When Using a Profitability Index to Select Projects, a Value

question 30

True/False

When using a profitability index to select projects, a value of .63 is preferred over a value of 0.21.

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Definitions:

Direct Labor Budget

An estimation of the total direct labor cost for a future period, including hours and rates for labor required in production.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process of products.

Direct Labor Rate

The average hourly wage paid to workers directly involved in the production process.

Master Budget

A comprehensive financial planning document that combines all of the individual budgets within a company into one overall budget.