A Project's Payback Period Is Determined to Be 4 Years

question 24

Multiple Choice

A project's payback period is determined to be 4 years.If it is later discovered that additional cash flows will be generated in years 5 and 6,then the project's payback period will:

• A) be reduced.
• B) be increased.
• C) be unchanged.
• D) change but the discount rate must be known to determine the nature of the change.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the standard costs for the actual production volume.

Standard Machine-Hours

The estimated number of hours that a machine is expected to operate to complete a specific task under standard conditions.

Manufacturing Overhead

All manufacturing costs not directly associated with the production of goods, including costs related to indirect labor, indirect materials, and other indirect expenses.

Standard Maintenance Cost

The anticipated cost of regular upkeep and maintenance of equipment or property, based on historical data or industry standards.