What Information Would You Need to Know to Solve a Rate

question 17

Multiple Choice

What information would you need to know to solve a rate of return problem?

• A) the present value cash flow.
• B) the number of years of the investment.
• C) the future value cash flow.
• D) all of the above.

---

Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how revenue growth translates into growth in operating income.

Variable Costing

A managerial accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, treating fixed manufacturing overhead as an expense of the period.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.