- The process of making capital expenditure decisions in business is called Capital Budgeting. The amount of potential capital expenditures usually exceeds available funds. Therefore, capital budgeting involves choosing among various capital projects to find the one(s) that will maximize a company’s return on investment. what are the steps in the capital expenditure authorization process?
- The relevant range is defined as " the range of activity over which a company expects to operate during a year. Within this range, a straight-line relationship usually exists for variable and fixed costs. That just sounds way too complicated! What it means is this- if a manufacturer operates at a certain level, they expect to incur x amount of variable costs. As more product is produced, and more resources are used, the amount of variable costs is expected to increase proportionally. Likewise, if production decreases, then variable costs should decrease proportionally. what does the relevant range mean for fixed costs like depreciation and salaries?
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