If a Firm Has Already Paid an Expense or Is

question 29

Multiple Choice

If a firm has already paid an expense or is obligated to pay one in the future, regardless of whether a particular project is undertaken, that expense is a

• A) committed cost.
• B) complementary cost.
• C) obligated cost.
• D) sunk cost.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for other expenses.

Markup

The amount added to the cost of goods to cover overhead and profit, usually expressed as a percentage of the cost.

Discontinued Inventory

Discontinued inventory includes products that are no longer being produced or sold by a company, often due to obsolescence or strategy shifts.

Gross Profit Margin

A profitability metric that shows the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency in producing goods.