COST ACCOUNTING
RESPONSIBILITY ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following will not improve return on investment if other factors are constant?
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Increasing selling prices
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Increasing sales volume while holding fixed expenses constant
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Decreasing expenses or assets
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None of the choices
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Explanation:
Detailed explanation-1: -Explanation: A decrease in sales and expense by the same percentage does not make any change in the profit margin and return on investment will also remain the same. An increase in the total assets will decrease asset turnover and this will leads to a decrease in return on investment.
Detailed explanation-2: -There are at least three contributing factors: economies of scale, market power, and management quality.
Detailed explanation-3: -Return on investment can be improved by increasing net income or increasing the assets invested.
There is 1 question to complete.