Depreciation on plant equipment, salaries of plant managers and plant leasing costs are considered a fixed overhead cost. Fixed overhead costs are costs that do not change even while the volume of production activity changes. Fixed costs are fairly predictable and fixed overhead costs are necessary to keep a company operating smoothly.
Current assets are subtracted from current liabilities to calculate
Current assets are subtracted from current liabilities to calculate working capital. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.
An investment is multiplied to required rate of return to calculate
An investment is multiplied to required rate of return to calculate imputed cost of investment. An imputed cost is a cost that is incurred by virtue of using an asset instead of investing it or undertaking an alternative course of action. An imputed cost is an invisible cost that is not incurred directly, as opposed to an explicit cost, which is incurred directly.
System in an organization that articulates purpose, mission and core values of a company is classified as
System in an organization that articulates purpose, mission and core values of a company is classified as belief system. Belief systems are there to communicate the vision, mission and values of the business. Belief systems can be very powerful in directing people and giving them purpose.
If current assets are $250000 and current liabilities are $135500, then working capital would be
An operating income is divided by revenues to calculate return on sales. Return on sales (ROS) is a measure of how efficiently a company turns sales into profits. ROS is calculated by dividing operating profit by net sales. ROS is only useful when comparing companies in the same line of business and of roughly the same size.
Sum of all resources used to generate income is classified as
Sum of all resources used to generate income is classified as investment. An investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.