If the Cost of an Activity Increases with the Number

question 160

Multiple Choice

If the cost of an activity increases with the number of purchase orders placed, rather than to the quantity of items purchased, it is which of the following?

• A)market-sustaining cost
• B)output unit-level cost
• C)facility-sustaining cost
• D)product-sustaining (service-sustaining)costs
• E)batch-level cost

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Definitions:

Total Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales, calculated by dividing total sales by the average total assets.

Efficiently

The method of achieving a goal or completing a task with the least waste of time and effort.

Assets

Economic resources owned by a business or individual that have value and can be used to meet debts, commitments, or legacies.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage by comparing total liabilities to total assets.