The Benefit-Cost Ratio for a Project with an Initial Outlay

question 51

Multiple Choice

The benefit-cost ratio for a project with an initial outlay of $9000 and net cash flows of $5000 p.a.for the next three years and a required rate of return of 10% p.a.is:

• A)$3434.
• B)0.3815
• C)1.21
• D)1.3815

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Definitions:

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or job orders, calculated before the period begins based on estimated costs.

Manufacturing Overhead

Indirect factory-related costs that are incurred when producing a product, such as utilities, depreciation, and salaries of maintenance personnel.

Work in Process

Inventory that includes partially completed goods that are in the process of being manufactured but are not yet finished products.

Finished Goods

Products that have completed the manufacturing process and are ready for sale.