While Developing a New Product Line, Cook Company Spent $3

question 2

Multiple Choice

While developing a new product line, Cook Company spent $3 million two years ago to build a plant for a new product.It then decided not to go forward with the project, so the building is available for sale or for a new product.Cook owns the building free and clear⎯there is no mortgage on it.Which of the following statements is CORRECT?

• A) If the building could be sold, then the after-tax proceeds that would be generated by any such sale should be charged as a cost to any new project that would use it.
• B) This is an example of an externality, because the very existence of the building affects the cash flows for any new project that Rowell might consider.
• C) Since the building was built in the past, its cost is a sunk cost and thus need not be considered when new projects are being evaluated, even if it would be used by those new projects.
• D) If there is a mortgage loan on the building, then the interest on that loan would have to be charged to any new project that used the building.
• E) Since the building has been paid for, it can be used by another project with no additional cost.Therefore, it should not be reflected in the cash flows for any new project.

Understand the evolution and types of disciplinary systems within prisons.

Recognize the various security levels of prisons and their characteristics.

Comprehend the complexities of prison officer roles, including the balance between control and ethical treatment of inmates.

Understand the concept of power within the prison environment, including the sources and impacts of different types of power on inmate behavior.

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Definitions:

Perpetual Inventory System

A method of accounting for inventory where transactions are recorded in real-time, allowing for continuous tracking of inventory levels.

Gross Method

An accounting approach where discounts for early payment are not considered until they are actually taken by the customer.

Merchandise

Goods that are purchased for resale to customers in the normal course of business operations.

Inventory Shrinkage

The loss of products between purchase from suppliers and sale to customers, often due to theft, damage, or clerical errors.