An investment is multiplied to required rate of return, to calculate: _____________?
Correct answer: D. imputed cost of investmentHire An Accountant
- A. congruent cost of investment
- B. transfer cost of investment
- C. operating cost of investment
- D. imputed cost of investmentHire An Accountant
Explanation
Multiplying the investment base by the required rate of return produces an imputed cost of investment, also called a capital charge. It represents the return that the invested funds are expected to earn rather than a recorded operating expense.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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