A Project Is Considered Acceptable If

question 54

Multiple Choice

A project is considered acceptable if:

• A) The net present value of the project is positive
• B) The internal rate of return is greater than the hurdle rate
• C) The modified payback period is less than the estimated useful life
• D) All of these are true, however a company will still need to determine how to allocate capital resources and thus they may not choose a project based on a single criteria as listed above LO

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Definitions:

Job Cost Sheet

A document that records the materials, labor, and manufacturing overhead costs assigned to each individual job in production.

Predetermined Overhead Rate

An established cost allocation rate that assigns expected indirect costs to products or services based on a chosen activity base.

Level of Activity

The volume or scale of operation in a business, often influencing costs and efficiency, such as the number of units produced or sold.

Cost of Unused Capacity

The costs incurred for not utilizing production or service capacity to its fullest potential.