An Improvement in Either Capital Turnover or Return on Sales

question 138

Multiple Choice

An improvement in either capital turnover or return on sales, without changing the other, will also improve the _____.

• A)level of sales
• B)cost of capital
• C)net book value
• D)rate of return on invested capital

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Definitions:

Conversion Costs

Expenses related to transforming raw materials into finished goods, typically including labor costs and manufacturing overhead.

Materials Cost

The cost of materials that are used to manufacture a product or provide a service.

Ending Work

Refers to the value of work-in-process inventory at the end of an accounting period.

Activity-Based Costing

A method in accounting that assigns costs to products or services based on the activities required to produce or deliver them.