Which of the Following Is an Example of an Opportunity

question 93

Multiple Choice

Which of the following is an example of an opportunity cost?

• A) Depositing money into a savings account so you will be able to pay cash for holiday gifts
• B) Buying a car which depletes your savings
• C) Giving up going to a movie in order to study for your finance exam
• D) Purchasing a new computer

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Definitions:

Absorption Costing

An approach in accounting where the total manufacturing expenses, including direct materials, direct labor, and both kinds of manufacturing overhead (variable and fixed), are included in a product's costing.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Product Cost

Product cost encompasses all costs directly involved in manufacturing a product, including raw materials, labor, and manufacturing overhead.

Absorption Costing

A method of product costing that includes all manufacturing costs, both fixed and variable, in the cost of a product.