A Potential Benefit Given Up When One Activity Is Selected

question 76

Multiple Choice

A potential benefit given up when one activity is selected over another best defines

• A)sunk costs.
• B)variable costs.
• C)opportunity costs.
• D)reflective costs.

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Definitions:

Absorption Costing

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

Throughput Costing

An accounting method emphasizing the costs directly associated with producing goods, excluding indirect costs like manufacturing overhead.

Variable Costing

A costing method in which variable manufacturing costs are treated as product costs while fixed manufacturing overheads are treated as period costs.

Predetermined Overhead Rate

A calculated rate used in cost accounting to allocate overhead costs to products or services, based on estimated overhead costs and activity levels.