What Will Be the Normal Impact on Costs When Managers

question 11

Multiple Choice

What will be the normal impact on costs when managers buy convenience items rather than make those same items from scratch?

• A) Food costs increase and labor costs increase
• B) Food costs decrease and labor costs increase
• C) Food costs increase and labor costs decrease
• D) Food costs decrease and labor costs decrease

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Definitions:

Coal Company

A business entity engaged in the extraction, processing, and selling of coal as an energy source or raw material.

Salvage Value

The anticipated remaining value of an asset once it has completed its functional lifespan, typically taken into account in computations of depreciation.

Natural Resources

Assets that come from the Earth and are used to produce goods and services, such as timber, oil, and minerals.

Units-of-Activity Method

The Units-of-Activity method is a depreciation approach based on the estimated usage, activity, or units produced over the asset's useful life, making depreciation expense directly proportional to its productivity.