Select the Appropriate Definition for Each of the Items Listed

question 34

Multiple Choice

Select the appropriate definition for each of the items listed below.
-A benefit given up when one alternative is chosen over another

• A)period cost
• B)direct cost
• C)opportunity cost
• D)variable cost
• E)indirect cost
• F)fixed cost
• G)product cost

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Definitions:

Variable Costing

An accounting method where only variable production costs are charged to product units, excluding fixed overhead costs.

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Operating Income

A measure of a company's profitability, excluding non-operating expenses such as interest and taxes, and non-operating income.

Finished Goods Inventory

This is the account that contains the cost of finished goods that are ready to be sold but are still in stock.