If a Full- Time Student Decides to Spend a Day

question 96

Multiple Choice

If a full- time student decides to spend a day at the beach, the opportunity cost of this decision:

• A) is best measured by the wage rate that the student could have earned had she/he decided to work full- time instead of studying
• B) is equal to the cost of food and drinks purchased at the beach
• C) equals the cost of the beach outing plus the value of the student's alternative use of the time, such as studying
• D) is zero, since the student would have stayed in bed had she/he not decided to go to the beach

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Definitions:

First-In, First-Out Method

A method of inventory valuation where the oldest inventory items are recorded as sold first, with the most recent costs remaining in inventory.

Conversion Costs

The combination of labor and manufacturing overhead costs that are incurred in turning raw materials into finished products.

First-In, First-Out Method

An inventory valuation method where the first items produced or acquired are the first ones sold or used, affecting cost of goods sold and inventory valuation.

Material Costs

The total cost of materials used in the production of goods, including both direct raw materials and indirect materials.