Many Entrepreneurs Choose to Open Their Own Business Because They

question 14

Multiple Choice

Many entrepreneurs choose to open their own business because they want to "call their own shots." This trait is also a common source of difficulty for entrepreneurs because they also

• A)fail to train a successor.
• B)inadequately monitor financial performance.
• C)fail to delegate.
• D)are poor bosses.
• E)fail to plan for contingencies.

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Definitions:

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product costs, excluding fixed overhead.

Net Operating Income

Profit generated from a company’s core business operations, excluding deductions of interest and taxes.

Absorption Costing

This accounting practice involves the comprehensive addition of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—to the price of a product.

Fixed Manufacturing Overhead

Fixed manufacturing overhead consists of indirect production expenses that remain constant regardless of the volume of products manufactured, like equipment depreciation.