When Using Relevant Cost Analysis, It Is a Common Mistake

question 39

Multiple Choice

When using relevant cost analysis, it is a common mistake for untrained managers to include in their analysis all the following except:

• A) Sunk costs.
• B) Allocated fixed costs.
• C) Average fixed costs.
• D) Unit variable costs.
• E) Total fixed costs.

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Definitions:

Liter

A metric unit of volume equal to one cubic decimeter or 1000 cubic centimeters, commonly used to measure liquids.

Volume

The amount of space that a substance or object occupies, or that is enclosed within a container.

Experiment

A scientific procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact.

Hypothesis

A hypothesis is a proposed explanation made on the basis of limited evidence as a starting point for further investigation.