Cheng IncIs Considering a Capital Budgeting Project That Has an Expected

question 23

Multiple Choice

Cheng Inc.is considering a capital budgeting project that has an expected return of 24% and a standard deviation of 30%.What is the project's coefficient of variation? Do not round your intermediate calculations.Round the final answer to 2 decimal places.

• A) 1.08
• B) 1.40
• C) 1.03
• D) 1.25
• E) 0.99

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Definitions:

Revenue Price Variance

The difference between the actual revenue received from selling a product and the expected revenue, based on standard pricing.

Revenue Volume Variance

The difference between the planned and actual units sold multiplied by the planned sales price.

Total Revenue Variance

The difference between the actual total revenue earned and the expected total revenue in a period.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the quantity purchased.