According to the Theory of Constraints, Which of the Following

question 100

Multiple Choice

According to the theory of constraints, which of the following is an operational measurement that can be used to measure the firm's ability to make money?

• A) Net profit
• B) Throughput
• C) Return on investment
• D) Sales
• E) Direct labor hours

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Definitions:

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period in which they are incurred, such as selling, general, and administrative expenses.

Expense

An expense is an outflow of money or other valuable resources that an individual, company, or organization incurs as a result of performing its normal operations.

Indirect Labor

Indirect labor refers to wages paid to employees who are not directly involved in the production of goods or services, such as supervisors and maintenance workers.

Manufacturing

The method of transforming unfinished materials, components, or pieces into final products that satisfy a customer’s expectations or standards.