You Are Given the Following Information on a Project $\bullet$ Initial Capital Cost = $500,000

question 22

Multiple Choice

You are given the following information on a project:
$\bullet$ initial capital cost = $500,000
$\bullet$ installation costs associated with the capital asset = $25,000
$\bullet$ R&D costs already incurred = $50,000
$\bullet$ estimated salvage on equipment to be replaced = $80,000
$\bullet$ increase in raw materials inventory = $10,000
Which of these amounts is included with working capital?

• A)$500,000
• B)$80,000
• C)$10,000
• D)$25,000

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Definitions:

Costs

Expenses incurred in the process of producing or acquiring goods and services.

Volume

The quantity or amount of something, often used in context with sales volume or production volume.

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials, packaging, or labor directly associated with product manufacturing.

Activity Levels

The amount of effort or capacity utilized in the operations of a business, which can influence cost and operational efficiency.