Which of the Following Costs Probably Should Not Be Allocated

question 95

Multiple Choice

Which of the following costs probably should not be allocated to the investment needed for a new project?

• A)increase in accounts receivable.
• B)new warehouse, built for this project.
• C)25 percent of the vice president's salary.
• D)labour expense for employees in new warehouse.

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Definitions:

Debt Management Ratios

Financial ratios that indicate the degree to which a company is financed by debt and its ability to repay it.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment.

Managers

Individuals in an organization responsible for controlling or administering all or part of a company or similar organization.

Times-Interest-Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes (EBIT).