Which of the Following Statements Is Correct

question 78

Multiple Choice

Which of the following statements is correct?

• A) According to a 1995 study, less than 80% of Canadian firms used the rule of NPV, but about 50% of firms used some form of discounted cash flow analysis.
• B) According to a 1995 study, less than 50% of Canadian firms used the rule of NPV, but about 79% of firms used some form of discounted cash flow analysis.
• C) According to a 1995 study, every Canadian firm used the rule of NPV, and about 80% of firms used some form of discounted cash flow analysis.
• D) According to a 1995 study, no Canadian firms used the rule of NPV, but about 79% of firms used some form of discounted cash flow analysis.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the production period based on an estimation of costs and activity levels.

Machine-Hours

A unit of measure representing the operation of machinery over time, typically used for allocating manufacturing overhead costs.

Predetermined Overhead Rate

A rate calculated at the beginning of a period for allocating estimated overhead costs to cost objects based on a chosen activity base.

Machine-Hours

This refers to the total number of hours that machinery is in operation, used as a basis for allocating manufacturing overhead to products.