When a Firm Has the Opportunity to Add a Project

question 35

Multiple Choice

When a firm has the opportunity to add a project that will utilize excess factory capacity (that is currently not being used) , which costs should be used to help determine if the added project should be undertaken?

• A)Allocated overhead costs
• B)Sunk costs
• C)Incremental costs
• D)Average costs

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Definitions:

Time Wages

Compensation paid to an employee based on the amount of time worked, typically expressed as an hourly rate.