The Minimum Rates of Return or a Minimum Cash Flow

question 63

True/False

The minimum rates of return or a minimum cash flow payback period are two standards established in capital investment analysis.

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Definitions:

Price Standard

A predetermined cost that represents what should be paid for a unit of input, such as materials or labor.

Materials Price Variance

Materials price variance is the difference between the actual cost of materials used in production and the standard cost expected, it can indicate changes in market prices or purchasing efficiency.

Quantity Standard

A specific measure established to gauge the expected or optimal quantity of input required to produce a unit of output.

Price Standard

A pre-determined cost per unit of input or output, used for setting budgets and measuring performance.