Hi-Tech Inc

question 154

Multiple Choice

Hi-Tech Inc.has several outdated computers that cost a total of $17,800 and could be sold as scrap for $4,600.They could be updated for an additional $2,400 and sold.If Hi-Tech updates the computers and sells them, net income will increase by $9,000.
-What amount would be considered sunk costs?

• A)$2,400
• B)$9,000
• C)$17,800
• D)$20,200

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Definitions:

Conversion Costs

The sum of direct labor and overhead costs, which are incurred to convert raw materials into finished products.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.

Weighted-Average Method

A costing method that averages the cost of inventory by taking the weight of each item's cost to calculate a combined average cost for all units.

Process Costing System

An accounting method used in manufacturing where costs are assigned to processes or departments, suitable for homogeneous products.