- The contribution margin ratio increases as the number of units sold increases.

d- If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.

e- None of the above.

9. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:

a- Zero.

b- The total manufacturing cost of the component.

c- The fixed manufacturing cost of the component.

d- The variable manufacturing cost of the component.

e- None of the above.

10. When using the economic order quantity model:

a- Ordering costs increase as the level of inventory increases.

b- Carrying costs decrease as the level of inventory increases.

c- Costs are minimized when total carrying costs and total ordering costs are equal.

d- All of the above.

e- None of the above.