Concerning Supply Chain Finance, which of the following statements are true? 1 Activity based costing involves...
Concerning Supply Chain Finance, which of the following statements are true?
1 Activity based costing involves defining relevant activities and relating all overhead costs to these activities.
2 Direct costs include costs for raw materials or labor hours to produce a product.
3 EBIT stands for Earnings Before Interest, Taxes, Depreciation and Amortization.
4 Working capital is a measure of a company's efficiency and short-term financial health.
5 None of the above.
Homework Answers
4.Working capital is a measure of a company's efficiency and short-term financial health.
working capital = current assets - current liabilities.
It is a measure of short term financial health, i.e it sees if the company has enough liquidity to meet its obligations.
Direct costs include both direct materials and direct labour costs.
EBIT stands for Earnings before interest and taxes.
Activity based costing may not relate all ovehead costs to relevant activities.
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