Which Factor Must a Manager Estimate When Making a Capital

question 59

Multiple Choice

Which factor must a manager estimate when making a capital investment decision?

• A) the previous spending
• B) the timing of cash flows
• C) the company's financial history
• D) the company's spending on other projects

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Definitions:

Year

A period of time consisting of 12 months or 365 days, used as a basic unit for measuring time in relation to the earth's orbit around the sun.

Cost of Goods Available for Sale

The total cost of inventory that a business has ready for sale, comprising both beginning inventory plus the cost of goods manufactured.

Overapplied

A situation where the allocated manufacturing overhead cost exceeds the actual manufacturing overhead costs incurred, resulting in an apparent surplus.

Underapplied

A situation where the allocated manufacturing overhead is less than the actual overhead incurred.