The Simplest Measure of Efficiency Is

question 12

Multiple Choice

The simplest measure of efficiency is:

• A)the amount of money the company has to work with in the short term.
• B)the ratio of revenues divided by invested capital.
• C)the net profit expressed as a percentage of sales.
• D)the total costs of producing products.
• E)the quantity of inputs that it takes to produce a given output.

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Variable Costing

An approach in accounting that takes into account only the variable aspects of production costs (such as direct materials, direct labor, and variable manufacturing overhead) in the computation of product prices.

Net Operating Income

Net Operating Income is a measure of a company's profitability from its regular business operations, excluding income and expenses from interest, taxes, and other non-operational activities.

Fixed Manufacturing Overhead

Regular, constant expenses related to the production process that are not affected by the level of goods produced, such as rent and salaries of management.