Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 116

Following are a number of key terms and concepts introduced in the chapter, along with a list of corresponding definitions. Match the appropriate letter for the key term or concept to each definition provided (items 1–15). Note that not all key terms and concepts will be used.

a. Differential cost	j. Present value
b. Allocated cost	k. Cost of capital
c. Sunk cost	l. Net present value (NPV)
d. Opportunity cost	m. Internal rate of return (IRR)
e. Relevant cost	n. Payback method
f. Full capacity	o. Accounting rate of return
g. Idle capacity	p. Profitability index
h. Capital budgeting	q. Postaudit
i. Cash flow	r. Outsourcing

_______A capital budgeting analytical technique that solves for the time-adjusted rate of return on an investment over its life.

Step 1 of 3

Cost Analysis:

Cost analysis means an economic evaluation which helps in evaluating and examining of cost data for making comparisons and projections. It is the simple and versatile process. Cost Analysis helps in determining the cost that further helps to ascertain the profit or loss and also to keep a track of liabilities and assets of the firm. Cost analysis is also known as the benefit cost.