In Making the Decision Whether to Sell a Product as Is

question 36

Multiple Choice

In making the decision whether to sell a product as is or process the product further, the expected income from selling the product as is may be defined as which of the following?

• A)The opportunity cost of processing the product further
• B)A sunk cost of processing the product further
• C)The opportunity cost of selling the product as is
• D)A limiting factor in processing the product further

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Definitions:

Net Operating Income

The revenue from a business's operations after subtracting operating expenses, excluding taxes, and interest.

Common Fixed Expense

Costs that do not vary with production volume, and are shared among different products or business segments.

Contribution Margin Ratio

The portion of sales revenue left over after variable expenses have been deducted, expressed as a percentage of sales revenue.

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume, such as raw materials and direct labor.