Which of the Following Is NOT Considered a Relevant, Incremental

question 179

Multiple Choice

Which of the following is NOT considered a relevant, incremental cash flow in capital budgeting analysis?

• A) Opportunity costs.
• B) Erosion costs.
• C) Additions to net working capital.
• D) Sunk costs.
• E) Fixed asset salvage values.

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Definitions:

Net Operating Income

The income derived from a company's primary business activities, not including costs or income from activities not related to its main operations.

Margin Of Safety

The difference between actual or projected sales and the sales level at which the business doesn't incur any loss but doesn't make a profit either.

Contribution Format

A type of income statement formatting that separates fixed and variable costs, helping to analyze the impact of sales volume on net income.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues, excluding non-operating income and expenses.