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In an assemble-to-order (ATO) environment, option overplanning is used to:
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Question 138 - CPIM-Part-2 discussion

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Return on investment (ROI) is decreased by which of the following activities?

A.
Increasing prices
Answers
A.
Increasing prices
B.
Increasing sales volume
Answers
B.
Increasing sales volume
C.
Increasing cost of sales
Answers
C.
Increasing cost of sales
D.
Reducing inventory levels
Answers
D.
Reducing inventory levels
Suggested answer: C

Explanation:

Return on investment (ROI) is a financial ratio that measures the profitability of an investment relative to its cost. ROI is calculated by dividing the net income (or profit) generated by the investment by the total cost of the investment. ROI is decreased by any activity that reduces the net income or increases the cost of the investment. Increasing cost of sales is an activity that decreases ROI because it reduces the net income generated by the sales revenue. Cost of sales (or cost of goods sold) is the direct cost of producing or purchasing the goods or services sold by an organization. Cost of sales includes materials, labor, and overhead costs. Increasing cost of sales means that the organization spends more money to produce or acquire the same amount of goods or services, which lowers its profit margin and ROI.

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asked 16/09/2024
Wislon Pereira
36 questions
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