A Corporate Strategy to Reduce Production Cost Is to Lower

question 85

Multiple Choice

A corporate strategy to reduce production cost is to lower the cost of labor.One publicly unfavorable way is to move all or part of the company's operations overseas and use third world labor to minimize cost.This is referred to as:

• A) sweatshop labor.
• B) offshoring.
• C) migrant labor.
• D) developing.

Understand the fundamental concepts of options, including calls and puts.

Identify and describe various types of options (e.g., American, European, Asian).

Understand the put-call parity theorem and its implications.

Apply financial mathematics to calculate the prices of options and their components.

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Definitions:

Dollar Contribution Margin

The difference between total sales revenue and total variable costs, expressed in absolute currency terms.

Variable Cost

Costs that change in proportion to the level of production activity or volume, such as raw material costs and direct labor costs.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Margin of Safety Percentage

A metric that measures how much sales can drop before a business reaches its break-even point, typically expressed as a percentage.