Period Costs

question 5

Multiple Choice

Period costs:

• A)are treated as expenses in the period they are incurred
• B)are directly traceable to products
• C)include direct labor
• D)are also referred to as manufacturing overhead costs

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Definitions:

NPV

Net present value. A capital budgeting technique that rates projects according to the total present value of all their associated cash flows. The higher the total or net present value, the better.

Capital Budgeting Decision

The process by which a business determines whether projects such as investments in equipment or new products are worth pursuing.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Bond's Yield

The return an investor realizes on a bond, calculated as the interest or dividends received divided by the price of the bond.