An Explicit Cost Is Defined as

question 297

Multiple Choice

An explicit cost is defined as

• A)a cost that does not change as output changes.
• B)a nonmonetary opportunity cost.
• C)a cost that involves spending money.
• D)a nonmonetary accounting cost.

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Definitions:

Incremental Net Income

The increase in net income resulting from a particular business decision compared to the scenario where the decision is not made.

Income Tax Expense

The amount of money a company or individual owes in taxes based on the taxable income for a given period, typically one year.

Profitability Index

A calculation used to determine the relative profitability of a project by dividing the present value of future cash flows by the initial investment.

Working Capital

Working capital is the difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.