Capital Budgeting Decisions Use the Net Present Value Rule So

question 21

True/False

Capital budgeting decisions use the Net Present Value rule so that those decisions maximize net present value (NPV).

---

Definitions:

Unfavorable Variance

A situation where actual costs exceed budgeted or expected costs, often indicating poorer than expected financial performance.

Actual Costs

The real costs incurred for materials, labor, and overhead in producing goods or delivering services, as opposed to estimated costs.

Standard Costs

Estimated pre-determined costs used for budgeting and measuring performance.

Standard Direct Labor Rate

The predetermined cost per hour for labor directly involved in manufacturing a product or delivering a service.