Costs Incurred Before the Split-Off Point Are

question 43

Multiple Choice

Costs incurred before the split-off point are

• A) sunk costs.
• B) incremental costs.
• C) relevant costs.
• D) opportunity costs.

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Definitions:

Average Variable Cost

The variable cost of production (costs that change with the level of output) divided by the number of units produced, showing the variable cost per unit.

Marginal Cost

The extra expense associated with manufacturing an additional unit of a product or service.

Average Fixed Cost

The fixed cost divided by the quantity of output, representing the fixed cost per unit of output.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or output in a business.