In Order to Increase the Net Profit of a Business,the

question 28

Multiple Choice

In order to increase the net profit of a business,the NMC of any proposed strategy must ________.

• A)be equal to the current NMC
• B)be equal to the difference of the current NMC and the marketing and sales expenses
• C)be equal to the total operating income
• D)be lower than the current NMC
• E)exceed the current NMC

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Definitions:

Absorption Costing

A method of accounting that incorporates all costs related to manufacturing, including direct materials, direct labor, as well as both variable and fixed overheads, into the product's price.

Unit Product Cost

The cost assigned to a single unit of product, encompassing all the costs incurred to produce, manufacture, or acquire that unit.

Absorption Costing

A method in accounting that totals up all expenses of manufacturing including costs for direct materials, direct labor, along with variable and fixed overhead, assigning them to the cost of a product.

Unit Product Cost

The total cost to produce one unit of a product, including direct materials, direct labor, and manufacturing overhead.