The profitability index decision rule of the project equals 2.45 year and thus, the project should be accept to be embarked on.
<h3>What is a
profitability index?</h3>
The rule refers to a decision-making exercise that helps to evaluate whether to proceed with a project based on its profitability.
Hence, because the profitability index decision rule of the project equals 2.45 year and thus, the project should be accept to be embarked on.
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Answer:
C. straight back chairs will be overcosted
Explanation:
Miller Company makes two types of chairs. One of the chairs is a rocking chair. The other is a straight-back chair. Both chairs are made by hand. Miller Company uses a company-wide overhead rate that is based on direct labor hours to assign overhead costs to the two products. If Miller automates the production of straight-back chairs and continues to use direct labor hours as a company-wide allocation basis:
A. rocking chairs will be undercosted
B. There should be no impact on unit cost
C. straight back chairs will be overcosted
D. rocking chairs will be overcosted.
EXPLANATION
If Miller automates the production of straight-back chairs and continues to use direct labor hours as a company-wide allocation basis then the straight back chairs will be overcosted<u> because the automation process directly implies that it no longer drives labor hours since it is no longer made by hand.</u>
Automated processes should use machine hours rather than labor hours, for the allocation of its overhead.
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