Determining Where the Organization Is to Compete Is a Reason

question 25

True/False

Determining where the organization is to compete is a reason for managers to understand the configuration of the cost base of the organization.

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Definitions:

Activity Changes

Refers to alterations in the volume or pace of operations or transactions within a business over a period.

Variable Costs

Costs that vary directly with the level of production or volume of output, such as raw materials and labor directly involved in manufacturing.

Activity Levels

A measure used in cost accounting to evaluate the relation between the cost of a particular activity and the level of activity executed.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the proportion of fixed versus variable costs a company has.