Suppose That for a Particular Business There Are No Implicit

question 242

Multiple Choice

Suppose that for a particular business there are no implicit costs. Then

• A)accounting profit will be greater than economic profit.
• B)accounting profit will be the same as economic profit.
• C)accounting profit will be less than economic profit.
• D)the relationship between accounting profit and economic profit cannot be determined without more information.

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Definitions:

Indirect Manufacturing Costs

Costs associated with manufacturing that are not directly related to the physical production of goods, such as maintenance, supervision, and utilities.

Cost Object

Anything for which cost is measured and assigned, such as a product, service, project, or customer.

Indirect Cost

Expenses not directly attributable to a specific product or activity, often including overhead costs like utilities.

Contribution Format

A type of income statement where costs are divided into variable and fixed categories, emphasizing the contribution margin.