The Process of Converting Future Cash Flows to What Its

question 43

Multiple Choice

The process of converting future cash flows to what its present value is called:

• A) annualizing.
• B) discounting.
• C) compounding.
• D) capital budgeting.

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Definitions:

Overhead Rates

Ratios used to allocate indirect costs to products or services, based on certain bases like direct labor hours or costs.

Direct Labour Rate

The wage rate paid to employees directly involved in manufacturing goods or providing services, excluding indirect costs such as benefits and overtime.

Process Costing

A costing method used where production is continuous, and the costs are allocated over units of output equally, making it suitable for industries like manufacturing and chemicals.

Hybrid Costing

A costing method that combines elements of both job costing and process costing, typically used in manufacturing products that have some common characteristics and some unique features.