Manufacturing Company Flashcards
1
Q
Suggest one disadvantage of raising funds by means of bank loan
A
- loan interest to be paid every year
- loan interest to be paid irrespective of profits
- loan to be repaid by given date
2
Q
Suggest ways of raising long term funds besides bank loan
A
- introduce additional capital
- take a partner
- convert to limited company
- mortgage the premises
- see if government grants are available
- borrow from family and friends
3
Q
Explain the meaning of prime cost
A
- costs which can be traced to a product
- it is the total of the direct materials, direct labour and direct expenses
4
Q
Explain the meaning of factory overheads
A
- factory indirect expenses
- they cannot be traced to the product being manufactured
5
Q
State the meaning of the term ‘work in progress’
A
Goods which are partly completed
