Life-Cycle Budgeting Differs from Life-Cycle Costing in That

question 16

Multiple Choice

Life-cycle budgeting differs from life-cycle costing in that

• A)budgeting includes revenues and costs, and costing includes only the costs.
• B)budgeting includes all products of a company and costing is only for individual products.
• C)budgeting is for the development and production of a product while costing is for only the production activities.
• D)budgeting is for one accounting period and is a total dollar concept while costing is a per unit concept.
• E)budgeting includes revenues, and costing includes only the costs.

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Definitions:

Payback

A capital budgeting method that calculates the length of time required to recoup the original investment.

IRR

A financial metric, the Internal Rate of Return evaluates the potential profitability of investments.

NPV

A financial analysis method that calculates the difference between the present value of cash inflows and outflows over a period of time, used to assess the worth of investments or projects.

Mutually Exclusive

Events or projects that cannot both occur at the same time, where the selection of one excludes the possibility of the other.