Projects That Are Calculated as Having Negative NPVs Should Be

question 76

Multiple Choice

Projects that are calculated as having negative NPVs should be:

• A) depreciated over a longer time period.
• B) charged less in overhead costs.
• C) discounted using lower rates.
• D) rejected or abandoned.

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Definitions:

Controllable Costs

Expenses that a manager or business can influence or regulate, such as marketing costs or raw material purchases.

Fixed Costs

Business expenses that remain constant regardless of production volume, such as rent or salaries.

Total Overhead Variance

The difference between the actual overhead costs incurred and the standard or budgeted overhead costs anticipated for a particular period.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.