Upton evaluates future projects by using the profitability index. The company is currently reviewing five similar projects and must choose one of the following:

Project	Initial Investment				Present Value of Cash Inflows
1	$	100,000			$	97,000
2		50,000				80,000
3		75,000				110,000
4		60,000				100,000
5		150,000				200,000

Which project should Upton select if the decision is based entirely on the profitability index?

Multiple Choice

• Project 1.

• Project 2.

• Project 3.

• Project 4.

• Project 5.

q2.

The pool rate is defined as the cost per unit of the cost driver for a particular activity cost pool.

True or False

q3.

Customer-profitability analysis uses activity-based costing to determine the activities, costs, and profit associated with serving particular customers.

True or False

q4.

Which of the following would likely not be a cost driver?

Multiple Choice

• Product orders

• Product inspections

• Cost accountants labor hours

• Material requisitions

• Machine setups