Which of the Following Is a Long-Run Adjustment

question 372

Multiple Choice

Which of the following is a long-run adjustment?

• A) A restaurant hires a new chef.
• B) A company builds a new manufacturing plant.
• C) A bank hires a new CEO.
• D) A company hires ten new management trainees.

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Definitions:

Variable Expenses

Costs that vary directly with the level of output or activity, such as materials and labor.

Operating Income

The profit realized from a business's operations after subtracting operating expenses from the gross profit.

Contribution Format

An income statement format that separates fixed and variable costs to highlight the contribution margin.

Variable Expense Ratio

A metric that compares variable expenses (costs that change with production levels) to total sales, indicating how much revenue is consumed by variable costs.