Which One of the Four Levels of the Cost Hierarchy

question 100

Multiple Choice

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management for a production run of a certain style of dress in blue?

• A) Unit-level activity
• B) Batch-level activity
• C) Product-level activity
• D) Facility-level activity

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Definitions:

IRR

Internal Rate of Return; the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Payback Period

The length of time it takes for an investment to generate cash flows sufficient to recover the initial investment cost.

Project's Liquidity

An assessment of a project's ability to convert its assets to cash quickly without significant loss in value, to meet short-term obligations.