In Evaluating a Proposed Project, Since Our Concern Is Only

question 111

True/False

In evaluating a proposed project, since our concern is only with how much more or less operating cash will flow into the firm as a result of the proposed project, incremental operating cash inflows are the relevant cash flows.

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Definitions:

Relevant Range

The range of activity or volume over which the assumptions about fixed and variable cost behavior hold true.

Napkins

Paper or cloth products used at the table for wiping the mouth and fingers while eating.

Fixed Cost Per Unit

Fixed Cost Per Unit is the total of all costs that do not change with the level of production or sales, divided by the number of units produced, showing how fixed costs dilute as volume increases.

Cost Behavior

The way in which a cost reacts to changes in the level of activity.