Suppose You Have Purchased a Non-Refundable Plane Ticket And, at the Last

question 114

Multiple Choice

Suppose you have purchased a non-refundable plane ticket and, at the last moment, you cannot take the trip.You can, however, sell the ticket.If you paid $700 for the ticket, the cost of sending the ticket to someone through overnight mail is $20, and you spend $10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket?

• A)$700 because that is what the ticket cost.
• B)$720 because that is the cost of the ticket and of getting it to the buyer.
• C)$730 because that is the total cost of the ticket and getting it to the buyer.
• D)More than $730, so that you can make a profit.
• E)$30 because the $700 is a sunk cost.

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Definitions:

Net Operating Income

A company's operating income after all operating expenses have been deducted from total revenue.

Variable Costing

A costing method that includes only variable costs - costs that vary with production levels - in the cost of goods sold and excludes fixed costs.

Net Operating Income

The profit generated from a company's everyday business operations, indicating the efficiency of management.

Net Operating Income

Income generated from a company's everyday business operations, excluding taxes and interest expenses.