Which Is a More Efficient Mechanism for Allocating Capital Among

question 46

Multiple Choice

Which is a more efficient mechanism for allocating capital among different businesses: the internal capital allocation of diversified firms or the external capital market?

• A)The internal capital allocation process of diversified firms
• B)The external capital market
• C)It depends on the effectiveness of the specific firm's capital allocation process
• D)It depends on the effectiveness of the specific firm's capital allocation process and the efficiency of the capital market in the country where the firm is located.

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Definitions:

Direct Labour Costs

Expenses related to employees who are directly involved in the production of goods or services.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to individual units of production, based on estimated costs.

Direct Materials

These are raw materials that are directly traceable to the manufacturing of a product.

Direct Labour-Hours

The sum of working hours for employees actively participating in the manufacturing procedure.