What is calculated by dividing the desired annual operating income by the invested capital?

Multiple choice question for Cost Management and Pricing Decisions. Select an option, then review the explanation below.

Explanation

Dividing the target annual operating income by the invested capital yields the target rate of return on investment, which measures the expected profitability relative to the capital invested.

Practice related questions from the same subject.

1.In cost-plus pricing, what does the 'plus' represent?
2.Which pricing method involves adding a markup to the cost base to determine the final price?
3.What is the term for the method of breaking down and examining a competitor's products or operations to understand their technology?
4.What term describes a seller charging a higher price for the same product during periods of high demand?
5.What is the process called that involves a detailed analysis of the value chain to minimize expenses and enhance quality in order to satisfy customers?

What is calculated by dividing the desired annual operating income by the invested capital?

Explanation

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