Costs That Can Be Considered Sunk Costs Over a Fixed

question 207

Multiple Choice

Costs that can be considered sunk costs over a fixed period of time are called ____ costs.

• A) Opportunity
• B) Fixed
• C) Incremental
• D) Accounting
• E) Erosion

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Definitions:

Fixed Costs

Costs that do not change in total despite changes in the volume of goods or services produced or sold.

Margin of Safety

The difference between actual or projected sales and the break-even point. It measures the amount by which sales can decline before a business incurs a loss.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which contributes towards covering fixed costs and then generating profit.

Operating Income

The income generated from the primary activities of a business, determined by deducting operating costs from the gross profit.