Opportunity Cost Is the Minimum Contribution to Profit That the Selling

question 20

True/False

Opportunity cost is the minimum contribution to profit that the selling segment forgoes by transferring the item internally.

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Definitions:

Overhead Applied

The allocation of indirect costs, such as manufacturing overhead, to specific jobs or products based on a predetermined rate or method.

Activity-Based Costing

A cost allocation system that first identifies overhead expenses, assigns them to specific activities, and then distributes these costs to various products.

Traditional Costing Method

An accounting method that assigns indirect costs to products based on a predetermined overhead rate, often not reflecting the actual consumption of resources by each product.

Direct Labor-Hours

The total number of hours worked directly on the production of goods.