The proportion of fi xed manufacturing
overhead to total manufacturing costs incurred
in the manufacturing process is deemed to give
a clearer indication of capital intensity as it is
not affected by timing of selling goods as the
proportion of fi xed manufacturing overhead to
costs of goods sold. The proportion of fixed
manufacturing overhead to costs of goods sold
may exhibit an increasing (or decreasing) trends,
which gives the readers an impression that capital
intensity of sample companies is increasing (or
decreasing), while in fact the proportion of fi xed
manufacturing overhead to total manufacturing
costs remains the same