Which of the following expenses associated with a project should NOT be included
ID: 2653878 • Letter: W
Question
Which of the following expenses associated with a project should NOT be included in a capital budgeting analysis?
training sales staff on a new product
additional maintenance expenses associated with new equipment
reengineering of a production line associated with a new project
additional allocated fixed overhead from corporate headquarters
training sales staff on a new product
additional maintenance expenses associated with new equipment
reengineering of a production line associated with a new project
additional allocated fixed overhead from corporate headquarters
Explanation / Answer
Answer:
While evaluating a project with Capital budgeting analysis, all relevant costs that are incurred due to acceptance of project should be considered. But all costs that are allocated to the project and are not specifically incurred for the project should be ignored. Hence in the given options additional allocated fixed overhead from corporate headquarters should NOT be included in a capital budgeting analysis.
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