When Using Relevant Cost Analysis,it Is a Common Mistake for Untrained

question 32

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.

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Definitions:

Product-Variety Externality

External benefits or costs to society resulting from a variety of products beyond what would be provided by market forces alone.

Business-Stealing Externality

A negative externality that occurs when new products or services enter a market, reducing the sales and profitability of existing products or services.

Spillover Costs

Costs that affect parties who are not directly involved in a transaction or economic activity.

Advertising

The activity or profession of producing advertisements for commercial products or services, aiming to influence consumer behavior and preferences.