The Use of Fixed Assets,rather Than Financial Assets,in Order to Increase

question 79

Multiple Choice

The use of fixed assets,rather than financial assets,in order to increase the operating earnings is known as:

• A)plant and equipment investment.
• B)financial leverage.
• C)operating leverage.
• D)nondeposit capital.
• E)None of the options are correct.

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Definitions:

Direct Labour

The amount of effort contributed by employees who work directly on manufacturing a product or delivering a service.

Factory Overhead

Indirect costs associated with manufacturing, including costs of utilities, maintenance, and factory equipment depreciation.

Variable Expenses

Costs that change in proportion to business activity or output levels, such as materials costs and utility expenses directly linked to production.

Fixed Expenses

Fixed expenses are consistent costs that do not vary with the volume of business activity, such as rent or salaries.