The Profitability Index Is Always Less Than 1.0

question 24

True/False

The profitability index is always less than 1.0.

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Definitions:

Total Manufacturing Cost

The aggregate expense incurred in the production of goods, including direct materials, direct labor, and manufacturing overhead.

Work in Process

Inventory that represents partially completed goods which are still in the production process.

Actual Manufacturing Overhead Cost

The actual costs incurred for indirect manufacturing expenses, such as utilities, rent, and maintenance.

Year

A period of time consisting of 12 months or 365 days, used as a basic unit for measuring time in relation to the earth's orbit around the sun.