The Intrinsic Value of an Option to Invest in a Real

question 8

Multiple Choice

The intrinsic value of an option to invest in a real asset reflects ______.

• A) managerial flexibility in the timing of investment
• B) the value of the asset as a "now or never" proposition
• C) the value of the option to delay investment
• D) Three of the above
• E) Two of the above

Calculate activity rates for various cost pools in an ABC system.

Assign overhead costs to products using calculated activity rates.

Determine product margins through ABC analysis.

Contrast the ABC system with traditional costing systems.