The Basic Idea of Opportunity Cost Is That

question 247

Multiple Choice

The basic idea of opportunity cost is that

• A) buyers miss opportunities to find better bargains.
• B) using resources in an activity imposes costs on other people.
• C) the decision to use resources in one activity means that the resources cannot be used elsewhere.
• D) economic agents are always looking for better opportunities.

Master the process of consolidating a subsidiary's financial statements with those of the parent company.

Learn how to compute and account for income from a subsidiary in the parent company’s financial statements.

Understand the impact of subsidiaries' dividends on the parent company's investment account.

Understand the determination of noncontrolling interest and its value at the date of acquisition.

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Definitions:

Fixed Component

A cost that remains unchanged in total regardless of changes in the level of activity or output over a certain period.

Overapplied

This refers to the condition in which the allocated costs in an accounting system exceed the actual costs incurred, often in the context of overhead or indirect costs in manufacturing.

Variable Component

Part of a cost or expense that changes in proportion with the level of activity or volume of output.

Fixed Component

A portion of a cost that does not change with the level of production or sales over the short term.