Which of the Following Statements Is FALSE

question 50

Multiple Choice

Which of the following statements is FALSE?

• A)Project externalities are direct effects of the project that may increase or decrease the profits of other business activities of the firm.
• B)Incremental earnings are the amount by which the firm's earnings are expected to change as a result of the investment decision.
• C)The average selling price of a product and its cost of production will generally change over time.
• D)Any money that has already been spent is a sunk cost and therefore irrelevant in the capital budgeting process.

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Definitions:

Process Costing

An accounting methodology used for homogenous products, allocating production costs based on processing departments or cycles.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including direct labor and manufacturing overhead.

Cutting Department

A specific section within a manufacturing facility where materials (often fabric) are cut to size before being assembled into final products.

Equivalent Unit

A concept in cost accounting used to apportion costs among finished goods and goods in process, based on work completed.