A(n) __________ Is a Control System That Measures Performance in Terms

question 135

Multiple Choice

A(n) __________ is a control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets.

• A) Open-book management
• B) Economic value-added system
• C) Activity-based costing
• D) Inappropriate control system
• E) None of these

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Definitions:

Selling Price Per Unit

The amount at which a single unit of product is offered for sale to customers.

Contribution Margin

The amount by which a product's sales exceed its variable costs; used to cover fixed costs and contribute to profit.

Variable Cost

Costs that vary in direct proportion to changes in levels of activity or volume of goods produced, such as materials and labor.

Selling Price

The amount charged to customers for a product or service, determining the revenue earned by a business.