Marcos Enterprises has three separate divisions.The firm allocates each division $1.5 million per year for capital purchases.Which one of the following terms applies to this allocation process?

Question

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Soft rationing refers to the process of setting limits on available funds for capital investments without completely eliminating any project. In this case, each division is allocated the same amount for capital purchases, indicating a soft limit on the available funds. Hard rationing, on the other hand, involves completely eliminating projects due to a lack of available funds. Opportunity cost refers to the cost of giving up the next best alternative when making a decision. Sunk costs are costs that have already been incurred and cannot be recovered. Strategic planning is the process of defining an organization's strategy and making decisions on allocating its resources to pursue this strategy. None of these terms are applicable to this question.

Marcos Enterprises Has Three Separate Divisions