Opportunity Costs

question 9

Multiple Choice

Opportunity costs:

• A)Include both explicit and implicit costs.
• B)Include explicit and sunk costs.
• C)Include implicit, explicit and sunk costs.
• D)Include explicit costs only.
• E)Only include implicit costs.

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Definitions:

Underapplied Overhead

The situation where the allocated manufacturing overhead cost is less than the actual overhead cost incurred.

Manufacturing Overhead

Covers all indirect costs associated with manufacturing a product, including expenses such as rent for the manufacturing space, utilities, and salaries for employees not directly producing goods.

T-Accounts

A visual representation of accounts used in double-entry bookkeeping, showing debits on the left and credits on the right.

Direct Materials Cost

The expense incurred for raw materials that are directly incorporated into a finished product.