If You Multiply Sales Profit Margin by Asset Turnover,you Obtain

question 12

Multiple Choice

If you multiply sales profit margin by asset turnover,you obtain:

• A) A meaningless number
• B) A metric that describes the profit generation efficiency of new assets
• C) Return on assets
• D) Return on shareholders equity

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Definitions:

Manufacturing Overhead

Includes all manufacturing costs other than direct materials and direct labor, encompassing expenses such as depreciation, electricity, and maintenance of factory facilities.

Cost of Goods Sold

The total cost directly associated with producing goods that have been sold, including materials, labor, and overhead costs.

Overapplied

A situation where the allocated amount of indirect costs exceeds the actual amount spent.

Underapplied

A situation where the actual manufacturing overhead costs are more than what was allocated to products.