In the New Cost Management Scheme of Things, What Are

question 30

Essay

In the new cost management scheme of things, what are some of the disadvantages of the traditional standard cost system (list at least four)?

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Definitions:

Profitability Index

A calculation used to determine the relative profitability of an investment, defined as the present value of future cash flows divided by the initial investment cost.

Discount Rate

The discount rate used in DCF method to establish the current worth of future financial flows.

Independent Projects

Investment projects that do not affect the cash flows or feasibility of other projects under consideration.

Profitability Index

A financial metric used to evaluate the potential profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.