An Ability to Efficiently Allocate Capital Through an Internal Market

question 40

Multiple Choice

An ability to efficiently allocate capital through an internal market may help the firm protect the competitive advantages it develops:

• A) through reduced disclosure to outside parties.
• B) by the ability to not report losses to investors.
• C) by the ability to increase pay to managers without shareholders being aware.
• D) through the ability to reinvest cash in dividends to shareholders.

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Definitions:

Direct Labour

The cost of workers who are directly involved in the production of goods or services.

Manufacturing Overhead

The indirect costs associated with the production process, including utilities, rent, and maintenance expenses of manufacturing facilities.

Cost of Goods Manufactured

The total cost incurred by a company to produce goods in a specific period, including materials, labor, and overhead costs.

Finished Goods Inventory

Represents the total cost of manufactured products that are completed but not yet sold.