The Average Inventory Turnover Ratio Tells the Owner How Fast

question 30

True/False

The average inventory turnover ratio tells the owner how fast merchandise is moving through the business.

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Definitions:

Direct Labor Hours

The cumulative hours that employees, who are directly engaged in the creation of products or services, have worked.

Overhead Rate

A calculation used to allocate indirect costs to products or services, typically expressed as a percentage of direct labor, materials, or another base.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific products or activities based on their use of resources.

Allocation Base

A criterion or standard used to distribute costs across multiple cost objects.