As the Number of Activities Increase in an ABC System

question 12

True/False

As the number of activities increase in an ABC system, measurement error also tends to increase.

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Definitions:

Unadjusted Rate

A rate or measure that has not been modified to account for factors or variables that could affect its interpretation or accuracy.

Required Rate of Return

The minimum return an investor expects to achieve by investing in a particular asset or project, considering the risk involved.

Net Present Value

A method in capital budgeting that calculates the present value of cash flows generated over a project's life, subtracting the initial investment.

Payback Technique

A method of investment appraisal that calculates the time required to recoup the cost of an investment.