Smile Company Had the Following Results If Productivity Is Computed Using a Physical Measure, Productivity Is

question 91

Multiple Choice

Smile Company had the following results: $\begin{array}{lr}\text { Rolls of film processed } & 350,000 \\\text { Sales revenue } & \$ 1,200,000 \\\text { Direct-labor hours worked } & 5,500 \\\text { Direct-labor cost } & \$ 47,000\end{array}$ If productivity is computed using a physical measure, productivity is _____.

• A)$3.43 per roll
• B)$260.87 per direct-labor hour
• C)2,553% of direct-labor cost
• D)63.64 rolls per direct-labor hour

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Definitions:

Excessive Risk

Engaging in financial activities that have a high chance of resulting in significant loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase profits by increasing sales.

Degree of Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the level of fixed versus variable costs.

Modigliani-Miller Model

A theory on capital structure that suggests a firm's value is unaffected by its financing decisions under certain conditions.