In Capital Budgeting, Risk Is Generally Thought of as the Chance

question 32

True/False

In capital budgeting, risk is generally thought of as the chance that NPV and IRR will provide conflicting recommendations to management.

---

Definitions:

Variable Manufacturing Overhead

Costs that vary with the level of production output and may include items such as utility expenses and raw materials.

Direct Labor-Hours

Total time spent by staff members who are directly part of the manufacturing operations.

Fixed Manufacturing Overhead

Fixed manufacturing overhead includes regular, consistent costs involved in manufacturing that do not vary with the level of production, such as salaries of managers and factory rent.

Job-Order Costing System

A cost accounting system that assigns manufacturing costs to a specific product or batches of products, often used in customized production environments.