A Sign of the Times

question 46

Multiple Choice

A Sign of the Times
Aurora hated this.After hearing of the threat for a long time, her company had finally decided that it must 'right size,' and this meant coming up with a plan for reducing the current size of the work force at her manufacturing plant.The job was left to her and, as much as she hated doing this part of her job, it was necessary for the survival of the company and was not just an effort to inflate their stock price.She also appreciated that her company was willing to try many different routes to decrease their labour costs, which was consistent with the positive way the company had treated their employees in the past.
-Refer to A Sign of the Times (Scenario) .Another method to reduce labour-costs would be ________, which is temporary involuntary termination that could last a few days or extend to years.

Definitions:

Net Operating Income

Net operating income reflects the profit a company makes from its operations, exclusive of taxes and interest.

Variable Costs

are expenses that change in proportion to the activity of a business, such as raw material costs, which increase with the level of production.

Direct Labor

Factory labor costs that can be easily traced to individual units of product. Also called touch labor.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating the contribution towards covering fixed costs.