Which of the Following Is Not an Advantage of ROI

question 119

Multiple Choice

Which of the following is not an advantage of ROI?

• A) It encourages managers of departments with high ROIs to invest in average ROI projects.
• B) It encourages managers to pay careful attention to the relationships among sales, expenses, and investment.
• C) It encourages cost efficiency.
• D) It discourages excessive investment in operating assets.

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Definitions:

Direct Labor Costs

These refer to the expenses associated with paying workers who directly manufacture or produce the goods and services.

Work in Process Inventory

Represents goods that are partially completed in a manufacturing process but are not yet finished products.

Cash Account

An account that records the amount of cash transactions a company engages in over a period.

Direct Labor Costs

The compensation and perks provided to workers directly engaged in manufacturing products or delivering services.