If a Firm Has Already Paid an Expense or Is

question 109

Multiple Choice

If a firm has already paid an expense or is obligated to pay one in the future, regardless of whether a particular project is undertaken, that expense is a(n)

• A) incremental cash outflow.
• B) opportunity cost.
• C) sunk cost.
• D) expensible item.

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Definitions:

Predetermined Overhead Rates

An estimated rate used in cost accounting to allocate overhead costs to products or services based on a set formula.

Machine-Hours

A measurement of the amount of time a machine is operated, used in allocating costs or determining production levels.

Molding

The process of shaping a pliable raw material by using a rigid frame or model called a mold.

Assembly

The process of putting together various components or pieces to build a finished product.