Which of the Following Items Could Be an Example of a Cost

question 153

Multiple Choice

Which of the following items could be an example of a cost object?

• A)A manufacturing plant
• B)An international plant
• C)The accounting department
• D)All of the above are examples of potential cost objects.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits that could have been obtained by taking an alternative action.

Variable Cost

Costs that change in proportion to the level of activity or volume of production, such as raw materials or sales commissions.

Prime Cost

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.

Direct Labor

The wages and salaries of employees who are directly involved in the production of goods or services.