In Planning and Control of Capacity Costs, Managers Must Consider

question 106

Multiple Choice

In planning and control of capacity costs, managers must consider possible capacity measures. Which of the following measures the available supply of capacity in a factory?

• A) Theoretical capacity
• B) Practical capacity
• C) Normal capacity
• D) Master-budget capacity

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Net Present Value

A financial metric that calculates the current value of all future cash flows generated by a project, minus the initial investment cost.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Net Present Value

This is the calculation used to find the present value of cash flows from an investment, adjusted for time and interest, to determine profitability.