The Future Costs That Differ Across Alternatives Are Called

question 43

Multiple Choice

The future costs that differ across alternatives are called

• A)Sunk costs
• B)Irrelevant costs
• C)Relevant costs
• D)Past costs

Understand the importance of separating mixed costs into their fixed and variable components for accurate budgeting.

Determine the impact of changes in activity level on total and per unit fixed costs.

Identify cost drivers and their role in cost behavior.

Understand the definitions and behaviors of direct and indirect costs, as well as committed and discretionary fixed costs.

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Definitions:

Par Value

The face value of a bond or the stock value stated in the corporate charter.

Convertible Preferred Stock

A type of preferred stock that gives holders the option to convert their shares into a specified number of common shares, usually after a predetermined date.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Par Value

Par value is a nominal value assigned to a security or stock, representing its minimum price as stated on the certificate or indicated in the charter.