Which of the Following Statements Is False

question 77

Multiple Choice

Which of the following statements is false?

• A) A capital budget lists the projects and investments that a company plans to undertake during the coming year.
• B) Income Tax = EBIT × (1 - τ_c).
• C) When sales of a new product displace sales of an existing product, the situation is often referred to as cannibalization.
• D) Overhead expenses are often allocated to the different business activities for accounting purposes.

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly traced back to the finished product in a cost-effective manner.

Manufacturing Overhead

Costs associated with manufacturing that are not directly tied to the product, such as factory rent, utilities, and management salaries.

Work in Process

The cost of unfinished goods in production, including labor, material, and overhead costs, at any given point in time.

Actual Costs

The real costs that a company incurs in the production, manufacturing, or undertaking of any activity, as opposed to estimated costs or budgeted amounts.