A Research Study Estimates That the Direct Cost of Constructing

question 22

Multiple Choice

A research study estimates that the direct cost of constructing a bridge connecting two boroughs in a city is $10 million. The revenue from the tolls on the bridge is estimated to be $8 million. The dollar value of pollution from the construction is estimated to be $5 million but the dollar value of the benefit to the city's residents is calculated to be $20 million. The construction of the bridge is most likely to be undertaken by:

• A) the government because revenues exceed costs.
• B) the government because the total benefits exceed total costs.
• C) a private firm because the total benefits exceed total costs.
• D) a private firm because revenues exceed direct costs.
• E) a private firm because the revenues exceed indirect costs.

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Definitions:

Spending Variances

An analysis that breaks down the discrepancy between what was budgeted for expenses and what was actually spent, providing insights for financial management.

Patient-visits

A metric used in healthcare to represent the number of times patients receive services from a provider or facility.

Planning Budget

A financial plan that outlines expected revenues, expenses, and other financial activities over a specific period, often used for organizational management and control.

Operating Results

The financial outcomes from a company's core business operations, excluding the effects of financial and extraordinary items.