In an EVA Calculation, the Corporate Charge for a Division's

question 68

True/False

In an EVA calculation, the corporate charge for a division's investment is based on a weighted average of the after-tax interest rate on the firm's debt and the cost of the firm's equity.

---

Definitions:

Absorption Costing

A financial accounting technique that integrates all production expenses, including direct materials, direct labor, along with all variable and fixed manufacturing overhead costs, into the product's cost.

Variable Production Costs

Costs that vary directly with the level of production output, such as raw materials and labor expenses.

Fixed Production Costs

Payments that stay unchanged regardless of how much is produced or sold, covering rent, salaries, and insurance.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenues.