When a Company Invests in Lean Manufacturing Processes or "Green

question 115

True/False

When a company invests in lean manufacturing processes or "green" technologies, the efficiencies and elimination of waste are factors that should NOT be included when conducting a discounted cash flow analysis of the investment.

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Definitions:

Direct Materials Price Variance

A measurement of the difference between the actual cost of direct materials and the standard cost expected to be paid, expressed in monetary terms.

Direct Materials Quantity Variance

A measure of the difference between the actual quantity of materials used in production and the standard amount expected, valued at the standard cost.

Variable Overhead

Costs incurred during production that fluctuate with production volume, such as utilities or materials.

Total Variable Overhead Variance

The difference between actual variable overhead costs and the expected (standard) costs for the same period.