The Smaller the Percentage Established for Allowances

question 40

Multiple Choice

The smaller the percentage established for allowances,

• A) the closer is normal time to standard time
• B) the closer is average observed time to normal time
• C) the larger is the performance rating factor
• D) the larger is the adequate sample size
• E) the larger is the number of observations in the work sampling

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Cash Payback Method

A capital budgeting technique that calculates the time required for an investment to generate cash flows sufficient to recover the initial investment cost.

Capital Investment

Funds invested in a firm or enterprise with the expectation of generating income or profit, used for long-term assets.

Fixed Asset

A long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income.