Which of the Following Is NOT a Reason Why Capital

question 40

Multiple Choice

Which of the following is NOT a reason why capital budgeting for a foreign project is more complicated than a domestic project?

• A) Cash flows from the foreign project have to be converted into the domestic currency.
• B) The foreign project can be affected by political instability in foreign country.
• C) The foreign project involves larger amount of working capital than the domestic project.
• D) The foreign project can be affected by different foreign taxes and regulations.

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Definitions:

Quantity Variance

A measure of the difference between the expected and actual quantities used in production, affecting materials or labor.

Overhead Absorbed

The overhead rate multiplied by standard units of volume.

Direct Labor Hours

The total amount of time spent by employees directly involved in manufacturing products or providing services.

Overhead Volume Variance

The flexible budget at standard volume less the overhead applied. It is an estimate of the unused or overused fixed plant capacity.