Opportunity Costs Can Be Defined As

question 55

Multiple Choice

Opportunity costs can be defined as:

• A) The benefit foregone by choosing one alternative over another
• B) The cost of collecting information for decision making purposes.
• C) The costs incurred when the wrong decision is made
• D) All of the above

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs, both variable and fixed, in the cost of a product.

Gross Margin

The difference between sales revenue and cost of goods sold, representing the fundamental profit derived from trading activities, before deduction of operating expenses.

Operations

Activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold.