A Reduction in the Sales of Existing Products Caused by the Introduction

question 33

Multiple Choice

A reduction in the sales of existing products caused by the introduction of a new product is an example of

• A)incidental effects.
• B)opportunity costs.
• C)sunk costs.
• D)allocated overhead costs.

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Manufacturing Costs

The total cost related to the production of goods, including raw materials, labor, and overhead expenses.

Variable Costing

A costing method that includes only variable production costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of a product.

Variable Production Costs

Costs that fluctuate with the level of output production, such as raw materials and direct labor.