Direct Costs ________

question 39

Multiple Choice

Direct costs ________.

• A) are anything for which a measurement of costs is desired
• B) are costs related to a particular cost object that can be traced to that cost object in a cost-effective manner
• C) focus specifically on the costing needs of the CFO
• D) are costs related to a particular cost object that cannot be traced to that cost object in a cost-effective manner

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point; measures the risk of not covering fixed costs.

Liabilities to Stockholders' Equity

A ratio that measures the amount of liabilities a company has compared to its shareholders' equity.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales or revenue; it is calculated by dividing net sales by average total assets.

Long-term Investments

Investments made with the intention to hold for more than one year, typically in bonds, stocks, or real estate, aiming for long-term capital growth.