Which of the Following Statements Is True

question 190

Multiple Choice

Which of the following statements is true?

• A)Costs are always explicit, never implicit.
• B)Costs are always implicit, never explicit.
• C)George runs a stationery shop; he paid Frank $5,000 for the carpet he installed in the shop. The $5,000 for carpet is an implicit cost.
• D)An implicit cost is a cost that represents the value of resources used in production for which no actual monetary payment is made.

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Definitions:

Budgeted Finished Goods

An estimate of the finished goods a company plans to produce over a certain period as part of its budgeting process.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Cost of Goods Manufactured

The total cost incurred by a company to produce goods in a specific period, including materials, labor, and overhead.

Inventory

The raw materials, work-in-progress (WIP), and finished goods that a company holds for the purpose of sale in the ordinary course of business.