A Plan of Dollar Amounts to Be Spent on Long-Term

question 50

Multiple Choice

A plan of dollar amounts to be spent on long-term projects is called a:

• A) Cash budget.
• B) Capital budget.
• C) Rolling budget.
• D) Research budget.
• E) Rolling financial forecast.

Understand the concept of excludability and rivalry in goods.

Differentiate between public goods, private goods, club goods, and common resources.

Recognize the free-rider problem and its implications for market efficiency.

Understand the role of government intervention in providing public goods and mitigating externalities.

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Definitions:

Fixed Component

The portion of a cost that remains constant regardless of the level of activity or output.

Overhead Efficiency

A measure of how effectively a business uses its overhead costs in the production process, often improving profit margins when increased.

Overapplied

In cost accounting, it refers to a situation where the allocated overhead for a period is more than the actual overhead incurred.

Underapplied

A situation where the assigned manufacturing overhead expenses fall short of the real overhead costs that have been spent.