The Theory of Constraints (TOC)is

question 6

Multiple Choice

The theory of constraints (TOC) is

• A) a strategic technique primarily used to reduce waste.
• B) a strategic technique used to help firms effectively improve the rate at which raw materials are converted to finished goods and then money through sales.
• C) a strategic technique used to balance capacity across all resources.
• D) all of the above.

Understand the basic concept and components of the Capital Asset Pricing Model (CAPM).

Identify and explain the assumptions underlying the CAPM and their implications.

Comprehend the concept of systematic risk and its measurement through beta.

Describe the characteristics of the market portfolio and its significance in CAPM.

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Definitions:

Variable Selling Expense

Expenses that fluctuate in direct proportion to sales volume, including commissions and freight fees.

Fixed Manufacturing Overhead

Expenses related to manufacturing that remain constant regardless of the number of units produced, including property taxes and rent for factory buildings.

Direct Labour

The work performed by individuals directly involved in the manufacturing of products or providing services, whose costs are directly attributable to the products or services.

Direct Materials

The raw materials and components that are directly used in the manufacturing of a product and can be directly attributed to that product.