If the net initial investment is $985000, returned working capital is $7500, then an average investment over five years will be ___________?
Correct answer: C. $496,250
- A. $596,300
- B. $485,300
- C. $496,250
- D. $486,250
Explanation
Average investment is calculated as the average of the initial investment and the amount recovered at the end: ($985,000 + $7,500) ÷ 2 = $496,250. The five-year period does not change this average when the question provides only these two amounts.
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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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