Explain the Differences and Similarities Between Net Present Value (NPV)and

question 62

Essay

Explain the differences and similarities between net present value (NPV)and the profitability index (PI).

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Definitions:

Efficiency Variance

The difference between the actual input used to produce a good or service and the standard input expected, used to measure performance.

Fixed Manufacturing Overhead

Costs in the manufacturing process that do not change with the level of production, such as rent, salaries, and depreciation.

Budget Variance

The difference between what was budgeted for and what was actually spent or received.

Volume Variance

The difference between the planned level of production volume and the actual production volume, often relating to overhead costs.