Companies Outsource Their Operations Because

question 158

Multiple Choice

Companies outsource their operations because

• A) the weather is nicer in other countries.
• B) employees in other countries take less sick leave.
• C) governments in other countries allow them to operate.
• D) labor costs are lower.
• E) no one wants to do the work domestically.

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Definitions:

Operating Profit Margin

A profitability ratio calculated as operating income divided by revenue, indicating the percentage of revenue that is left over after paying for variable costs of production.

Cost of Goods Sold

Expenses directly incurred from the production of a company's sold goods, involving the cost of labor and materials.

General and Administrative Costs

Expenses related to the day-to-day operations of a business that are not directly linked to production or sales.

Gross Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold; it measures how efficiently a company uses its labor and supplies in production.