If a Proposal's Profitability Index Is Greater Than One Then

question 80

True/False

If a proposal's profitability index is greater than one then the net present value is positive.

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Definitions:

Idle Capacity

The portion of a company's resources or production capability that is not currently being utilized to its full potential.

Activity-based Costing

Activity-based costing allocates overhead costs based on the specific activities that contribute to overhead in producing a product or service.

Processing Batches

Groups of items or units processed together in one operation to improve efficiency, often in manufacturing or data processing contexts.

Activity-based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of activities.