In Capital Rationing, Alternative Proposals That Survive Initial and Secondary

question 63

Multiple Choice

In capital rationing, alternative proposals that survive initial and secondary screenings are normally evaluated in terms of

• A)present value
• B)qualitative factors
• C)maximum cost
• D)net cash flow

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Definitions:

Administrative Expense

Expenses that are not directly tied to the production of goods or services, such as office supplies, salaries of administrative personnel, and rent for office space.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred.

Plastic Parts

Components or materials made out of plastic, often used in manufacturing and production of various goods.

Direct Materials

Essential parts that directly contribute to the fabrication of particular merchandise or services.