R&D Spending Decisions Are Complicated Because

question 109

Multiple Choice

R&D spending decisions are complicated because

• A) costs of R&D are immediate, while benefits occur at some future time and are uncertain.
• B) benefits of R&D are clear, but costs are complicated and hard to estimate.
• C) there are so many different sources of funds for R&D, and they each require different returns.
• D) it is difficult to determine which R&D activities could be patented.

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Definitions:

Direct Labor-hours

Represents the total hours worked directly on the production of goods, important for calculating the labor cost per unit.

Labor Rate Variance

The difference between the actual cost of labor and the standard or expected cost, often analyzed in cost accounting.

Labor Efficiency Variance

Labor Efficiency Variance measures the difference between the actual hours worked and the standard hours expected for the work performed.

Direct Labor Wage

The compensation workers receive for directly contributing to the manufacturing or production of goods, usually an hourly wage or per unit produced rate.