Disaggregating Return on Capital Employed into Sales Margin and Capital

question 29

True/False

Disaggregating return on capital employed into sales margin and capital turnover offers a useful stating point for diagnosing firm performance.

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Definitions:

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of fully completed units for inventory valuation.

Process Costing System

A financial recording method for allocating expenses to identical items that are manufactured in bulk through an uninterrupted process.

Weighted-Average Method

A costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold, weighting by the number of units.

Direct Labor Cost

The total cost of all labor directly involved in the production of goods or services, which can be easily traced to the product.