The Internal Rate of Return Tends to Be

question 42

Multiple Choice

The internal rate of return tends to be:

• A) easier for managers to comprehend than the net present value.
• B) extremely accurate even when cash flow estimates are faulty.
• C) ignored by most financial analysts.
• D) used primarily to differentiate between mutually exclusive projects.

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Definitions:

Direct Materials Cost Variance

The difference between the budgeted cost of materials and the actual cost incurred for materials used in production.

Standard Materials Cost

The budgeted or estimated cost of raw materials required for production, used for cost control and variance analysis.

Material Used

The raw materials that have been consumed in the production process to create goods.

Total Labor Cost Variance

This refers to the difference between the actual labor costs incurred and the standard labor costs for the actual production levels.