From a Purely Cost Point of View, Is Capacity Utilization

question 74

Multiple Choice

From a purely cost point of view, is capacity utilization less than 100% desirable or not desirable?

• A)This depends on the capital structure
• B)Neither of these, because it is neutral
• C)Desirable, because it decreases unit costs
• D)Not desirable, because in theory it raises unit costs

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Definitions:

Assets

A firm’s economic resources, or items of value that it owns, such as cash, inventory, land, equipment, buildings, and other tangible and intangible things.

Receivables Turnover

Sales divided by accounts receivable.