Which of the following circumstances will cause sales to fixed assets to be abnormally high?
A)A recent purchase of land.
B)A labor-intensive industry.
C)A highly mechanized facility.
D)High direct labor costs from a new union contract.
E)The use of units-of-production depreciation.

Question

Quizplus · Accepted Answer

Sales to fixed assets ratio can be abnormally high in a labor-intensive industry because this ratio measures a company's ability to generate sales from its fixed assets. In a labor-intensive industry, the company relies more on human labor than on fixed assets, which means the company's sales are less dependent on the value of its fixed assets, potentially leading to a higher ratio.

Which of the Following Circumstances Will Cause Sales to Fixed