Explicit Costs Are Costs That

question 115

Multiple Choice

Explicit costs are costs that:

• A)require a firm to spend money.
• B)are zero when no output is produced.
• C)do not depend on the quantity of output produced.
• D)depend on the quantity of output produced.

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Definitions:

Conversion Costs

Expenses associated with converting raw materials into finished products, typically including labor and overhead costs.

Process Costing

An accounting method used to allocate costs to products that are nearly identical and produced in a continuous process.

Processing Department

A specific unit within a manufacturing facility where a particular process or sequence of operations is carried out.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on an average cost of all goods available for sale.