An Increase in Fixed Operating and Financial Cost Results in an Increase

question 97

True/False

An increase in fixed operating and financial cost results in an increase in risk, since the firm will have to achieve a higher level of sales just to break even.

Analyze the effectiveness of computer-based training compared to traditional classroom instruction.

Appreciate the role of personal choice in the effectiveness of training methods.

Understand the concept of generative learning and its applications in a collaborative environment.

Recognize the importance and benefits of "just-in-time" training provided by technology-based methods.

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Definitions:

Operating Income

Income earned from a firm's regular business operations, excluding deductions of interest and taxes.

Absorption Costing

A costing method where all manufacturing costs, including both fixed and variable costs, are attributed to the product, thus fully absorbing them.

Net Income

The profit of a company after all expenses and taxes have been deducted from total revenue.

Variable Manufacturing Costs

Costs that vary directly with the level of production, including expenses like raw materials and direct labor.