Which of the Following Is Preferred by Managers When the Risk

question 73

Multiple Choice

Which of the following is preferred by managers when the risk of obsolescence is high?

• A) A short payback period
• B) A high opportunity cost
• C) A low accounting rate of return
• D) All of these
• E) None of these

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Definitions:

Custom-Made

Products or services that are specially designed and produced to meet the specific requirements or specifications of a customer.

Prime Cost

The combined costs of direct materials and direct labor incurred to produce a product.

Direct Material

Raw materials that can be directly attributed to the production of specific goods or services, utilized in their creation.

Direct Labour Cost

A cost that can be directly attributed to the production of specific goods or services, such as wages paid to employees who physically produce a product.