Which of the Following Statements Regarding "Opportunity Costs" Is True

question 76

Multiple Choice

Which of the following statements regarding "opportunity costs" is true?

• A) These costs are recorded routinely by most modern cost accounting systems.
• B) These costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits of an alternative option from being realized.
• C) These costs are generally deductible for federal income tax purposes in the U.S.
• D) In terms of most short-run decisions, they are irrelevant.
• E) They are usually considered a sunk cost associated with one or more decision alternatives.

---

Definitions:

Batch-level Costs

Costs associated with a specific batch of products, including setup costs and quality testing, that are not directly related to the manufacturing of individual items within the batch.

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities and resources that go into their production.

Activity-Based Costing

A pricing strategy that allocates overhead and indirect expenses to specific products and services according to the activities they necessitate.

Manufacturing Overhead

The indirect costs associated with manufacturing a product, including expenses like utilities, maintenance, and factory equipment.