Which of the Following Statements Regarding Costs and Decision Making

question 68

Multiple Choice

Which of the following statements regarding costs and decision making is correct?

• A) Fixed costs must be considered only on a per-unit basis.
• B) Per-unit fixed cost amounts are valid only for make-or-buy decisions.
• C) Per-unit fixed costs can be misleading because such amounts appear to behave as variable costs when, in actuality, the amounts are related to fixed expenditures.
• D) Sunk costs can be misleading in make-or-buy decisions because these amounts appear to be relevant differential costs.
• E) Opportunity costs should be ignored when evaluating decision alternatives.

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Definitions:

Follows Objects

The ability to visually track moving items, often assessed in developmental examinations to indicate proper neurological function.

180 Degrees

A term denoting a complete opposite direction or change in opinion or position.

Months

Divisions of the year based on the Earth's orbit around the sun, typically totaling twelve in a calendar year.

Draws Arms

Refers to the action of pulling one's arms towards the body or towards another object or person.