The Benefit-Cost Ratio B/C) for an Activity Is Equal to the Present

question 11

True/False

The benefit-cost ratio B/C) for an activity is equal to the present value of its benefits divided by the present value of its cost.

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Definitions:

Variable Expenses

Costs that change in proportion to the level of business activity or production volume.

Fixed Expenses

Fixed expenses are costs that do not change in the short term regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Margin Of Safety

The excess of budgeted (or actual) dollar sales over the break-even dollar sales.

Variable Expenses

Expenses that fluctuate based on the level of a company's operations.