The Purpose of the Conversion Process Is to Transform Material

question 49

Multiple Choice

The purpose of the conversion process is to transform material, labor and overhead into a finished product.To accomplish that purpose, organizations can use one of three systems.Which of the following best pairs a system with products that would be appropriately manufactured using it?

• A)Process: decks of playing cards, compact discs
• B)Job: plastic bottles, aluminum cans
• C)Process: custom-built homes, original works of art
• D)Hybrid: decks of playing cards, made-to-order smoothies

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Definitions:

Capital Intensity Ratio

The dollar amount of assets required to produce a dollar of sales. The capital intensity ratio is the reciprocal of the total assets turnover ratio.

AFN Formula

The Additional Funds Needed formula, used to calculate the additional working capital required to support a firm's growth in sales.

Debt/Assets Ratio

A financial metric indicating the proportion of a company's assets that are financed by debt.

Dividend Payout Ratio

A financial metric that measures the percentage of earnings distributed to shareholders in the form of dividends.