Which of the Following Costs Would Be Relevant in Short-Term

question 122

Multiple Choice

Which of the following costs would be relevant in short-term decision making (evaluating "special sales orders," make-vs.-buy decisions, etc.) ?

• A) Incremental fixed costs.
• B) All product-related costs.
• C) Total variable costs that are the same in the considered alternatives.
• D) Cost of fixed assets to be used in the alternatives.
• E) Opportunity costs associated with excess resource capacity.

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Definitions:

Unit of Labor

A measurement of work or effort by an employee or worker.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate in a specific period.

Capital

Financial assets or their financial value, as well as the tangible factors of production that are used in creating goods or services.

Maximize Profit

The process of increasing one's financial gain to the highest possible level given the constraints of the market.