Cramer Designs produces a wide range of women\'s apparel. Three years ago, the c
ID: 2764430 • Letter: C
Question
Cramer Designs produces a wide range of women's apparel. Three years ago, the company spent $1.2 million to launch its line of designer handbags. Brittany Cramer, the company's CEO and founder, is conducting a post-audit on the handbag line to determine how the division's performance compared to the company's expectations. She has found that the revenue from the handbag division was much lower than expected; however, the company was able to produce the handbags for a much lower cost per unit than expected. Which of the following should be considered the main purpose(s) of the post-audit? It helps project the firm's tax liability. It encourages managers to generate reasonable forecasts. It helps improve operations. When a firm a exhausts its retained earnings and must raise capital from external sources, its weighted average cost of capital (WACC) willExplanation / Answer
It encourages managers to generate reasonable forecast and helps improve operations as managers can realize they are making optimistic projects and that cost reduction will be required to meet original profit expectations
Will increase because internally generated funds have lower required rate of return compared to externally generated funds