A Declining Fixed Asset Turnover Ratio Can Actually Be Caused

question 121

True/False

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales.

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Definitions:

Selling Price

The sum of money that a purchaser spends to acquire a good or service.

Absorption Costing

A strategy for calculating product costs that includes every aspect of manufacturing expenses: direct materials, direct labor, and all overhead costs, both variable and fixed.

Markup

The amount added to the cost of goods to cover overhead and profit; a percentage of cost.

Direct Labor

Labor costs directly associated with the manufacture of specific goods or the delivery of specific services, representing wage expenses for personnel involved in production.