What Is an Attribute of the Internal Rate of Return

question 63

Multiple Choice

What is an attribute of the internal rate of return?

• A)It is the interest rate that makes the NPV of the investment equal to zero.
• B)It is the interest rate that makes the cost of the investment equal to the present value of the investment's net cash inflows.
• C)It is used in the capital rationing process.
• D)All of the above are attributes of the internal rate of return.

---

Definitions:

Overhead Applied

The portion of overhead costs allocated to specific jobs or production activities based on a predetermined formula or rate.

Overhead Volume Variance

The difference between the budgeted and actual overhead costs due to changes in the level of production or activity.

Total Overhead Variance

The difference between the actual overhead costs incurred and the overhead costs that were budgeted or applied based on a standard cost system.

Overhead Controllable Variance

Overhead controllable variance refers to the difference between expected controllable overhead costs and the actual costs directly managed by a department or manager.