An Explicit Cost Is

question 100

Multiple Choice

An explicit cost is:

• A) an opportunity cost for which payment is not required.
• B) an out-of-pocket expense.
• C) always larger than an associated implicit cost.
• D) both (a) and (b)

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Definitions:

Process Costing

An accounting methodology used in manufacturing environments where the cost of the product is calculated based on the processes it goes through, ideal for homogenous products.

Weighted-Average Method

A cost accounting method that calculates the cost per unit by dividing the total costs by the total number of units produced, incorporating costs from previous periods.

Equivalent Units of Production

A calculation method used in cost accounting that determines the units produced during a period, adjusting for incomplete units.

Conversion Costs

Costs associated with converting raw materials into finished goods, primarily comprising labor and overhead expenses.