Profit Computed Without Implicit Costs Is _____ Profit

question 132

Multiple Choice

Profit computed without implicit costs is _____ profit.

• A)explicit
• B)accounting
• C)implicit
• D)economic

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Definitions:

Applied Fixed Overhead

Costs for fixed overhead (such as rent, salaries, and utilities) that are allocated to goods produced based on a predetermined rate.

Full Capacity

The maximum level of output that a company can sustain over a period of time using its current resources, without compromising quality or efficiency.

Cost-Based Transfer Prices

Pricing methods for transactions within an organization based on the costs incurred in producing or acquiring the transferred goods or services.

Standard Variable Cost

The estimated average variable cost per unit of output, factoring in material, labor, and overhead expenses.