The Primary Difficulty in the Allocation of Overhead Costs to Prospective

question 73

Multiple Choice

The primary difficulty in the allocation of overhead costs to prospective projects is that the:

• A)Allocation will reduce the project's NPV
• B)Discount rate is unknown
• C)Costs may not represent an incremental expense
• D)Expenses may have been previously allocated

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Definitions:

Mutually Exclusive

refers to events that cannot occur at the same time in a probabilistic experiment.

P(A)

The probability of an event A occurring.

P(B)

Represents the probability of an event B occurring in probability theory and statistics.

Classical Approach

A method or theory in economics and political philosophy centered around free markets, competition, and limited government intervention.