How Will Increases in the Following Items Affect Return on Investment

question 35

Multiple Choice

How will increases in the following items affect return on investment (ROI) ?
$\begin{array} { l c c } & \text { Increase in Expenses } & \text { Increase in Inventury } \\\end{array}$
A) $\begin{array} { l c c } & \text { Decrease ROI } &&&& \text { Decrease ROI } \\\end{array}$
B) $\begin{array} { l c c } & \text { Decrease ROI } &&&& \text { Increase ROI } \\\end{array}$
C) $\begin{array} { l c c } & \text { Increase ROI } &&&& \text { Decrease ROI } \\\end{array}$
D) $\begin{array} { l c c } & \text { Increase ROI } &&&& \text { Increase ROI } \\\end{array}$

---

Definitions:

Factory Overhead

Factory overhead includes all the indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of employees not directly involved in production.

Standard Cost

A predetermined cost of manufacturing, selling, or any other enterprise activity, which serves as a benchmark for assessing performance.

Equivalent Units

A concept used in cost accounting to indicate the quantity of production expressed in terms of fully completed units.

Cost of Energy

The amount of money that is spent to produce, convert, transmit, and distribute energy.