On What Is a Manager of a Profit Centre Evaluated

question 27

Multiple Choice

On what is a manager of a profit centre evaluated?

• A)the profit that the centre generates
• B)his or her ability to control costs
• C)the amount of return the centre's assets generate
• D)the amount of revenue that can be generated

Apply the cost of capital concepts, including the weighted average cost of capital (WACC), in project evaluation.

Understand and calculate the cost of equity and debt financing.

Evaluate the effect of a project's risk on its required rate of return and capital cost.

Apply the dividend growth model to determine stock prices.

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Definitions:

Standard Price

Standard price is a pre-determined cost assigned to materials, labor, and overheads to measure variances in budgeting and accounting.

Direct Materials

Raw materials directly used in the production of goods, easily traceable to the final product.

Theoretical Standard

A benchmark for the most efficient level of operating performance or cost control, assuming perfect conditions.

Fixed Overhead Volume Variance

The difference between the budgeted and actual overhead costs due to variations in production volume.