Which One of the Following Methods Considers the Time Value

question 153

Multiple Choice

Which one of the following methods considers the time value of money in evaluating alternative capital expenditures?

• A) Accounting rate of return.
• B) Net present value.
• C) Payback period.
• D) Cash flow method.
• E) Return on average investment.

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Definitions:

Factory Overhead

The indirect costs associated with manufacturing, including utilities, maintenance, and salaries of non-direct labor employees, that cannot be directly traced to specific products.

Product Costing

The process of determining the total cost involved in producing a product, including direct materials, labor, and overhead costs.

Interim Financial Statements

Financial reports covering a period of time less than a fiscal year, often quarterly or semi-annually, providing a periodic update on a company's financial position.

Overapplied Factory Overhead

The amount of factory overhead applied in excess of the actual factory overhead costs incurred for production during a period.