The Opportunity Cost of a Particular Activity

question 22

Multiple Choice

The opportunity cost of a particular activity

• A) is the same for everyone pursuing this activity
• B) may include both monetary costs and forgone income
• C) always decreases as more of that activity is pursued
• D) usually is known with certainty
• E) measures the direct benefits of that activity

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Definitions:

Traditional Costing

An accounting method that applies indirect costs to products based on a predetermined overhead rate, typically simpler than activity-based costing.

Activity-Based Costing

A costing methodology that assigns the costs of resources to products or services based on activities and processes involved in their production.

Traditional Costing Method

A cost accounting method that assigns overhead costs to products based on a predetermined overhead rate.

Direct Labor-Hours

A measure representing the total hours worked by employees directly involved in the production of goods or services.