The Process of Computing the Present Value of a Future

question 18

True/False

The process of computing the present value of a future value is called discounting.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a product.

Total Contribution Margin

The difference between total sales revenue and total variable costs.

Variable Costing

A pricing approach that incorporates just the variable production expenses, such as direct materials, direct labor, and variable manufacturing overhead, into the costs of products.

Unit Product Cost

The total cost to produce a single unit, including direct materials, direct labor, and allocated overhead.