The Objective of ________ Is to Select the Group of Projects

question 6

Multiple Choice

The objective of ________ is to select the group of projects that provides the highest overall net present value and does not require more dollars than are budgeted.

• A) capital rationing
• B) scenario analysis
• C) certainty equivalents
• D) sensitivity analysis

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Definitions:

Actual Direct Labour Rate

The actual cost per hour paid to workers for their labor.

Standard Labour Rate

The predetermined cost per hour of labor, used in budgeting and costing to estimate the labor costs associated with a product.

Labour Efficiency Variance

Labour efficiency variance is the difference between the actual labor hours used and the standard labor hours expected for the output level achieved, reflecting labor efficiency.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected (or budgeted) variable overhead based on efficient usage of resources.