Projects That Have Negative NPVs Should Be

question 100

Multiple Choice

Projects that have negative NPVs should be:

• A) depreciated over a longer time period.
• B) charged less in overhead costs.
• C) discounted using lower rates.
• D) rejected or abandoned.

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Definitions:

Units Completed

The total number of finished goods produced within a specific accounting period.

Standard Overhead Cost

The pre-determined or estimated cost of indirect expenses that a company expects to incur during a specific period.

Direct Labor Cost Variance

The difference between the budgeted cost of direct labor for production and the actual cost incurred, indicating over or under allocation of resources.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, indicating discrepancies in workforce expenses.