The lower the revenue per employee, a. the more efficient the company is in generating revenue from its employees. b. the less efficient the company is in generating revenue from its employees. c. The revenue per employee has no effect on the efficiency the company has in generating revenue from its employees. d. None of these choices are correct.

The lower the revenue per employee, a. the more efficient the company is in generating revenue from its employees. b. the less efficient the company is in generating revenue from its employees. c. The revenue per employee has no effect on the efficiency the company has in generating revenue from its employees. d. None of these choices are correct.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 44MCQ: When a Dupont analysis reveals that a company has much higher than average asset turnover and much...

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When a Dupont analysis reveals that a company has much higher than average asset turnover and much lower than average profit margin, what can be concluded about the companys strategy? a. It is a product differentiator. c. It has no strategy. b. It needs to concentrate on improve- d. It is a low-cost provider ing its profit margins.
A cost center is a responsibility center of a company which incurs losses. incurs costs and generates revenues. only incurs costs and does not directly generate revenues. is a responsibility center which generates profits and evaluates the investment cost of earning the profit.
True or false A cost center manager does not have the ability to produce revenue.
Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please explain. Discuss the components of the Contribution Margin Income Statement, how does management use this in the decision making process?
Which of the following would reduce net profit margin but have no effect on gross profit margin?a) Reducing the commission rate paid to salesmen.b) Negotiating a lower purchase price for raw materials.c) An increase in IT support costs for the accounting package used.d) Increasing the expected economic lives of machinery used in the production function.
Which of the following situations is most likely to pose a problem for companies that use return on investment as a measure of a manager’s performance? a. Managers may be encouraged to purchase more operating assets than they otherwise should. b. Managers may be discouraged from purchasing operating assets that could improve overall profitability. c. Managers may be discouraged from reducing their division’s costs. d. Managers may be discouraged from paying off debt in order to reduce costs
Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income. A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
What does a consistently negative responsibility marginimply will happen to the operating income of the business ifthe center is closed? Why? Identify several other factors thatshould be considered in deciding whether or not to close thecenter.
For CVP analysis calculations, which of the following statements is correct? A. In target profit calculations, sales revenue is less than total costs. B. CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit. OC. A company's sales mix is ultimately determined by the management of a company. D. The Break-even point is the point at which operating income is greater than $0. O E. If sales volume is expected to be higher than the indifference point, management should choose the cost structure with the higher fixed costs.
In what way can the use of ROI as a performance measure for investment centers lead to bad decisions? How does the residual income approach overcome this problem?
Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.
Monopolists sometimes practice price discrimination to O a. get rid of surplus product. O b. decrease output. O c. out of fairness to disadvantaged groups. O d. increase profit. O e. increase deadweight loss.