Question

When it comes to analyzing operating expenses, managers classify

the expenses as either fixed or variable.
If a company has higher operating expenses compared to its
competitors, that indicates they are more efficient at generating sales.
Operating expenses reflect the operational activities, not the investing
or financing activities of a company.
True
False
O

Answer 1

Operating expenses can be divided into fixed costs and variable costs. Higher operating expenses compared to competitors do not indicate greater efficiency in generating sales. Operating expenses reflect the operational activities of a company.

Step-by-step explanation:

In a short-run perspective, operating expenses can be divided into fixed costs and variable costs. Fixed costs are expenditures that do not change regardless of the level of production, such as rent or equipment costs. Variable costs, on the other hand, are costs that depend on the level of production, like raw materials or labor costs.

Higher operating expenses compared to competitors do not necessarily indicate greater efficiency in generating sales. It could mean that the company incurs higher fixed costs or variable costs due to factors such as business size or market conditions.

Operating expenses reflect the operational activities of a company, including costs related to producing and delivering goods or services. They do not include investing or financing activities, which are reflected in other financial statements like the balance sheet or cash flow statement.