if a farm manager fails to include a value for the opportunity costs of labor and management when…

if a farm manager fails to include a value for the opportunity costs of labor and management when calculating roa, their calculated roa will be too high relative to the \true\ roa.\ntrue\nfalse\n— the returns are average returns to factors, not marginal returns.\nskip for now\nsubmit answer

if a farm manager fails to include a value for the opportunity costs of labor and management when calculating roa, their calculated roa will be too high relative to the \true\ roa.\ntrue\nfalse\n— the returns are average returns to factors, not marginal returns.\nskip for now\nsubmit answer

Answer

Explanation:

Step1: Recall ROA formula

ROA = $\frac{Net\ Income}{Total\ Assets}$. Net - income is calculated as total revenue minus total costs.

Step2: Consider opportunity - cost impact

Opportunity costs of labor and management are real costs. If not included in total costs, total costs are underestimated.

Step3: Analyze ROA result

With underestimated costs, net income is overestimated. Since ROA is net income divided by total assets, an overestimated net income leads to an over - calculated ROA.

Answer:

True