The Principal Capital Budgeting Models for Evaluating Information Technology Projects

question 77

Multiple Choice

The principal capital budgeting models for evaluating information technology projects are the payback method, the accounting rate of return on investment (ROI) , the net present value, and the

• A) future present value.
• B) internal rate of return.
• C) external rate of return.
• D) ROPM.

---

Definitions:

Overhead

Indirect costs associated with running a business that are not directly tied to a specific product or service, such as rent and utilities.

Variable Factory Overhead Controllable Variance

The difference between the actual variable overhead costs incurred and the standard variable overhead expenses expected, which can be controlled or influenced by management.

Standard Factory Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a certain base such as labor hours or machine hours.

Direct Labor Hour

A measure of the amount of time an employee spends producing goods or services, directly associated with the product's cost.