When the Return on Investment for Each Division of a Corporation

question 104

Multiple Choice

When the return on investment for each division of a corporation is greater than what the return would be if each division were an independent business,that corporation is said to have achieved

• A) synergy.
• B) a leveraged buyout.
• C) its hurdle rate.
• D) the status of a true conglomerate.
• E) Stage III.

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Definitions:

Variable Costs

Expenses that change in proportion to the level of production or business activity, including costs such as materials and direct labor.

Fixed Costs

Fixed outgoings that are unaffected by variations in output or sales volume, including rental fees, payroll, and insurance coverages.

Indirect Cost

Expenses not directly linked to a specific product or service but necessary for the overall operations of a business, such as utilities and executive salaries.

Hamburger Patty

A ground meat product, commonly beef, molded into a round shape to fit hamburger buns.