Which of the Following Is NOT a Relevant Cash Flow

question 61

Multiple Choice

Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the analysis of a capital budgeting project?

• A) Changes in net operating working capital.
• B) Shipping and installation costs for machinery acquired.
• C) Cannibalization effects.
• D) Opportunity costs.
• E) Sunk costs that have been expensed for tax purposes.

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Definitions:

Work in Process Inventory

The value of unfinished goods in the production process at a specific point in time.

Direct Materials

Raw materials that can be directly traced to the production process of a product and are considered a part of the finished product.

Direct Labor

The cost of wages paid to workers directly involved in the production of goods or services.

Job Order Cost Sheets

Documents that record and track the costs associated with a specific job or order.