Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

When using the bottleneck product mix decision method in the context of investments in securities, which factor should be prioritized to maximize overall profitability?

Select securities with the highest total return regardless of resource constraints

Prioritize investments with the lowest risk only

Maximize the contribution margin per unit of the constrained resource

Invest equally in all available securities

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Verified step by step guidance

Understand the concept of bottleneck product mix decision: This method is used to allocate limited resources (the bottleneck) to maximize profitability. The focus is on optimizing the use of the constrained resource.

Identify the constrained resource: In the context of investments in securities, the constrained resource could be capital, time, or any other limiting factor that restricts the ability to invest freely.

Calculate the contribution margin per unit of the constrained resource: Contribution margin is the difference between revenue and variable costs. Divide the contribution margin of each investment option by the amount of the constrained resource it requires to determine the contribution margin per unit of the constrained resource.

Rank the securities based on the contribution margin per unit of the constrained resource: Prioritize investments that yield the highest contribution margin per unit of the constrained resource to maximize overall profitability.

Allocate the constrained resource: Begin by investing in the securities with the highest contribution margin per unit of the constrained resource, and continue allocating resources until the constraint is fully utilized.