Which Component of Strategy Measures the Changes in Operating Income

question 13

Multiple Choice

Which component of strategy measures the changes in operating income attributed solely to an increase in the quantity of output between Year 1 and Year 2?

• A) the growth component
• B) the price-recovery component
• C) the productivity component
• D) the cost leadership component

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the amount of production or sales, including rent, wages, and insurance premiums.

Mixed Cost

A cost that contains both fixed and variable components and changes with the level of output but not directly in proportion.

Fixed Cost Element

A component of total costs that does not change with the level of output or activity within a certain range.

Fixed Cost

Costs that do not change with the level of manufacturing activity or output, such as rent, salaries, and insurance premiums.