Which of the Following Best Defines Incremental Earnings

question 84

Multiple Choice

Which of the following best defines incremental earnings?

• A)cash flows arising from a particular investment decision
• B)the amount by which a firm's earnings are expected to change as the result of an investment decision
• C)the earnings arising from all projects that a company plans to undertake in a fixed timespan
• D)the net present value (NPV)of earnings that a firm is expected to receive as the result of an investment decision
• E)the increase in cash flows resulting from a new product

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Definitions:

Year 2

Refers to the second year of a time-related context or sequence, not a standalone key term without additional context.

Contribution Margin

The amount of revenue remaining after subtracting variable costs, indicating how much contributes towards covering fixed costs and generating profit.

Per Unit

Refers to expressing costs, revenues, or other financial metrics on a per-unit basis to provide a standardized measure.

Absorption Costing

An accounting method that includes all manufacturing costs, both variable and fixed, in the cost of a product, and is used for external reporting purposes.