The Accounting Rate of Return Focuses on The

question 92

Multiple Choice

The accounting rate of return focuses on the:

• A) total accounting income over a project's life.
• B) average accounting income over a project's life.
• C) average cash flows over a project's life.
• D) cash inflows from a project.
• E) tax savings from a project.

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Definitions:

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, typically depicting economies and diseconomies of scale.

Marginal Cost

The additional cost resulting from the creation of one more unit of a product or service.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Unit Costs of Production

The total expense incurred by a company to produce, store, and sell one unit of a particular product or service.