The Structural and Executional Factors That Determine the Long-Term Cost

question 42

Multiple Choice

The structural and executional factors that determine the long-term cost structure of an organization are called:

• A)Organizational activities
• B)Operational cost drivers
• C)Operational activities
• D)Organizational cost drivers

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Definitions:

Absorption Costing

A method of accounting that encompasses all costs involved in manufacturing, including direct materials, direct labor, and both variable and fixed manufacturing overhead, as part of a product's cost.

Net Operating Income

The profit a company makes from its core business operations, excluding deductions of interest and taxes.

Net Cash Flow

The amount of cash generated or lost over a specific period, taking into account cash inflows and outflows from operational, investing, and financing activities.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as factory rent or salaries of production supervisors.