Use the Information Below to Answer the Following Question(s)

question 118

Multiple Choice

Use the information below to answer the following question(s) .Soft Cushion Company is highly decentralized.Each division is empowered to make its own sales decisions.The Assembly Division can purchase cushion stuffing from the Production Division or from external suppliers.The Production Division has been the major supplier of stuffing in recent years.The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year.The Production Division recently increased its unit price to $40.The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally.The Assembly Division purchases 20,000 kg per month.
-Cash outflows that are directly associated with the production and transfer of the products and services are called

• A)additional costs.
• B)opportunity costs.
• C)outlay costs.
• D)transfer costs.
• E)variable costs.

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Definitions:

Discarded

Discarded refers to items or substances that have been thrown away or disposed of, no longer deemed useful or necessary.

Equipment Cost

The total amount spent to acquire, install, and make ready for use a piece of equipment for operational purposes.

Capital Expenditure

Funds used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Expense Account

An accounting category used for tracking money spent on operating activities of a business.