_____ Is a Type of Divestiture in Which a Firm

question 135

Multiple Choice

_____ is a type of divestiture in which a firm converts a particular unit or division into a separate company and issues stock in the newly created corporation to outside investors.

• A) A deployment plan
• B) Licensing
• C) A carve-out
• D) Asset stripping

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Definitions:

Direct Materials Costs

The expenses for raw materials that are directly used in the manufacturing of a product.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a unit of product.

Unit Product Cost

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

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.