When an Alternative Decision Rule Disagrees with the Net Present

question 65

True/False

When an alternative decision rule disagrees with the net present value (NPV), the NPV should be followed.

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Definitions:

Direct Labor Hour

Direct labor hour refers to the time spent by workers directly involved in the production of goods or services.

Overhead Applied

A portion of overhead costs assigned to a particular cost object based on a predetermined rate.

Direct Labor Efficiency Variance

The difference between the budgeted amount of direct labor required to produce an output and the actual direct labor used.

Favorable

A term used in budgeting and finance to indicate results that are better than expected, such as lower costs or higher revenues.