Costs That Have Already Been Incurred, and Which Cannot Be

question 140

Multiple Choice

Costs that have already been incurred, and which cannot be recovered, are known as

• A)short-run fixed costs.
• B)implicit costs.
• C)unavoidable costs.
• D)sunk costs.

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Definitions:

Cost Allocation

The process of assigning indirect costs to different departments, projects, or production processes within a company to ensure accurate product costing or project budgeting.

Reciprocal Services Method

An accounting method used to allocate costs in situations where support departments provide services to each other as well as to production departments.

Support Department Costs

Expenses associated with departments that do not directly generate revenue but provide essential services to other departments, like IT and HR.

Assembly Department

A section within a manufacturing plant where components are assembled into final products.