A Cost That Has Already Been Incurred Is Called A(n)________

question 80

Multiple Choice

A cost that has already been incurred is called a(n) ________ cost.

• A)indirect
• B)sunk
• C)relevant
• D)opportunity

Understand how different reward and evaluation mechanisms impact division manager's decisions and divisional performance.

Identify the factors that influence the efficiency of transfer pricing between divisions.

Appreciate the importance of information flow, decision-making authority, and incentive systems in managing divisional conflicts.

Distinguish between the objectives of maximizing division profits versus maximizing company-wide profits.

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of a specific product.

Factory Overhead

Costs associated with operating a manufacturing facility that are not directly tied to a specific unit of production, such as maintenance and utilities.

Receiving Report

A document completed by the recipient of goods or services, detailing the quantities and condition of the items received.

Ordered Materials

Refers to items or supplies that have been requested for purchase by a company but have not yet been received.